Transfer Restrictions in Shareholder Agreements
Corporations are creatures of statute, contrary to LLCs, which are creatures of a contract. I have written extensively about the need for a carefully crafted LLC agreement, but have not written much about the need for shareholders in a closely held corporation to have a carefully crafted shareholder agreement. Shares of stock are generally freely… Read More
Monuments Matter – Mutual Acquiescence And Recognition
Although perhaps unfamiliar with the dynamics of real property law, many in the general public often have an ingrained concept of adverse possession, a notion that the property that they have used for so long should belong to them no matter what a survey might show (discussed in a previous blog post here). Along with this… Read More
Fundamentals Of Business Succession Planning
Inevitably, every business will end. Successful businesses plan for the end, and, as a result, maximize the value of their efforts. A proper advance plan can help maximize value when the time comes. Just as every business is different, a plan for succession varies for every business. There are a few fundamentals for an ‘advance… Read More
An LLC Issued Me a K-1. What Am I?
In prior postings, I have discussed how membership has its privileges, but how does a person know if they are in fact a member? Washington’s LLC Act provides two different standards for membership depending on the time period a member is admitted. For the admission of “the initial member” a person becomes a member upon… Read More
What Is The Difference Between A Prescriptive Easement And Adverse Possession?
Most non-lawyers have probably heard about adverse possession- the concept that you can become the owner of someone else’s property by treating it as your own. But the term “prescriptive easement” is not as well known. The two concepts have different requirements and implications for the rights of the parties. Adverse Possession concerns a claim of ownership of… Read More
LLC Interests And Securities – Personal Liability Looms
When drafting LLC agreements, practitioners ought to remember that LLC interests may be securities subject to both state and federal securities laws. When an LLC interest becomes a security, additional disclosures of “material facts” are required. Without such disclosures, personal liability for securities fraud looms. The recent Washington Court of Appeals case of Freeman v.… Read More
LLCs And Capital Accounts: An Introduction
Lawyers advising LLCs and their members must understand capital accounts from a tax perspective. When LLCs are taxed as a partnership, a member’s capital account reflects a portion of a member’s economic interest in the LLC. The tax regulations surrounding capital accounts are lengthy and complex, but understanding the basics allows practitioners to fully counsel… Read More