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Are You a California Resident?

Are You a California Resident?

Many people believe that as long as they are outside the state of California for six months and a day they are not residents of California. And thus don’t have to pay California’s high income taxes. But the state of California is both broke and arrogant. And they make the rules the way they want.

Design Your Asset Protection Plan

Design Your Asset Protection Plan

You design a lot of things in your life. The layout of your house, the flow of your business, the requirements on your children, and many more scenarios are all elements of conscious design. Asset protection is no different. There is an architecture, a cohesive...

Corporate Opportunities

Corporate Opportunities

Does the Rule Apply to Real Estate? If you invest in and/or syndicate real estate what are the duties to your investors? You owe them a duty of loyalty. But how far does that go? The issue of corporate opportunities is important. I wrote a whole chapter on it (from...

The Duties You Owe

When you own, run or manage a company you have certain duties. You owe a duty to the others involved as well as a duty to the company itself. At its core these duties require you to act with ‘due care.’ Courts have held that this means the degree of care that an ordinarily prudent person in a similar position would exercise under the same circumstances.

So does ‘due care’ mean running the company as if it is your personal piggy bank without regard to the interests of other shareholders? Of course not.

But is due care making decisions that benefit the company instead of the shareholders? That is a tougher case. The answer is found in the old attorney stock answer: ‘It depends.’

Courts reviewing such cases will look at the facts and circumstances of each situation. This is just as it should be. You want an independent review of each case instead of a hard and fast rule that may not accurately deal with the facts of each situation.

Courts apply the business judgment rule when considering breaches of the duty of care. This means that courts presume that the business decision was proper, regardless of the result, and made in good faith. This presumption, however, can be rebutted (or overcome) if it can be shown that the decision was tainted by fraud or if it involved a conflict of interest.

The business judgment rule allows businesses to take risks without holding the officers and directors liable. But if you exceed the rule by grossly and/or improperly exceeding your duty of care you can be held responsible.

So remember you owe a duty of care. If you always act with honesty and integrity there will never be an issue.

Are You a California Resident?

Are You a California Resident?

Many people believe that as long as they are outside the state of California for six months and a day they are not residents of California. And thus don’t have to pay California’s high income taxes. But the state of California is both broke and arrogant. And they make the rules the way they want.

Design Your Asset Protection Plan

Design Your Asset Protection Plan

You design a lot of things in your life. The layout of your house, the flow of your business, the requirements on your children, and many more scenarios are all elements of conscious design. Asset protection is no different. There is an architecture, a cohesive...