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Understanding business formation: General partnerships - II

In a previous post, we began discussing how nascent entrepreneurs here in Utah will need to make a host of important decisions when they decide to bring a product or service to market from the financial and the tactical to the logistical and, of course, the legal.  

Regarding this last point, we began discussing how entrepreneurs have a host of business formation options here in Utah and how many elect to go with the platform of the general partnership. We'll continue this discussion in today's post, providing more background information about this method of organizing a for-profit business.

Understanding business formation: General partnerships

When a group of individuals comes together with a plan to market a product or provide a service for which they believe there is consumer demand, they will be confronted almost immediately with the need to make a multitude of important decisions.

For instance, these budding entrepreneurs will have to decide where they want to set up operations, how many people they need to hire and whether it will prove necessary to secure a loan. Outside of these logistical and financial matters, there are also many legal issues that must be addressed, including how they would like to organize their for-profit business.

Prescriptive Rights Presumed if Use Over Twenty Years

To establish a prescriptive easement, a person must show, "by clear and convincing evidence," Buckley v. Cox, 247 P.2d 277, 279-80 (Utah 1952), that his "use of another's land was open, continuous, and adverse under a claim of right for a period of twenty years." Valcarce v. Fitzgerald, 961 P.2d 305, 311 (Utah 1998); see also Orton v. Carter, 970 P.2d 1254, 1258 (Utah 1998). However, "once a claimant has shown an open and continuous use of the land under claim of right for the twenty-year prescriptive period, the use will be presumed to have been adverse." Id. The burden then shifts to the property owner who opposes the easement to "establish[] that the use was initially permissive." Id. at 311-12. Each of the elements of prescriptive easement must be proven by clear and convincing evidence. Lunt v. Lance, 2008 UT App 192, ¶ 18, 186 P.3d 978.

RESTRICTIVE COVENANTS AS SIMPLE CONTRACTS

The Utah Supreme Court strengthened the power of an owner's association and a homeowner's association governing board to enforce the restrictive covenants against individual lot owners. In Fort Pierce Industrial Park Phases II, III & IV Owners Association v. Shakespeare, 2016 UT 28, the Utah Supreme Court rejected the notion that "restrictive covenants are not favored in the law and are strictly construed in favor of the free and unrestricted use of property." St. Benedict's Development Co. v. St. Benedict's Hospital, 811 P.2d 194 (Utah 1991). While not exactly overruling St. Benedict, the Utah Supreme Court made clear that in construing restrictive covenants, "the rules of construction used for contracts" applies. Fort Pierce, 2016 UT 28, ¶¶ 8, 32. As demonstrated in Fort Pierce, that puts the governing board on equal footing with the homeowner or lot owner in interpreting what the restrictive covenants mean. Further, the court held that decisions of the governing board are afforded a "presumption of reasonableness." Id. ¶ 28. That means the lot or homeowner has the burden of overcoming that presumption before a decision of the governing board is overturned. After the Fort Pierce case, the governing board's ability to enforce the restrictive covenants and its decisions in interpreting them are markedly strengthened.

Holding a Person in Contempt for Violating a Utah Divorce Decree

What are your options if your ex-spouse violates the divorce decree? Perhaps she refuses to pay child support, or he is behind on his alimony payments. Or perhaps she refuses to pay the credit card debt allocated to her in the decree, or he interferes with your parent-time. If so, you have a relatively quick and effective tool to fix the problem. The Utah divorce attorneys at Snow Jensen & Reece can help you file the necessary paperwork to enforce the decree.

DIVORCE AND THE IRREVOCABLE TRUST

Curiously, in Dahl v. Dahl, 2015 WL 5098249, although the Utah Supreme Court emphasized the strong public policy in Utah to divide marital estates equitably such that a trust cannot hide assets of the marriage, the Court determined that Ms. Dahl could only withdraw from the trust those assets she contributed to the trust. Id. ¶ 34. Thus, Dr. Dahl was allowed to contribute property to the irrevocable trust that remained his separate property. True, the trial court could give all of Ms. Dahl's contributions to her to offset whatever property remained in the trust, but this ruling leaves open the door for a creative spouse to plan a divorce by placing assets in an irrevocable trust and keeping them outside the marital estate-effectively picking and choosing what assets he or she wants and possibly even obtaining the lion's share of the assets if the trust is properly done. Respectfully, the Utah Supreme Court ignores the reality that any asset created during the marriage is created through the labor and effort of both parties even though one party alone may physically create the asset or the asset is titled in only one party's name. Dr. Dahl was able to work and create property because Ms. Dahl stayed home and reared their two children. Assets that he created through marital labor should be considered marital assets and even though he may separately contribute them to the trust, the contribution should be considered a marital contribution making both parties settlors to the trust with both having full ownership and rights as settlors. The case is good because it states Utah's public policy with regard to marital division and even overrides express choice of law language in the irrevocable trust drafted under Nevada law, and it applies Utah law making the trust revocable. But the determination that effectively one spouse can secret assets into an irrevocable trust following a lengthy marriage is fodder for mischief. Hopefully, the Court corrects this before it makes the opinion final and subject to formal publication.

Talk to an attorney when composing your estate plan

Estate planning is very complex, and to properly implement a plan that protects your estate and preserves your last wishes so that your loved ones can thrive after you are gone is a very difficult task to complete -- especially on your own. Estate planning isn't the only thing you need to worry about. You want to make sure that your estate is being administered properly and that you have the right people in the right place to take care of you and your loved ones.

But estate planning is a huge mountain to climb. It isn't something that you can simply will your way through (no pun intended). Most people need help taking their first steps towards achieving a thorough estate plan.

What You Should Know About Alimony in Utah

As if the emotional toll of divorce weren't enough, the financial aspect can be devastating. A crucial task your Utah divorce lawyer must help you tackle from the get-go is to separate the emotional aspect of the case from the financial one. Let's examine this separation in the context of alimony.

What you need to know about non-competition agreements

Having your "ducks in a row" is absolutely critical when running a business. If you aren't handling important issues in a timely manner, or if your documents lack the compliance and completeness that they need to be enforceable, then your company could be at risk. We could write pages and pages on this topic, but today we're just going to look at a small piece of what we are talking about. Today, let's talk about non-competition agreements.

Many companies make their new employees sign non-competition agreements when they are hired. These contracts tell the employee that they are forbidden from revealing trade secrets and company information to competitors and other companies. In exchange, the individual is given employment.

What assets can be transferred outside of probate

In the state of Utah, the purpose of probate proceeding is to enact an orderly process where the assets of a deceased person are legally transferred to other people, usually a person’s heirs and beneficiaries. Order is key in probate, because of the disputes that can arise over who is the rightful owner of a loved one’s assets.

Because of this, it is helpful to know what assets can be transferred without the need for probate. This post will highlight a few of them.