Additional CARES Act SBA Loan Programs and Montgomery County Relief to Help Your Business

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed into law late last week.  As a result, small businesses have spent this past week scrambling and reaching out to their banks and advisors to submit loan and grant applications with the hope of saving their business and avoiding bankruptcy.  On April 3, 2020, the Small Business Administration (SBA) will begin accepting applications for the CARES Act’s Paycheck Protection Program (PPP) (as detailed in a post earlier this week), despite prevailing uncertainty and unanswered questions over the specifics of the law and how they apply to unique and distinct circumstances.

While the PPP offers small businesses a lifeline for surviving the COVID-19 pandemic as well as the subsequent economic fallout, it is not the only option that the CARES Act offers businesses to protect them from this sudden and unexpected disruption. 

How the CARES Act Works

Under the CARES Act, the Economic Injury Disaster Loans (EIDL) program offers loans of up to $2 million to small businesses severely impacted by COVID-19.  Similar to PPP loans, EIDL funds may be used to cover payroll, rent, utilities, health care benefits and other operating expenses.  However, EIDL funds may also be used to pay fixed debts and other bills and accounts payable that cannot be paid as a result of the pandemic.  The APR on EIDLs is 3.75% for small businesses (2.75% for nonprofits), and principal and interest is deferred at the Administrator’s discretion, based on the borrower’s ability to repay. 

The highlight of the EIDL is the immediate advance of $10,000 in emergency relief that is funded within 3 days of submitting an application.  The $10,000 is fully forgiven and not required to be repaid, irrespective of whether the EIDL is approved or not. 

Eligibility is similar to the PPP loans.  Businesses must have less than 500 employees, and they include certain nonprofits, sole proprietorships (whether with or without employees), independent contractors, cooperatives, employee owned businesses, and tribal small businesses. 

How to Apply for Assistance

The SBA is accepting applications now.  Businesses may apply via the SBA’s website, and by clicking “Apply for Assistance.”

Businesses that apply for and receive an EIDL may also apply for a PPP loan.  However, if a business ultimately receives a PPP loan, they will need to roll their EIDL into the PPP, and the $10,000 advance they received would be subtracted from the amount forgiven in the PPP (the details of loan forgiveness under the PPP are detailed in our previous post).  For businesses that have loans from both EIDL and PPP, that business may not use EIDL funds for the same purpose as its PPP loan, and vice versa.

In addition, for businesses located in Montgomery County, Maryland, the County Executive and the County Council have approved the Montgomery County Public Health Emergency Grant (PHEG) program.  The PHEG program sets aside $20 million in funding to support businesses and nonprofits that have suffered an adverse economic impact from COVID-19.  The County Executive is currently developing a system and regulations for the implementation of the PHEG program, but there is no other information available at this time.  When information relating to this program is released, we will provide updates accordingly.

Please contact Chris Young with any questions you may have about the CARES Act, or with assistance in obtaining Emergency Injury Disaster Loan for your business.

Chris Young
is an associate in the Business & Tax practice at Miller, Miller & Canby. He focuses his practice on corporate legal agreements, business formation, tax controversy work and helping clients deal with new tax regulations. View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.

CARES Act: Your Business Should Not Go Bankrupt Due to COVID-19

Last Friday, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law.  The CARES Act is aimed at mitigating the economic fallout resulting from the COVID-19 pandemic.  Congress authorized the infusion of $2 trillion into the United States economy.  Of that $2 trillion, $500 billion has been allocated to businesses to help to alleviate the calamity caused by quarantines and social distancing.  With both essential and non-essential businesses facing severe restrictions, as well as with the uncertainty surrounding the duration of the pandemic, anxiety over business survival is at the forefront.  To stymie the potential influx of business closings and bankruptcies, the CARES Act seeks to make cash immediately available to businesses with loans on borrower-friendly terms and conditions as they seek to wade through the pandemic and the economic aftermath.

Paycheck Protection Program
While the CARES Act provides several attractive tax highlights, including the availability of an employer tax credit and the deferral of the Social Security tax portion of the employer’s share of payroll tax, a key component of the aforementioned $500 billion is the Paycheck Protection Program (PPP).  The PPP offers businesses with immediate cash to fund payroll, health care benefits, rent, utilities, and interest on mortgage obligations, among other business operating costs.  The PPP loans are 100% federally guaranteed and, generally, businesses with no more than 500 employees that were in operation during February 15, 2020 and June 30, 2020 are eligible to apply.  

A highlight of the PPP is loan forgiveness.  Specifically, as long as a business maintains its payroll and thereby retains its employees, the amount spent by the business during the eight (8) week period after the loan’s origination will be forgiven.  It is the intent of the CARES Act that employers maintain employees on their payrolls during this crisis period.

The size of the loan that businesses are eligible to receive is equal to 2.5x the business’ average monthly payroll costs for 2019.  Seasonal businesses may use the period between February 15, 2019 and June 30, 2019 as their average monthly payroll.  If the business was nonoperational during that period, then the size of the loan is 2.5x the average monthly payroll costs between January 1 and February 29, 2020.  In addition, the maximum term for PPP loans, if they must be repaid, is ten (10) years, with a maximum interest rate of 4%, and there are no SBA loan fees or prepayment fees.

SBA Loans
In addition to the PPP loans, the CARES Act provides that small businesses may apply for certain SBA loans such as 7(a), 504 and microloans under friendly terms and conditions.  Under the CARES Act, the SBA will cover all loan payments, including principal, interest and fees, for such SBA loans made six (6) months before the Act’s enactment, and for loans made within six (6) months of the enactment.  To be eligible, businesses must meet SBA “small business” criteria.

To apply for a PPP loan, or any of the other loans available under the CARES businesses may reach out to current SBA 7(a) lenders for assistance. Businesses have until June 30, 2020 to apply. Click here to find an SBA Lender.

Maryland Business Relief Grants
In addition to the CARES Act, the State of Maryland is offering relief to small businesses through loans and grants.  Specifically, the Maryland Small Business COVID-19 Emergency Relief Loan Fund offers businesses with fewer than 50 employees with up to $50,000 of cash.  Much like PPP loans, Maryland is offering borrower-friendly terms to assist businesses with navigating this crisis.  Indeed, under this loan program, interest on the loans run at 0% for the first 12 months, and 2% for the remaining 35 months; and there is a deferral of all payments for the first 12 months, and straight amortization beginning in the 13th month through the end of the loan period.  To be eligible, businesses must have been established prior to March 9, 2020 and be in good standing.  Also similar to PPP loans, loaned fund may be used for operating expenses such rent, mortgage payments, and utilities.  To qualify, businesses must establish the lost revenue resulting from the COVID-19 pandemic.

The Maryland Small Business COVID-19 Emergency Relief Grant Fund offers grants of up to $10,000 not to exceed 3 months of cash operating expenses to businesses of 50 or fewer employees.  Like the state’s loan program, businesses must be established prior to March 9, 2020, and be in good standing.  To qualify, businesses must produce financial documentation that reflects that its annual revenues do not exceed $5 million.  Similarly, businesses may use the grant for ordinary business operating costs such as working capital to support payroll expenses, rent, mortgage payments, and utilities.

Applications for Maryland’s Emergency Relief Loan Fund are found online HERE. Applications for Maryland’s Emergency Relief Grant Fund are also found online, and can be accessed HERE.

Please contact Chris Young at 301.762.5212 with any questions you may have about the CARES Act, with assistance in obtaining a Paycheck Protection Program loan for your business, or with the State of Maryland’s grant or loan programs.

Chris Young
is an associate in the Business & Tax practice at Miller, Miller & Canby. He focuses his practice on corporate legal agreements, business formation, tax controversy work and helping clients deal with new tax regulations. View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.


MM&C Update: Coronavirus COVID-19 Policy

Dear Clients and Friends:

We are all making adjustments to our daily lives in light of the impact of the coronavirus (COVID-19), and the guidance and adjustments being implemented and recommended by Federal, State and local officials as well as professional health organizations.  

Miller, Miller & Canby is committed to continuing to provide the highest level of professional services during this time, but we also place our highest priority on the safety and health of you, our clients and customers, as well as the attorneys and staff that comprise the Miller, Miller & Canby family.  We would like to take this opportunity to share some of the measures we believe will help us to continue to meet your needs and we hope that you will take them into consideration when choosing how to interact with us.

Miller, Miller & Canby has always made advanced technology a part of our firm’s culture, and we have a platform for facilitating communications with clients, whether our attorneys are located at our office, at home or some other location.  While we actively monitor adjustments that local governments, educational institutions and other businesses are implementing in response to public health considerations – such as remote work, tele-conferencing and on-line educational instruction – rest assured that Miller, Miller & Canby is capable and prepared to engage in such activities as warranted or requested by our clients.  While we continue to operate on a “business as usual” basis, we do encourage clients to consider whether in-person meetings, whether held at our office or other locations, are necessary when teleconferencing or video conferencing options are available.

We have also treated client information with the highest degree of confidentiality, and our technology platform allows for the transmission of encrypted documents or other information with our attorneys.  We always encourage clients to use this means of communication to protect the privacy of their information.  If you require any assistance with utilizing this secure upload we are available to assist.

Miller, Miller & Canby remains committed to staying current on developments and recommendations from government and public health officials that impact on our work-place practices in order to provide the safest environment for our employees and you, while continuing to afford the highest level of professional service to our clients and friends.

Thank you, as always, for your continued trust in Miller, Miller & Canby.

MM&C Condemnation Attorney Joseph Suntum Elected Chair of the Owners’ Counsel of America Board

Miller, Miller & Canby Condemnation Attorney, Joseph (Joe) Suntum, has been elected Board Chair of the Owners’ Counsel of America (OCA) Board of Directors.

The OCA is a network of highly-skilled eminent domain attorneys dedicated to defending the rights of private property owners across the country. OCA condemnation attorneys represent landowners in cases against local and state governments, the federal government, transportation departments, utilities, energy companies, redevelopment authorities, and other agencies.

The eminent domain attorneys affiliated with OCA have experience representing landowners – including owners of homes, commercial buildings, undeveloped land and industrial real estate -- in eminent domain, inverse condemnation, regulatory takings claims, property rights litigation, and complex real estate valuation matters.

“I am honored by the Board’s trust and look forward to working with the Board…to continue moving OCA forward and building upon the foundation of our predecessors. With everyone’s support we will continue OCA’s growth and stature as a strong voice for private property rights and an invaluable supporting organization for all our members,” said Mr. Suntum.

OCA member attorneys are advocates for property owners across the country. Membership is selectively restricted to one member attorney from each state. Mr. Suntum is the member attorney for the state of Maryland.

To learn more about the Owners’ Counsel of America, click here.

Joe Suntum
is Miller, Miller & Canby’s Eminent Domain/Condemnation practice group leader. He brings more than 30 years of trial experience and in-depth knowledge of real property valuation and eminent domain law to effectively protect the rights of his clients. In 2020, Miller, Miller & Canby’s Eminent Domain practice was awarded a U.S. News – Best Lawyers ® First Tier ranking in the Washington, DC region for the fourth year.

To learn more about eminent domain and Miller, Miller & Canby, contact Joe Suntum at 301-762-5212, or via email.

Widening Washington D.C.’s Beltway & I-270 for Toll Lanes in Maryland: Project Update

If you live in Montgomery or Prince George’s Counties, or you regularly commute into Washington D.C. or Northern Virginia, you are likely already aware of plans to widen the I-495 Beltway and I-270 to make way for new toll lanes.  Miller, Miller & Canby’s eminent domain and condemnation attorneys are closely tracking this major infrastructure project.

The Landscape
This project is a priority of Governor Hogan, which is emerging out of the I-495 & I-270 Managed Lanes Study launched in March 2018 by Maryland Department of Transportation’s State Highway Administration (MDOT SHA).  A Public-Private Partnership (P3) has been established to manage and indeed fund the project’s development, design and construction.  The P3 releases periodic newsletters and info on their website.

On January 8, 2020, Maryland’s Board of Public Works (BPW), comprised of the Governor, Treasurer and Comptroller, voted 2-1 to approve Phase-1 of the project.  On February 7th the P3 posted an announcement on its website clarifying that the BPW’s vote “only allows the solicitation process to move forward for a Phase Developer to assist the MDOT SHA with preliminary development and design activities, which is allowable under federal regulations.” (Click here for full anouncement)  Once the project’s new toll lanes are constructed, the P3’s development contractor will retain some level of ownership interest in those lanes while operating and maintaining them for a given time period – purportedly 50 years.

Prior to January’s BPW vote, the National Environmental Policy Act (NEPA) process was already well underway for the I-495 & I-270 Managed Lanes Study.  In fact, the P3’s most recent September 2019 Newsletter noted that the Draft Environmental Impact Statement (DEIS) was scheduled to be released later this Winter 2020 for public review and comment, followed by public hearings in the Spring.  However, the P3’s February 7th website post announced that the DEIS would not be published until Spring 2020.

The Plan for Phase 1
The P3’s February 7th website post included a map of Phase-1 as planned, a copy of which is provided below.  Phase-1 will widen I-495 and I-270 for toll lanes, beginning by replacing and widening the American Legion Bridge that crosses the Potomac River from Virginia, and extending northward to I-70 in Frederick County.  Current plans are to divide Phase-1’s delivery, first widening I-270 up to its intersection with I-370 in Montgomery County.  However, since the project’s details remain undefined, the extent of privately owned real estate that will be required to support the widening remains unresolved.  At present, there is an interactive map posted online by MDOT SHA for preliminary planning purposes, which remains subject to change.

Legislation Proposed to Stop the Project
This project remains highly controversial.  In fact, Bills SB0229 & HB0292, cross-filed in both chambers of the General Assembly this session, propose to prohibit the State from constructing toll roads or bridges without the consent of the majority of the affected Counties.  The Bills propose to rewrite an existing law (Maryland Transportation Code Section 4-407), which already requires majority County consent for toll projects, but only amongst nine named Counties all located east of the Chesapeake Bay Bridge.  If successfully enacted, the new law would extend that majority consent requirement to ALL Maryland Counties and Baltimore City. 

The House Environment and Transportation Committee held a hearing on February 13th in which HB0292 was under consideration.  Those testifying in favor of HB0292 (i.e. in opposition to the 495/270 project), led by Prince George’s County representative Mary Lehman, raised arguments and allegations including:

  • The existing law stands as precedent, and to continue limiting the consent requirement to nine Counties is inequitable/unfair.

  • The State needs to fully engage affected Counties, yet there has been virtually no consultation, coordination and collaboration with affected Counties for this 495/270 project. 

  • The contract procurement process has been far from transparent, as solicitation was recently amended to essentially sole-source to an Australian company called Transurban who was Virginia’s P3 contractor that still owns and operates its I-495, I-395 and I-95 Express Lanes.

  • Preliminary MDOT SHA estimates indicate that the entire 495/270 project will range between $8 and $9 Billion, but witnesses asserted that budget estimate details have not been released and independent estimates are as high as $25 Billion.

  • Testimony challenged the assertion that the project will be financed wholly by private investment, thus enabling other planned MDOT SHA projects to remain funded and on-track.  Rather, it was suggested that taxpayers will likely absorb change-orders and cost overruns, which have proven to be significant in other P3 projects elsewhere.  Transurban’s current West Gate Tunnel project in Australia was presented as an example.

  • This Bill will not become a blanket veto of all toll projects, because County politicians are accountable to voters, and if the project makes sense, they will support it or face being replaced.

Those testifying in opposition to the Bill (i.e. in favor of the I-495/I-270 project) raised arguments and allegations including:

  • This is a Not In My Back Yard (NIMBY) Bill, in that its proponents living closer to D.C. are disregarding the decades-long notorious traffic issues faced particularly by Maryland commuters living in upper Montgomery County, Frederick County and further. (4+ hours daily commute for many) 

  • The State, not Counties, must ultimately consider how this 495/270 project will benefit its citizens at large and the larger State economy as it pertains to the livability and attractiveness to new persons and businesses considering moving here. 

  • Individual Counties cannot be given a first right of refusal that will impact the entire State and pit counties against each other – which in all likelihood will occur.  They referenced the recent I-95 toll road project north of Baltimore extending into Harford County, which Baltimore County could have opposed if this Bill were law, to the detriment of Harford County residents. 

  • It is a fallacy that adding toll lanes will increase greenhouse gas emission.

  • The 495/270 widening would generate jobs and income, which would be lost if this Bill were passed. 

Finally, there was discussion regarding the potential constitutional Commerce Clause challenges that could be raised should HB0292 become law.  It was also noted that while toll projects tend to be State projects, they usually receive federal funds, making federal law applicable, which would potentially preempt a State law such as the one proposed.  HB0292’s opponents posited that it is more susceptible to being repealed or preempted than the existing law requiring nine eastern Counties’ consent.  They pointed out that the I-495 project involves interstate transit into Virginia falling under federal purview, while asserting that the existing law only impacts intrastate roadways in nine counties.  HB0292’s proponents reiterated that it changes nothing about existing law other than the number of Counties whose consent is required. 

As the General Assembly continues to deliberate these Bills, the 495/270 widening project will undoubtedly press ahead.

About Miller, Miller & Canby
Miller, Miller & Canby has extensive experience in protecting property owners’ rights throughout the eminent domain process. Jamie Roth is an Associate in the firm’s Litigation Practice Group, concentrating his practice in real estate litigation with a focus in eminent domain. Prior to becoming an attorney, Jamie enjoyed a distinguished career spanning over twenty years in the private and public sector with experience in project management, strategic planning, asset management and risk mitigation, including eleven years as a successful real estate consultant in federal eminent domain matters.

If you have any eminent domain-related questions or questions about the project or its potential impact to your property, please contact Jamie at 301.762.5251 or via email.

Visit our firm’s website for general information on the eminent domain process and our firm’s services by clicking here.

Top 5 Common Mistakes with DIY Estate Plans

The internet offers all the information and tools we need at our fingertips to create our own estate plan, right? For most people, this is simply not true. Several years ago, Consumer Reports®, an independent nonprofit consumer watchdog group, created wills using the forms provided by DIY websites and asked three law professors to review them. Although the professors found that the wills drafted using the DIY services were better than wills drafted by non-lawyers on their own, they were inadequate to fully meet the needs of most consumers. Although your DIY “estate plan” may initially cost only $49.95, it may end up being much more costly than an estate plan designed by an experienced estate planning attorney.  

The fact is, wills are only one part of a comprehensive estate plan that fully protects you and your family. Even if your DIY will meets all your state’s requirements and is legally valid, the will alone is unlikely to be sufficient to address all of your estate planning needs. Furthermore, DIY packages you can buy online that purport to be comprehensive may not include important documents you may be unaware that you need. Without expertise in a particular area, we simply don’t know what we don’t know—and this could lead to unnecessary heartache for you or the family and loved ones you will one day leave behind. 

Here are the top 5 most common pitfalls of the DIY approach:

1.  DIY estate plans may not conform to the applicable law. The law that applies to estate planning is determined by each state—and there can be wide variations in the law from state to state. Although the forms you can find on the internet may claim to conform to your state’s law, this may not always be the case. In addition, if you own property in another state or country, the laws in those jurisdictions may differ significantly, and your DIY estate plan may not adequately account for them.

2. A DIY estate plan could contain inaccurate, incomplete, or contradictory information. For example, if you create a will using an online questionnaire, there is the possibility that you may select the wrong option or leave out important information that could prevent your will from accomplishing your goals. In addition, some online services allow users to insert additional information not addressed by their questionnaire that could contradict other parts of the will.

3. Your DIY estate plan may not account for changing life circumstances and different scenarios that could arise. For example, if you create a will in which you leave everything to your two children, what happens if one of those children dies before you? Will that child’s share go entirely to his or her sibling—or will it go to the child’s offspring? What if one of your children accumulates a lot of debt? Is it okay with you if the money or property the indebted child inherits is vulnerable to claims of the child’s creditors? What if your will states your daughter will receive the family home as her only inheritance, but it is sold shortly before you die? Will she inherit nothing? As opposed to a computer program, an experienced estate planning attorney will help you think through the potential changes and contingencies that could have an impact on your estate plan and design a plan that prevents unintended results that could frustrate your estate planning goals.

4. DIYers frequently make mistakes in executing the plan. Under the law, there are certain requirements that must be met for wills and other estate planning documents to be legally valid. For example, a will typically requires the signatures of two witnesses, but state law differs regarding what is necessary for a will to be validly witnessed. Some states require not only that the will be signed by the will maker and the witnesses, but also that they all must sign the will in each other’s presence. In other states, witnesses are not required to be in the same room when the will maker signs the will, and they can even sign it later if the will maker tells them his or her signature is valid.  Similarly, for a valid power of attorney, some states require only the signature of the principal (the person who is granting the power of attorney) to be notarized, but some states require the signatures of both the principal and the agent (the person who will act on behalf of the principal) to be notarized. In other states, one or more witnesses are required—and these requirements may also differ depending upon the type of power of attorney (financial vs. medical) you are trying to execute. If you seek the help of an estate planning attorney, you can rest assured that all of the “i’s” are dotted and the “t’s” are crossed, and that your intentions will not be defeated because of mistakes made during the execution of your documents.

5. Assets may be left out of your estate plan. Many people do not realize that a trust is frequently a better estate planning tool than a will because it avoids expensive, time-consuming, and public court proceedings (i.e., the probate process) that would otherwise be necessary to transfer your money and property to your heirs after you pass away. Even if you have created a DIY trust, if you do not fund it, that is, transfer title of your money and property into the name of the trust, it will be ineffective, and your loved ones will still have to endure the probate process to finish what you started. Further, if you do initially transfer title of all your assets to the trust, it is likely you will acquire additional property or financial accounts over the years that must go through probate if title is not transferred to the trust. Regular meetings with an estate planning attorney can help ensure that your plan accomplishes your goals and that your grieving family members are not left with stressful decisions and challenges.

We Can Help

A DIY estate plan can lead to a false sense of security because it may not achieve what you think it does. If your DIY will is not valid, your property and money will go to heirs specified by state law—who may not be the people you would have chosen. An unfunded trust will be ineffective. Banks may not accept a generic power of attorney you found on the internet. Laws affecting your estate plan may change. These are just some of the mistakes or unforeseen issues that could cost your family dearly. An experienced estate planning attorney is aware of any trends in the law that could dramatically affect your estate plan and has the expertise needed to help you design and create a comprehensive plan.

Call Miller, Miller & Canby today at 301-762-5212 to schedule a meeting so we can help provide you and your family with the peace of mind that comes from knowing that you have an estate plan that accomplishes your goals and will avoid unnecessary attorneys’ fees, headaches, or conflict.

David A. Lucas
is an attorney in the Estates & Trusts and Business & Tax practice groups at Miller, Miller & Canby. He focuses his practice in Estate Planning and Trust and Estate Administration. He provides extensive estate and legacy planning, asset protection planning, and retirement planning.

Contact David at 301.762.5212 or via email. To learn more about Miller, Miller & Canby's Estates & Trusts practice click here.  


Four Incentives the SECURE Act Gives Small Business Owners

The “Setting Every Community Up for Retirement Enhancement” Act (“SECURE Act”) was signed into law at the end of 2019. The SECURE Act takes small, but impactful, steps towards addressing this country’s retirement crisis by incentivizing small business owners to sponsor retirement plans for their employees.

If you are a small business owner who has considered, or wanted, to offer a retirement plan for your employees but declined to do so because of costs or administrative burdens, now may be a good time to revisit this valuable employee benefit option. Below are four significant incentives the Act provides:

1. Broader Access for Employers
Historically, the cost, administrative burdens, and liability risks of running a sponsored retirement plan have been difficult for smaller companies to manage. Multiple-Employer Plans (MEPs) are appealing to business owners because they can reduce these problems, but many employers were left out due to the “common interest” requirement. Beginning in 2021, the “common interest” requirement will be removed and unrelated companies will be permitted to participate in and run MEPs through a pooled plan administrator. The SECURE Act also eliminates the “One Bad Apple” rule. Previously, this rule provided that a violation by one MEP participant disqualified the entire pool – this made employers understandably uneasy about joining a MEP. As a further boost, small business owners will see a substantial hike from the previous $500 tax credit offered to defray retirement package start-up costs. The tax credit has been increased to $5,000 a year for the next three tax years!
2. Incentives for Automatic Enrollment

Automatic enrollment is a great way to increase employee participation by encouraging them to start - and continue - saving. There is no doubt that lawmakers are pushing employers in that direction. An employee’s auto-enrollment contribution rate for certain plans used to be capped at 10%, but the cap has now been increased to 15% after an employee’s first year. By waiting until the employee’s second year for the increase, the SECURE Act is expected to reduce the number of individuals who drop out of plans due to high initial contribution amounts. The legislation also introduced a new tax credit (up to $500 a year for three years) for employers who launch new 401k and SIMPLE IRA plans with automatic enrollment.
3. Greater Inclusion for Part-time Employees
Many small businesses are staffed by part-time personnel, who, until now, had been essentially excluded from participating in their employer’s retirement benefits. Prior to the SECURE Act, part-time employees were required to log a minimum of 1,000 hours per year in order to qualify for their employer’s sponsored retirement plan. Beginning in 2021, a part-time employee will be allowed to participate in the retirement plan so long as they have worked at least 500 hours annually for three consecutive years. Although it may seem like an additional cost to add more individuals to a retirement plan, the SECURE Act does not require an employer to offer the same 401(k) benefits to a part-time employee as it would to a full-time worker. For example, an employer can choose to make matching contributions for its full-time employees, but opt to not offer matching to its part-time staff.
4. Safe Harbor for Annuities
While the benefits of annuities have been widely debated, some advisors find them to be helpful investment tools for retirement because they can provide a consistent stream of income at a future date. However, for the most part, annuities have been ignored in company-sponsored retirement packages due to the potential legal liability an employer could face in the future. Under prior law, an employer remained liable if an insurer didn’t follow through with making guaranteed payments to the employee - leaving the employer vulnerable to a future lawsuit. The SECURE Act now shifts this liability risk back to the insurance company (but only if the employer selects an annuity provider that meets several requirements). This feature now makes annuities a friendlier option for employers to include in a benefits plan.

The bottom line is: The incentives provided by the SECURE Act should encourage employers who may have been considering sponsoring a retirement plan, or were hesitant to look into it in the past, to take action.

David A. Lucas
is an attorney in Miller, Miller & Canby’s Estates & Trusts and Business & Tax practice groups. Give David a call today at 301-762-5212 to discuss how your business may benefit from the new provisions of the SECURE Act.

To learn more about Miller, Miller & Canby's Estates & Trusts practice click here.


Three Liability Planning Tips for Business Owners

The risk of liability is a very real concern for today’s business owners.  There are employment-related issues including wrongful termination, sexual harassment, and discrimination; careless business partners and employees; and contractual obligations that may include personal guarantees, leases, business agreements, etc.  There are also personal liabilities like divorce, vehicle accidents, and rental real estate.

Unfortunately, our litigious society necessitates that a broad range of people, including business owners, board members, real estate investors, private practitioners and retirees, should protect their hard-earned assets from a variety of liabilities. We have outlined some strategies for business owners and practitioners that may help provide protection from risk.

Key Take-aways to Protect Yourself from Risk:

●    Types of liability insurance you need to have in place;
●    State exemptions that will protect certain assets from the claims of creditors; and
●    The role of business entities in liability planning.

Tip #1 – Insurance is the First Line of Defense Against Liability

Liability insurance is the first line of defense against any claim.  Liability insurance provides a source of funds to pay legal fees as well as settlements or judgments.

The types of insurance you should consider include:

●    Homeowner’s insurance
●    Property and casualty insurance
●    Excess liability insurance (also known as “umbrella” insurance)
●    Automobile and other vehicle (motorcycle, boat, airplane) insurance
●    General business insurance
●    Professional liability insurance
●    Director and officer insurance

Planning Tip:  Never rely on insurance as your sole means of liability protection since the cost of a comprehensive policy may be prohibitive, and each type of policy has numerous exceptions to coverage.  Instead, you should use insurance as one of a multiple layer of strategies designed to place a barrier between your business and personal assets and the claims of a plaintiff.  Moreover, it is important to work with an insurance professional who can explain the purpose of each type of coverage, make recommendations for liability limits and deductibles, and help you consider the most cost-effective coverage on an annual basis.

Tip #2 – State Law Exemptions Protect a Variety of Personal Assets from Lawsuits

Each state has a set of laws or constitutional provisions that partially or completely exempt certain types of assets from the claims of creditors.  While these laws vary widely from one state to the next, in general, the following types of assets may be protected from a creditor seeking to enforce a judgment against you:

●    Primary residence (referred to as “homestead” protection in some states)
●    Qualified retirement plans (401(k)s, profit sharing plans, money purchase plans, IRAs)
●    Life insurance (cash value)
●    Annuities
●    Property co-owned with a spouse as “tenants by the entirety” (only available to married couples; and may only apply to real estate, not personal property, in some states)
●    Wages
●    Prepaid college plans
●    Section 529 plans (“college savings plan”)
●    Disability insurance payments
●    Social Security benefits

Planning Tip:  If you reside in Maryland or the District of Columbia, Miller, Miller & Canby’s attorneys can help you determine which exemptions are available to you and how much protection they provide.  Our business and estate planning attorneys can also help you understand the pros and cons of each type of exemption.  For example, while tenants by the entirety co-ownership of real property between you and your spouse is simple and may make sense in the short term; in the long run, if you divorce or one spouse dies, the protection provided by tenants by the entirety co-ownership ends, thus making it completely useless.  As with liability insurance, exemption planning is best used as one layer of an overall asset protection strategy.

Tip #3 – Business Entities Protect Business and Personal Assets from Lawsuits

The various types of business entities include partnerships, limited liability companies, and corporations.  Business owners need to mitigate the risks and liabilities associated with owning a business. Business entities can also help real estate investors mitigate the risks and liabilities associated with owning real estate.  The right structure for your enterprise should take into consideration asset protection, income taxes, estate planning, retirement funding, and business succession goals.

Business entities can also be an effective tool for protecting your personal assets from lawsuits.  In many states, in addition to the protections offered by incorporating, assets held within a limited partnership or a limited liability company are protected from the personal creditors of an owner.  Depending on the type of business entity and the state of formation, the personal creditors of an owner may be prevented from taking control of the business.  Instead, the creditor is limited to a “charging order” which only gives the creditor the rights of an assignee.  This is beneficial to the owners, because an assignee generally only receives distributions from an entity if, and when, the distributions are made.
Planning Tip:  Creating a business entity that protects your assets from lawsuits involves much more than just filling out some forms with the state and paying an annual fee.  Business formalities must be observed and documented, otherwise a creditor can attack the entity through “veil piercing” or “alter ego” arguments, which could result in personal liability for your business’s actions or debts.  Additionally, state laws governing business entities vary widely and are constantly changing due to legislative action and court decisions.  As a result, it is critical to properly chronicle business activities and modify the business’s governing documents as applicable laws change. 

Miller, Miller & Canby’s business law attorneys can help you remain in compliance to thwart any potential challenges to your entity.  And remember, as with liability insurance and state law exemptions, the use of business entities is just another layer of an overall asset protection strategy that should coordinate with other asset protection strategies.

Protecting Your Assets

We highly recommend that liability insurance, state law exemption planning, and business entities be used together to create a multi-layered asset protection plan.  The business & estate planning attorneys at Miller, Miller & Canby are experienced with helping business owners, real estate investors, board members, retirees, physicians, practitioners, and others create and maintain effective liability protection plans.

David A. Lucas
is an attorney in the MM&C's Estates & Trusts and Business & Tax practice groups, focusing his practice in Estate Planning, and Trust and Estate Administration. He provides extensive estate and legacy planning, asset protection planning, and retirement planning. To learn more about Miller, Miller & Canby's Estates & Trusts practice click here

Chris Young
is an associate in the Business & Tax practice at Miller, Miller & Canby. He focuses his practice on corporate legal agreements, business formation, tax controversy work and helping clients deal with new tax regulations. View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.

Commercial Property Owners Have Until February 10th to Appeal New Maryland Property Tax Assessments

At the end of December, the Maryland Department of Assessments and Taxation (SDAT) issued new Assessment Notices to owners of one-third of all commercial and residential properties in Maryland. For instance, in Montgomery County, commercial properties in Bethesda, Potomac and Germantown were reassessed.  In Anne Arundel County, commercial properties in Annapolis, Glen Burnie and Linthicum were reassessed. In Frederick County, commercial properties in and around downtown Frederick were reassessed. In Prince George’s County, commercial properties in Beltsville, Laurel, Clinton and Upper Marlboro were reassessed.

Property owners have 45 days from the date of the Assessment Notice to challenge these new assessments.  Based on the notices we have seen this cycle, the appeal deadline is February 10, 2020, although this could vary depending upon the notice date. The “first-level” appeal takes place at the local Assessment Office. If the assessor refuses to reduce the assessment, the owner may file a further appeal to the county’s Property Tax Assessment Appeals Board (PTAAB).  This Board will consider the evidence and issue a written decision, usually within two weeks. If the property owner is still dissatisfied, another appeal may be filed to the Maryland Tax Court.

Miller, Miller & Canby has been challenging the assessments of various types of properties in Maryland for more than 30 years and has obtained substantial reductions in real property assessments for our clients. Our litigation attorneys regularly represent clients before the local Assessment Office, PTAAB and the Maryland Tax Court.  We have successfully appealed the assessments on office buildings, retail stores, senior living centers, warehouses, industrial sites, casinos, apartment buildings and cemeteries.  Let us help you reduce your Maryland property assessments in 2020.

Michael Campbell
is a partner in the litigation group at Miller, Miller & Canby.  In addition to trial and appellate advocacy, his practice focuses on real estate litigation and property tax assessment appeals. Please feel free to contact Mr. Campbell at 301.762.5212 or send him an email for property tax guidance or to help reduce your commercial Maryland property tax assessment.  For more information about the firm’s Maryland property tax appeals practice and representative cases, click here.

The 3 Types of Real Estate Co-ownership in Maryland: What Every Owner Should Know

Do you co-own, or are you planning to co-own, real estate in Maryland?  Perhaps you are married or planning to marry, you are acquiring property with others, or you have inherited a property along with others.  There are many decisions to make when considering real estate co-ownership, one of which is the type of co-ownership you should enter into, referred to legally as your estate in the property.  In fact, as circumstances change, you may benefit by changing your type of co-ownership.  However valid your reason for sharing ownership in a given property may be, you should clearly understand the type of co-ownership you have, because it matters a great deal more than you may realize. 

Consider these three important questions:

  • Can you convey your share of the property by gift or sale, or devise it in a will, without consent of your co-owners?
  • Is your property vulnerable to a creditor who may be actively seeking to collect on a personal debt you owe, or on the debt of a co-owner?
  • What happens to your property interest in the event of a divorce or death?

There are three types of real estate co-ownership in Maryland:  Joint Tenancy, Tenancy by the Entirety (a.k.a. Tenancy by the Entireties) for married couples and Tenancy in Common.

  1. JOINT TENANCY is when two or more co-owners simultaneously have an interest in the whole property, as well as a separate, undivided individual interest.  Each Joint Tenant enjoys a shared right of possession to the whole property, while holding title to a portion of it.  Joint Tenancy requires that the Joint Tenants acquire their interests at the same time, by the same instrument (e.g. deed or will) and in equal interests.  The hallmark of Joint Tenancy is a right of survivorship.  When one Joint Tenant dies, by operation of law the decedent’s interest is automatically transferred proportionally amongst the surviving Joint Tenants.  The intent to form a Joint Tenancy must be clearly expressed in the instrument.  If the instrument does not contain the words “Joint Tenants” or “Joint Tenancy,” it must otherwise clearly intend a right of survivorship.

    Pros & Cons of Joint Tenancy:  In one sense a right of survivorship is an advantage, because there is no need to record a deed verifying that the survivor(s) now owns the decedent’s interest.  However, this also means that a Joint Tenant cannot devise her property interest to her heirs.  Joint Tenants are only responsible for their respective share of cost of maintaining the property, such as property taxes, mortgage and insurance.  Moreover, Joint Tenants are entitled to share proportionally in any income the property earns.  Also, if a Joint Tenant incurs a debt unrelated to the property, any resulting judgment lien is only against her apportioned interest in the property.  However, if a judgment creditor successfully levies the property within the debtor Joint Tenant’s lifetime, the other Joint Tenants may suffer the consequences of either a forced sale or partitioning (physical division) of the property.  A Joint Tenant retains the right to sell or gift his/her interest in the property without permission of the other Joint Tenants, but in doing so, the Joint Tenancy is severed, creating a Tenancy in Common with the remaining Joint Tenants.  In Maryland, a Joint Tenant’s mortgage of his/her property interest also converts his/her co-ownership into a Tenancy in Common.  Finally, an individual Joint Tenant may file a lawsuit to potentially force a partition of the property, or a sale in lieu of partition, in which case the proceeds are distributed amongst the Joint Tenants.
  2. TENANCY BY THE ENTIRETY is a form of Joint Tenancy recognized under common law for married couples.  In Maryland, couples who are married when executing the deed to a property are presumed to take title as Tenants by the Entirety unless otherwise provided in the instrument.  However, if two persons marry while already owning property together as Joint Tenants, their ownership is not automatically converted into a Tenancy by the Entirety. They must update their deed. Conversely, when the Court grants an absolute divorce, the Tenancy by the Entirety is severed by operation of law and their co-ownership is converted into a Tenancy in Common, thus extinguishing the right of survivorship.

    Pros & Cons of Tenancy by the Entirety:  Under a Tenancy by the Entirety there is only one shared interest between the married co-owners, consequently one spouse cannot sell or otherwise convey the property without the consent of the other.  Also, if only one spouse owes a debt to a creditor, that creditor cannot force a sale to satisfy the debt; the property is shielded from the debts of one spouse.
  3. TENANCY IN COMMON differs from Joint Tenancy in that each co-owner has a divisible interest in the property, and there is no right of survivorship.  When a Tenancy in Common is formed, the property interests will be apportioned equally between the Tenants in Common, unless allocation is otherwise specified.  Any property granted to two or more unmarried persons is a Tenancy in Common unless there is a clear intention in the instrument to form a Joint Tenancy.

    Pros & Cons of Tenancy in Common:  A Tenant in Common may convey, encumber and devise his/her property interest as he/she wishes without the consent of the other co-owners.  However, a Tenant in Common’s interest in the property is susceptible to liens and judgments.

As a co-owner in any arrangement, you should understand the ramifications of your type of co-ownership.  This is particularly true when facing litigation. It is important to consult a professional to review your deed, and discuss how your property interest may be impacted if you are facing litigation or other situation.

James (Jamie) Roth is an Associate in the Litigation Practice Group at Miller, Miller & Canby. He concentrates his practice in real estate litigation with a focus in eminent domain, as well as business and commercial litigation. He has enjoyed a long-standing and distinguished career as a successful real estate consultant, including more than twenty years of private and public sector experience in project management, strategic planning, asset management and risk mitigation.  

Contact Jamie at 301.762.5251 or via email.

For more information on Miller, Miller & Canby’s Real Estate Litigation Practice, click here.

DISCLAIMER - This article is offered as an overview for educational purposes, it is not a comprehensive coverage of the law, and it is not a substitute for an attorney’s consultation.


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