Top 3 Issues of 2015 Affecting Business, Real Estate, and Estate Planning

Every year, thousands of legal decisions get reached in the courts and thousands more laws get enacted. While most of these may not have any direct impact upon you, some of them can dramatically affect your life and how you do business. If you are running a company, they could even put you out of business… or give you new ideas to succeed. The following are what we see are the most important issues that you should be aware of in planning for 2016.

1. Uber Litigation – The California Labor Commissioner ruled that an Uber driver was an employee, not an independent contractor, and ordered Uber to reimburse the driver for her expenses. The case is on appeal. Like the Bararsani case involving real estate agents (below), this and similar cases challenge the degree of control that a company can exercise over independent contractors.

2. Franchise Litigation – Federal and State agencies are filing complaints against McDonald’s and other Franchisors alleging that the standards in franchise agreements make the franchisees employees of the franchisor. If they prevail, franchisors will now be liable for the sins of the franchisees… a step that could end the franchise system.

3. Minimum Wage – Under current law, California’s minimum wage will increase to $10/hour on 1/1/2016. However, a ballot measure is in the works for an increase to $15/hour in 2016. Many cities such as San Francisco are imposing their own minimum wages. Businesses are complaining that they are being put out of business and that the increases kill jobs and harm those, such as retirees, who live on fixed incomes.

PROPERTY (Real Estate):
1. End of Debt Forgiveness Tax Relief Act – At the end of 2014, Congress extended the Tax Relief but only through the end of 2014. Although Bills in Congress would extend the Act through 2016 if passed, nothing is happening right now. California never extended the Tax Relief to 2014 and recently Gov. Brown vetoed a Bill that would have extended it through 2016. So, upside-down owners have no relief under the Act if they can’t keep their home.

2. Re-Setting Interest-Only Loans – In 2005-06, millions of loans were made that provided for interest-only payments. However, they typically provided that in 10 years they would start to amortize, ie: require principal payments. So, property owners are getting notices that their loan payments are going up, sometimes dramatically. In many cases they can no longer afford the payments and may be forced to sell or walk-away, even if they have equity in their property. This could trigger application of the Home Equity Sales Act.

3. Bararsani and related Cases – A pandora’s box has been opened nationally to determine whether real estate agents are independent contractors or employees. So far, the courts have supported independence but questions are being raised concerning the degree of broker supervision and control allowed. Depending upon how this issue is ultimately resolved, it could spell the end of large real estate companies and industry Associations.

1. Non-Trust Property – When a person dies with a Trust but has real property that was not in the Trust, a Heggstad Petition can be filed in Probate to transfer that property to the Trust. But this required enough specificity to prove that the owner intended that this particular property be in the Trust. In 2015, it was determined that the owner’s intent is sufficient if the Trust states that the owner is transferring to the Trust their “right, title and interest to all of Trustor’s real property”. This may help many successor trustees avoid a lengthy and costly full Probate procedure.

2. Revocable Transfer on Death Deed – Many times, a person has a single asset – a home – and wants to avoid both the cost of a Trust and the costs of Probate. Effective 2016, California law allows a Deed to be recorded conveying the Property to a Beneficiary on death while keeping title in the owner’s name during their life. This likely will replace the conveyance with a reservation of a life estate.

3. Estate and Gift Tax Exclusions – For 2016, the lifetime Estate and Gift Tax exclusions will rise to $5.45 million. The Annual Gift Tax exemption will remain at $14,000 per donee. Thus a married couple could give up to $28K each year to each donee (such as a child) without any tax. Spend-downs can be a useful practice under some circumstances when planning for parent’s or spouses assisted living care but it must be done correctly to get MediCal qualified.

Historically, we have market “corrections” every 7-10 years which, if very severe and persistent become Recessions. Many financial advisors that we talk with are anticipating a correction in 2017-18 based in part on very high stock values today, a weakening economy in Europe and China, and an anticipate Fed increase in the interest rate. Corrections put our economy back on balance and set the stage for future growth so in one sense they are necessary. On the other hand, corrections can be devastating for those dependent upon the market and others whose jobs can be put at risk. Be sure to discuss matters with your financial adviser if you think you may be adversely affected.

Also, we have now moved into our new headquarters at 2339 Gold Express Way, Suite 101, in Gold River. We’ll have an open house in January but feel free to drop in. In the meantime, we wish you and your family a happy Holiday Season and a prosperous new year.

On behalf of all of us at BPE Law Group, PC, we sincerely thank you for your referrals and allowing us to assist you and your clients in dealing with legal concerns and maximizing  opportunities. If you or your clients would like a consultation with us, please call our office at (916) 966-2260 or e-mail me at

This article is not intended to be legal advice, and should not be taken as legal advice. Every case requires review of specific facts and history, and a formal agreement for service. Please feel free to contact us if you need legal advice and are interested in seeing if we can help you.