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This Halloween, as we face our fears and approach the end of the year, we thought it would be a good time to talk about DEBT. At its most basic, “debt” is a consumer’s obligation to pay money arising out of a transaction. Pretty much everyone deals with debt in their lives. If you use credit cards, have a mortgage on your house, have a car loan, or pay student loans, you have debt.
Although debt is common, it can become a problem when you are no longer able to meet your various financial obligations. Maybe you unexpectedly lost your job or had to receive unplanned medical care. Maybe you had an expensive appliance break or experienced a natural disaster. Or maybe it’s just been a challenging year. For whatever reason, many people will face a financial crisis at some point.
Being proactive about your debt problems can be a good strategy to prevent a bad situation from getting worse. Here are six ideas to consider if you are feeling overwhelmed by your debt.
Knowing the terms of your agreement may be particularly useful if you have secured debt. Debt may be unsecured, i.e. not attached to a particular asset, or secured. Secured debt is debt that is backed by “collateral,” or in other words, an asset, like your car or your house. The collateral is designed to reduce the risk of lending to you. If you default on your obligation to pay, the asset securing the transaction may be repossessed or foreclosed upon. You will want to read your contract carefully to see what the creditor’s rights are when you do not make a full payment and whether there is any grace period built into your agreement.
There are potential risks to using one of these services and you always want to be mindful of possible scams. The FTC has a more in-depth guide on “Coping with Debt” that walks through the pros and cons of using debt relief services or pursuing debt settlement.
However, you should know that the federal Fair Debt Collection Practices Act (FDCPA) affords you certain protections in dealing with a debt collector. There are limits on when and how a debt collector can contact you. For example, a debt collector cannot generally call you before 8:00 AM or after 9:00 PM, and they must honor your written request to stop further contact. Debt collectors are not allowed to harass you, lie, or use unfair practices in trying to collect your debt. You can check out the full FDCPA here or read more about Debt Collection FAQs from the FTC.
The Consumer Financial Protection Bureau (CFPB) also has sample letters on how to respond to debt collectors, including how to request more information, state you do not owe the debt, and ask the debt collector to stop contacting you.
Here at the Lawyer Referral and Information Service, we are happy to provide you with a referral to a private attorney with experience in bankruptcy, debt collection, or consumer protection. The attorney will provide an initial free consultation and then let you know how much their services might cost. Just give us a call at (865) 522-7501 or contact us online at www.knoxbar.org/referral to get your free referral today.
Additional resources
Government Resources
More General Information
If you’re looking for a lawyer and just don’t know where to start, the Knoxville Bar Association’s LRIS is a great place to begin. We match you with a lawyer that suits your needs. Our trusted attorneys provide you with a free consultation so that you can decide if it’s the right fit. Want to learn more? Call us at (865) 522-7501 or visit knoxbar.org/lawyerfinder.
The materials contained in this blog are intended to, and do, provide only a broad overview of various legal topics. The general information contained in this material is not designed nor intended to be a substitute for legal advice on a specific legal issue or question. In addition, the information provided in this material is only general advice and may not be applicable to apparent similar individual problems, since only slight changes in facts change the applicable advice. If you have a legal problem or question, please consult an attorney.
Any publication, distribution, or other use of these materials without the express written consent of the Knoxville Bar Association is prohibited.
If you are a residential tenant or landlord, then you likely want to know more about the Center for Disease Control and Prevention’s (CDC) recent national, temporary moratorium on evictions in response to the COVID-19 pandemic. We have crafted this blog post to answer some of your questions.
What is the temporary eviction moratorium and when does it start? For the next four months, from September 4th to December 31st, evictions are not allowed nationally under specific circumstances covered by the CDC’s Order.
Who is covered by the temporary eviction moratorium? Broadly, the temporary eviction moratorium applies to tenants with residential leases who expect to make less than $99,000 in annual income for the 2020 calendar year (or $198,000 if filing a joint tax return). The moratorium also applies to residential tenants who were not required to report any income to the IRS in 2019 or received a stimulus payment this year under the CARES Act.
But to qualify for the protections of the Order, there are several additional requirements. Residential tenants must provide their landlords with a formal declaration stating that they 1) have used their “best efforts” to get all available government assistance for rent or housing; 2) are unable to make a full payment for one of several reasons; 3) are making their “best efforts” to make timely partial payments under their individual circumstances; and 4) would likely be homeless, have to move into a homeless shelter, or have to move into a shared residence with people living in close quarters because they have no other available housing options.
Here are some exceptions, though:
What is the required Declaration? It is important to know that the protections of the Order are not automatic. Rather, tenants attempting to use the Order to prevent evictions are required to give their landlords a formal Declaration under penalty of perjury. Each adult listed on the lease agreement is required to execute a Declaration. Making false or misleading statements or omissions in the Declaration could expose tenants to civil fines or even criminal prosecution. You can find the declaration form on the CDC’s website.
Do tenants not have to pay their rent for the next four months? No, tenants still have an obligation to pay their rent, and the terms of their lease agreements/contracts still generally apply. In fact, tenants need to make their best efforts to make timely partial payments that are as close to the full payment as the tenants’ circumstances allow. If tenants do not pay their full rent on time, the Order permits landlords to charge or collect fees, penalties, or interest under the terms of their lease agreements/contract.
If the moratorium is not extended past December 31, 2020, landlords impacted by the Order will be able to pursue evictions for failure to pay rent then. State and local governments are also permitted to enact more rights protective provisions as well, so stay tuned to the actions of Tennessee state and local governments.
What are the penalties for landlords under the Order? Landlords should realize that the CDC’s Order has teeth. Persons or organizations violating the Order may be subject to large fines and/or jail time.
Is this moratorium lawful? We anticipate future litigation about this question. The CDC cites the Public Health Service Act as authorization for its action, but we expect to see legal challenges as to whether the CDC exceeded the scope of its authority or violated some provision of the constitution or administrative law.
Do I need an attorney? You might! We foresee both tenants and landlords needing legal help to navigate the provisions of the CDC’s Order. There are many “terms of art” used in the Order – like “best efforts” – that attorneys may be able to interpret for you or challenge in court. We anticipate the Order being used as a possible sword or shield depending on the facts of the case, and an attorney will be best positioned to guide you through your legal options.
Are you…
These are just some of the issues where an attorney’s assistance might be vital.
If you are considering hiring a private attorney to help with an issue related to the CDC’s Order, contact us today for a free referral and initial consultation at (865) 522-7501 or online at www.knoxbar.org/lawyerfinder.
If cannot afford a private attorney, please contact your local Legal Aid office. For Knoxville, call Legal Aid of East Tennessee at (865) 637-0484 or visit their website at www.laet.org. Also, the Legal Aid Society of Middle Tennessee and the Cumberlands is directing tenants to https://www.covid19evictionforms.com/ for help filling out the required Declaration.
Additional Resources
This blog post, while designed to be informative, is not a replacement for legal advice. Please consult an attorney about your legal issues related to the temporary eviction moratorium.
With the ongoing impacts of COVID-19, how much of our lives have we put on hold? When the crisis first hit Knox County in mid-March, everything seemed to freeze, including our court system. Judicial evictions for non-payment of rent were temporarily paused absent extraordinary circumstances. Filing deadlines and statutes of limitation were extended. Jury trials were delayed, and hearings were continued. Even reaching a live person on the phone might have felt impossible. If you decided to wait to file that lawsuit you had in mind, you would have been in good company.
Things have changed. Five months later, Knox County courts have strived to establish a new normal. After being closed for all in-person matters for eight weeks this spring, Fifth General Sessions (Civil) has been fully reopened since early May. Tennessee courts generally resumed hearing eviction matters on June 1st.[1] Various statutory, administrative, and court rule deadlines were extended through June 5th, but not beyond.[2] The extension of orders of protection and temporary injunctions through June 15th has ended,[3] and the suspension of jury trials during the state of emergency lifted in early July.[4] While in-person contact may be limited in judges’ and court clerks’ offices, they are nevertheless required to remain open for business.[5] In many ways, the spring freeze of court operations has thoroughly thawed.
Because the courts lost several months of full operation, you might expect delays in filing new cases. However, as Esther Roberts, judicial clerk with the Knox County General Sessions Courts, reports, “There is no backlog per se.” Yes, cases from the spring were reset, and the courts are now trying to ensure proper social distancing protocols are being followed; but as a general rule, the court system is endeavoring to provide timely access.
Although the Knox County courts are operational, your experience in the courtroom will be different in the COVID-19 era. Several precautions have been adopted to make courtrooms safer. There are permanently installed “sneeze guards” in all the General Sessions courtrooms. There are also “social distancing” seating arrangements and temporary docket caps to allow individuals to stay as far apart as practicable. This summer Fifth General Sessions temporarily moved to a larger location in the Main Assembly Room of the City-County Building to allow larger dockets while still keeping social distancing guidelines in place. The Tennessee Supreme Court has ordered facial coverings to be worn by everyone at all times while inside the courthouse.[6]
Outside of the courtroom, Knox County General Sessions Courts have also taken additional precautions. In criminal cases, for example, the courts are offering video plea technology for defendants who are interested in entering a plea remotely. The Tennessee Supreme Court is actively encouraging local court systems to use technology whenever possible to reduce in-person contact and court time.[7] The court system has frequently advised attorneys to prepare their cases outside of the courtroom as much as possible.
Of course, as the pandemic evolves, the governmental and judicial responses will also likely evolve. As of this writing, federal protections from the CARES Act prohibiting certain evictions have lapsed[8] and our federal leaders have not come to an agreement about the next coronavirus bill. If and when a new federal coronavirus bill is enacted, you may want to turn to a trusted source of information to check how it might affect the local courts. The Knoxville Bar Association’s COVID-19 resource page is regularly updated with news from the courts and other legal developments: https://www.knoxbar.org/COVID-19. For questions specifically about Fifth General Sessions (Civil), feel free to contact the Court Clerk Charlie Susano at (865) 215-4038.
Bottom line: If you are still sitting on a potential lawsuit, stop waiting! While there are noticeable changes in Knox County courts, the courts are also hearing cases and no longer extending deadlines. Call the Knoxville Bar Association’s Lawyer Referral and Information Service today to get referred to a private attorney for an initial, free consultation: (865) 522-7501.
[1] Supreme Court of Tennessee, Order Extending State of Emergency and Easing Suspension of In-Person Court Proceedings, No. ADM2020-00428, filed May 26, 2020. Accessible online at https://www.tncourts.gov/sites/default/files/docs/tsc_order_5-26.pdf.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Supreme Court of Tennessee, Order Regarding Face Coverings, No. ADM2020-00428, filed July 9, 2020. Accessible online at http://tncourts.gov/sites/default/files/docs/order_regarding_face_coverings.pdf. There are exceptions to the requirement for children 12-years-old or younger and certain individuals for health-related reasons.
[7] Supra, Order Extending State of Emergency and Easing Suspension of In-Person Court Proceedings, No. ADM2020-00428
[8] “Courts Reopening and Evictions,” brochure provided by the Legal Aid Society of Middle Tennessee and the Cumberlands, accessible online at https://las.org/wp-content/uploads/2020/08/Courts-Reopen-Housing-Zac.pdf.
There are many competing perspectives on estate planning; some people recognize the importance, while others believe that they would not benefit from crafting one. If you have not started on an estate plan for you and your family, understand that you are certainly not alone. In fact, you are in the majority. We understand it can be uncomfortable to consider your own mortality and how it might affect your loved ones.
Another reason why many people do not have any estate-planning documents is because they believe that estate plans are only for the rich and elderly. The fact is that any adult – yes, even you! – can benefit from having an estate plan in place. Current events have shown us that everyone’s day-to-day routines and livelihoods can quickly and dramatically change. When life is turned upside down, the important things (like your children, spouse, and loved ones) tend to come into focus.
Wills
The Last Will and Testament (more commonly referred to as Wills) is probably the best-known estate planning document, and for good reason: the foundation of almost any estate plan is set with this form. A Will has many possible uses; it can:
Trusts
For people with fairly high net-worth estates, a trust can be a very important estate-planning tool. A trust is a legal document that sets up one place where the trustor can place multiple assets. While the trustor (creator of the trust) is still alive, he or she retains control over the items in the trust, acting as both the trustor and trustee. The trustor (sometimes called the “grantor”) also appoints a successor trustee who distributes the assets in the trust to the beneficiaries as desired by the trustor. One benefit of trusts is that you can avoid the federal estate tax if it applies.
Avoiding Probate Court
If you pass away without an estate plan, then your estate will most likely need to be settled through the Tennessee probate court system. This can be a long, expensive, and stressful process for your loved ones. Additionally, you risk having your assets distributed to individuals whom you would not want to receive them. One advantage of having a Will or trust (or both) is that you greatly reduce the time spent in probate court.
Conclusion
The best time to start on your estate plan is right now, while you are of sound mind and body. You never know what tomorrow might bring, which is why you need a plan today. The Knoxville Bar Association would be glad to connect you with an estate-planning attorney; reach out to us soon at 865-522-7501 to get the process started!
Many parents in shared-parenting arrangements are concerned about sending their child to the other parent’s home, thereby possibly exposing the child to other sources of COVID-19 infection. Do you have to comply with a Permanent Parenting Plan or court order, and what are the consequences if you don’t?
First, parents are allowed to modify the exchange schedules in a Permanent Parenting Plan if they do so by agreement. If you and the other parent both believe that a co-parenting schedule should be changed to protect your child, and you can agree to a temporary alternative plan, do it. As long as the change is agreed to by both parents there should be no consequences.
If a modification to a parenting plan is not agreed between the parents, either parent who fails to follow the plan may be subject to having the other parent file a petition in court to enforce the plan and/or to have the offending parent held in contempt of court. Do not assume that current stay at home orders from local or state government will protect you. Tennessee Executive Order 22 (March 30, 2020) and Executive Order 23 (April 2, 2020) both state that essential travel, not restricted by the orders, includes “travel required by law, law enforcement, or court order, including to transport children pursuant to a custody agreement.” A parent who violates an existing exchange order may claim immediate risk of harm to the child as a defense, but the general risk of community infection may not be enough to avoid being held in contempt.
It’s difficult to predict how courts will respond to requests for enforcement of parenting plans under these circumstances. If exchanging a child between parents creates an immediate risk of infection (i.e., someone in your home or the other parent’s home has been diagnosed positive for COVID-19 or has been knowingly exposed to it and is in quarantine), it’s unlikely any court would penalize a violation. If the risk from exchanging a child between households is not greater than the general community risk of infection, the best advice is follow the plan unless agreed otherwise.
It is our hope that this information will help you make appropriate decisions in your own circumstances. However, if you have specific questions or concerns for which you need guidance, we encourage you to seek advice from an attorney.
Ted Kern focuses his practice on family law. This column is provided through the Knoxville Bar Association, your trusted source for lawyer referrals. The KBA is a nonprofit corporation that offers community service programs such as the Lawyer Referral & Information Service, speakers’ bureau, and public education programs.
During these uncertain times brought about by the spread of Covid-19/the Coronavirus, many people have questions about the legal needs of loved ones who may be experiencing issues with diminished capacity or adult children with special needs. The following information is intended to provide some brief insight into Conservatorship actions in Tennessee but it is not legal advice. You should consult an attorney about your specific needs before taking any action.
Standard Conservatorships – A Conservator (sometimes called a guardian) is appointed by a court to perform specific functions on behalf of a person who has been declared legally incompetent (sometimes called a “ward”). The ward cannot revoke or change a court ordered conservatorship or overrule the conservator who has been appointed by the court. Only the conservator can perform the specific powers transferred to the conservator which have been removed from the ward by the court. A conservator only has the powers specified in the court order signed by the judge. These powers may be quite broad or very limited. The court must only transfer those powers that are necessary for the ward’s protection. A Conservatorship is a type of litigation. This proceeding is begun when a sworn petition requesting the appointment of a conservator and the transfer of specific powers to that conservator is filed in the proposed ward’s county of residence. The appointment of a conservator becomes effective after the court enters an order, following a hearing and letters of conservatorship are issued by the court clerk. The conservator may have to post a bond in order to be appointed. A sworn report from a physician who examined the ward within the last 90 days must be filed in support of the petition signed by the proposed conservator. The petitioner must prove with clear and convincing evidence that the ward requires a conservator.
Emergency Conservatorship – An emergency conservatorship can be obtained when the court finds that compliance with standard conservatorship proceedings is likely to result in “substantial harm to an individual’s heal, safety or welfare” and not other person, including a power of attorney or agent has authority or is willing to protect the individual. In these circumstances the court may appoint an emergency conservator whose authority may not exceed sixty (60) days and who may exercise only the powers specified in the order of appointment. While the court may appoint the emergency conservator without notice to the ward, the ward must receive notice of the appointment within 48 hours and the court is required to hold a hearing on the appropriateness of the appointment within five (5) days. At the end of sixty (60) days the emergency conservatorship terminates unless some other action is taken to either extend it or convert it to a standard conservatorship.
Hopefully, this information has been of assistance to you. If you have a question about any of these documents, we encourage you to seek legal advice.
When families experience a crisis event such as job loss, it can be hard to know how to get help. The Tennessee Justice Center and the Tennessee Supreme Court have taken steps to make it easier for individuals impacted by crisis to obtain the answers they need to obtain help.
The Tennessee Justice Center, a non-profit law firm based in Nashville that helps families access the basic necessities of life like healthcare and nutrition, has recently compiled COVID-19 related information on their website including links and topics regarding:
Visitors to their website will also find general information about the pandemic on their COVID updates page including the spread of the virus in TN, actions to take, and other helpful links.
Another organization, Justiceforalltn.org, an initiative of the Tennessee Supreme Court’s Access to Justice Commission, is also implementing innovative ways to help people find the answers they need, specifically with civil legal issues. “We are amazed at the resiliency and dedication our access to justice partners have shown in finding creative ways to deliver services to disadvantaged Tennesseans during these unprecedented times,” said J. William “Bill” Coley, chair of the ATJ Commission. “The Tennessee Supreme Court’s leadership in encouraging courts to be innovative to continue court operations is inspiring. We are using Help4TNDay to encourage the same level of innovation among our partners.”
There is already a statewide resource that allows attorneys to volunteer and help clients remotely. TN Free Legal Answers is an online platform that allows people who qualify to email their legal questions to a lawyer, who will respond with free legal advice. The ATJ Commission has partnered with the TN Alliance for Legal Services, the agency that administers the resource, in a coordinated public awareness campaign to promote TN Free Legal Answers to Tennesseans with civil legal problems.
Those with limited income who have a legal question may go to https://tn.freelegalanswers.org/ to see if they qualify and to post their question. In addition to TN Free Legal Answers, there are other statewide online resources for Tennesseans to use to connect with legal information and legal help.
COVID-19, also known as the Coronavirus, is significantly impacting small businesses in our state and across our country. In response, Congress’s third phase of its stimulus package is designed to combat this effect through the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or the “Act”). The CARES Act proposes to give relief to small businesses in the form of Small Business Interruption Loans, which will be administered under the existing Small Business Administration (“SBA”) Section 7(a) small business loan program. The new “Paycheck Protection Program” (“PPP” or the “Program”) expands Section 7(a) of the Small Business Act by providing forgivable loans to businesses with 500 or fewer employees. Another, separate loan option for businesses is the Economic Injury Disaster Assistance (“EIDL”) Loan, under Section 7(b).
A. What Businesses are Eligible, Section 7(a) PPP Loan
Small businesses, non-profits, and veteran organizations with fewer than 500 employees (unless the covered industry’s SBA size standard allows more than 500 employees) and that meet the eligibility factors. To determine eligibility, lenders look at whether the business (i) was in operation on February 15, 2020; and (ii) had employees for whom the borrower business paid salaries and payroll taxes.
The Act excludes nonprofit organizations from eligibility that receive Medicaid reimbursements, it does include sole proprietors, independent contractors and other self-employed individuals as eligible, and it provides an exception for businesses in the hospitality and dining industries with more than one physical location and with no more than 500 employees per physical location.
For hospitality and dining industry businesses with more than one physical location, if they employ 500 or fewer employees per location and are assigned to the “accommodation and food services” sector (Sector 72) under the North American Industry Classification System (NAICS), the businesses are eligible to receive a loan.
It is important to note that a borrower business who received a disaster loan under Section 7(b)(2) of the Small Business Act related to COVID-19 for purposes of paying payroll and providing payroll support would not be eligible for a Section 7(a) loan based on the same purposes/needs.
B. Loan Period
The loan period for this program began on February 15, 2020, and ends on June 30, 2020. This means that businesses can apply for the loan any time during that period, and the loan funds can be applied to costs incurred during that period, including retroactively.
C. Loan Forgiveness
The CARES Act provides a process by which borrower businesses would be eligible for loan forgiveness. The amount forgivable is equal to the amount spent by the borrower during an eight- week period after the origination date of the SBA loan on payroll costs, interest payments on any mortgage incurred prior to February 15, 2020, payments of rent on any lease in force prior to February 15, 2020, and payments to any utility for which service began before February 15, 2020. Note, group healthcare benefit payments and interest payments on other debt obligations are not forgivable amounts, although they are allowable uses. Ultimately, the amount forgiven will be reduced in proportion to any reduction in employees retained after the 8-week period compared to the prior year and to the reduction in the compensation of any employee beyond 25% of his or her prior year’s compensation.
To request forgiveness of the loan, borrower businesses will need to submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, along with documents showing payments on eligible mortgage, lease, and utility obligations. Borrower businesses must certify that the documents are true and that they used the forgiveness amount to keep employees and make eligible mortgage interest, rent and utility payments. The lender has 60 days in which to make a decision on forgiveness.
D. Loan Amounts
The maximum amount of each loan is either 2.5 times the amount of the applicant’s average monthly payroll, or a maximum loan amount of $10 million.
E. Loan Requirements
F. Allowable Uses for Loan
Businesses may, in addition to the existing uses allowed under the SBA’s Business Loan Program, use the loans for:
1. Payroll costs
This includes: compensation to employees, such as salary, wage, commissions, cash, etc.; paid leave; severance payments; payment for group health benefits, including insurance premiums; retirement benefits; state and local payroll taxes; and compensation to sole proprietors or independent contractors (including commission-based compensation) up to $100,000 in 1 year, prorated for the covered period;
Eligible payroll expense does not include individual employee compensation above $100,000 per year, prorated for the covered period; certain federal taxes; compensation to employees whose principal place of residence is outside of the US; and emergency sick and family leave wages for which credit is allowed under the Families First Act.
2. Group health care benefits during periods of paid sick, medical, or family leave, and the related insurance premiums;
3. Salaries, commissions, or similar compensations;
4. Payments of interest on mortgage obligations;
5. Rent/lease agreement payments;
6. Utilities; and
7. Interest on any other debt obligations incurred before the covered period.
G. Loan Interest
The interest rate on loans under section 7(a) is set at a maximum of 4%. There are no subsidy recoupment fees associated with the loans and no prepayment penalty for any payments made. The loans have a maximum maturity of 10 years, and an additional provision in the CARES Act provides for possible deferment of repayment of the loans for a period of at least six months, but not more than a year.
H. Refinancing
A loan made under the SBA’s Disaster Loan Program since January 31, 2020, may be refinanced as part of a covered loan under this new program as soon as these new loans are made available. The CARES Act specifically allows SBA Disaster Loan recipients with economic injury disaster loans made since January 31, 2020 for purposes other than the permitted loan uses under this program to receive assistance under this program.
I. Emergency Economic Injury Disaster Loan Program, Section 7(b)(2)
Separate from the Small Business Act 7(a) loan discussed above, the Act also relaxes/expands the requirements for a different loan available through the SBA. The Economic Injury Disaster Loan (“EIDL”) program is also available for small businesses that have sustained economic injury from COVID-19 and are located in a disaster declared area.
Each EIDL loan amount is limited to the business’s economic injury, which is determined by the SBA, and other factors such as business interruption insurance and potential contributions available to the business. Importantly, if the business is a “major” source of employment, the SBA may waive the $2 million maximum loan amount limit. EIDL loans may be used to pay fixed ordinary and necessary financial obligations that businesses are unable to pay as a direct result of the disaster – such as fixed debts, payroll, and accounts payable. The EIDL loan’s interest rate will depend on different factors set by law but will not exceed 3.75% and is set for the entire life of the loan. For non-profits, the interest rate will not exceed 2.75%. The EIDL loan’s repayment is extended over a longer period, up to 30 years, to ease the burden on businesses. EIDL loans over $25,000 require collateral, but loans cannot be denied if the applicant does not have any collateral to pledge. In that case, the applicant would be required to pledge what is available, and the SBA will take real estate as collateral when practicable.
The Act establishes an emergency grant to allow an eligible entity that has applied for an EIDL loan to request an advance on that loan of no more than $10,000, which the SBA must distribute within three days. An applicant would not be required to repay such an advance payment, even if it is subsequently denied an EIDL loan. Eligible entities would include startups, cooperatives and ESOPs with fewer than 500 employees, and any individual operating as a sole proprietor or an independent contractor. For EIDL loans made in response to COVID-19 before December 31, 2020, the SBA must waive any personal guarantee on advances and loans below $200,000, as well as the requirement that an applicant be in business for the one-year period before the disaster and the “credit elsewhere” requirement.
J. Express Loans
The SBA already has an Express Loan Program that provides loans within 36 hours. The CARES Act increases Express Loan amounts from $350,000 to $1,000,000 thorough the end of 2020.
K. When and Where to Apply for Loans
Businesses can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Businesses can visit www.sba.gov for a list of SBA lenders. Small businesses and sole proprietorships can apply starting April 3, 2020. Independent contractors and self-employed individuals can start applying April 10, 2020.
L. What Documents are Needed to Apply for Loans
Businesses will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender. The application can be found at www.sba.gov. Businesses will also need to provide payroll documentation to the lender.
Erica Green focuses her practice on employment law at Kramer Rayson LLP. This column is provided through the Knoxville Bar Association, your trusted source for lawyer referrals. The KBA is a nonprofit corporation that offers community service programs such as the Lawyer Referral & Information Service, speakers’ bureau, and public education programs.
It is never a bad time to think about estate planning; however, in the midst of COVID-19, also known as the Coronavirus, many individuals have questions regarding the various estate planning documents and what they may need. The following is a very brief overview of some of the various documents; however, this is not legal advice, and you should always consult qualified counsel before taking any action.
A. Last Will and Testament
A will is a legal document that details how you want your property and affairs to be handled upon your death. For a will to be valid, the individual, called a testator or testatrix, must be over 18 years old, of sound mind, and the testator or testatrix must sign the will in front of two witnesses, and those two witnesses must also sign the will in front of each other. While the two witnesses need not be disinterested witnesses, any interested witness is limited to what he/she can take under the will to that which he/she would have received had the testator died without a will. Accordingly, it is recommended that the two witnesses be disinterested to avoid unintended consequences.
Tennessee also recognizes what are called holographic wills, which is a will done in your own handwriting. It is important to note that you cannot type your will and then sign it. Tennessee law requires that the “material provisions” in such a will be handwritten; therefore, it is best to handwrite the entire document.
Tennessee also recognizes nuncupative wills (also sometimes called “deathbed wills”). Nuncupative wills may be made only by a person in imminent peril of death, whether from illness or otherwise, and shall be valid only if the testator died as a result of the impending peril. In order for a nuncupative will to be valid, it must be: (1) declared to be the testator’s will by the testator before two (2) disinterested witnesses; (2) reduced to writing by or under the direction of one (1) of the witnesses within thirty (30) days after such declaration; and (3) submitted for probate within six (6) months after the death of the testator. The nuncupative will may dispose of personal property only and to an aggregate value not exceeding one thousand dollars ($1,000), except that in the case of persons in active military, air or naval service in time of war the aggregate amount may be ten thousand dollars ($10,000). A nuncupative will neither revokes nor changes an existing written will. With the obvious limitations of a nuncupative will, it is certainly not the best choice unless it is the only choice available.
Certain assets under Tennessee law pass outside of Probate, meaning they will pass to a designated beneficiary without the necessity of having a will. Such assets include retirement accounts such as IRAs or 401ks, life insurance proceeds, property held in a living trust, funds in payable-on-death (POD) accounts, and securities registered in transfer-on-death (TOD) form. For such accounts, you can name a beneficiary, which is a person who you wish to receive such assets upon your death.
B. Living Will
A living will is a document that allows you to specify your decisions related to end of life care. This includes such things like whether or not you wish to be kept alive by artificial means and whether you wish to donate your organs. To make a living will, it must be in writing and signed by the individual in front of a notary public or signed in front of two witnesses without a notary public. If it is signed in front of two witnesses without a notary public, at least one of the witnesses must be disinterested. A disinterested witness, in this case, is a witness who is not related to the principal by blood, marriage, or adoption and would not be entitled to any portion of the estate of the principal upon the death of the principal under any will or codicil made by the principal existing at the time of execution of the declaration or by operation of law then existing.
C. Power of Attorney
A Power of Attorney is a way to grant another individual the power to make decisions for you. A Health Care Power of Attorney is a document that allows you to designate a person you wish to make medical and end of life decisions for you. A General Durable Power of Attorney is a document that allows you to grant another individual the power to make financial decisions for you. This would include such things like writing checks, selling or acquiring real property, managing bank accounts and insurance, etc. To be effective, a power of attorney must be signed by the individual in front of a notary or in front of two witnesses without a notary. If it is signed in front of two witnesses without a notary, at least one of those witnesses must be disinterested, meaning, in this case, that the witness is not related to the principal by blood, marriage, or adoption and would not be entitled to any portion of the estate of the principal upon the death of the principal under any will or codicil made by the principal existing at the time of execution of the durable power of attorney for health care or by operation of law then existing.
If you have a question about any of these documents, we encourage you to seek legal advice.
On March 18th President Trump signed the Families First Coronavirus Response Act. This new law requires certain employers to provide emergency limited paid and unpaid leave under the FMLA and emergency paid sick leave in certain limited circumstances. Some of the highlights are discussed below.
Beginning and End Date: Both the expanded FMLA and the emergency paid sick leave provisions take effect on April 2, 2020, and expire on December 31, 2020.
What Employers Are Covered? Both provisions apply to all employers with fewer than 500 employees, including public agencies. Both allow employers of an employee who is a healthcare provider or an emergency responder to elect to exclude the employee from these two provisions. Both also allow subsequent Department of Labor regulations to exempt small businesses with fewer than 50 employees if applying these provisions would jeopardize the viability of the business.
Who Is Eligible? Under the FMLA provision both full and part-time employees who have been on the employer’s payroll for 30 days are eligible. But the paid sick leave provision applies to all employees, regardless of length of service.
What reason qualifies for the FMLA expansion? This is limited to an employee who cannot work or telework due to the need to care for the employee’s minor son or daughter if the minor child’s school or place of childcare has been closed, or the childcare provider is unavailable due to a “public health emergency” with respect to COVID-19 declared by a federal, state or local authority. Basically, it is “caregiver leave”.
Is any of this expanded FMLA leave paid? Yes. The first 10 days (two weeks) are unpaid, but an employee can substitute accrued paid leave, including the new emergency paid sick leave. The remaining leave ( a maximum of 10 weeks, as the total available is still 12 weeks) is paid at 2/3 of the employee’s regular rate, for the number of hours the employee would be otherwise scheduled to work. This pay is capped at $200 a day and $10,000 total.
Is expanded FMLA leave job protected? Yes, the employee must be restored to the same or equivalent position. However, there is an exception for employers with less than 25 employees, if the employee’s position no longer exists due to operational changes related to the public health emergency, such as a reduction in force or restructuring because of a downturn in business.
What qualifies for emergency paid sick leave? The inability to work or telework due to any of the following:
How much emergency paid sick leave is required? 80 hours maximum, but available immediately, so no accrual requirement. Paid at the regular rate of pay for reasons 1-3 above (employee is sick), with a maximum of $511 a day and $5,110 in total. For reasons 4-6 above (caregiver reasons) it is paid at 2/3 the regular rate of pay, with a maximum of $200 a day and $2,000 in total.
Can I require employees to use paid leave under an existing policy before using this new emergency paid leave? No. The emergency paid leave is supplemental.
Does the unused emergency sick leave carryover? No, the unused leave does not carryover to the next year. It also does not have to be paid upon termination under this law, but your state law might require it to be paid, so check that before you make a final decision. Under current Tennessee law, so long as you state in the policy that it will not be paid upon termination you do not have to pay it.
Do I get a tax break? Potentially under both the expanded FMLA and the emergency sick leave provisions. Talk with a tax lawyer, or your accountant.
Of course, you cannot retaliate against an employee for exercising his or her rights under these new laws. You will also have to post a Notice detailing these laws, and the Department of Labor is in the process of drafting that Notice.
There are a lot of issues and open questions with these sweeping changes. Hopefully, this guidance will help you navigate these uncharted waters.
Chad Hatmaker focuses his practice on employment law and commercial litigation and he is a Member of Woolf McClane. This column is provided through the Knoxville Bar Association, your trusted source for lawyer referrals. The KBA is a nonprofit corporation that offers community service programs such as the Lawyer Referral & Information Service, speakers’ bureau and public education programs.
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