Wednesday, January 27, 2010

Who Needs a Will?

I have been on a quiet mission for a few years to encourage people to execute wills. Often, I have had people ask me, not unreasonably, why they might need a will.
I found a very elegant and succinct answer by Nashville attorney Barbara Moss in a recent article in The Tennessean. In answering the question “So, who needs a will?” Moss writes:
Anyone who owns property with no co-owner or beneficiary or who has children young enough to need a guardian needs a will. Someone who has a complicated family situation, such as children by a former spouse, or a taxable estate (in Tennessee, any estate over $1 million dollars), especially needs a will.
Moss goes on to write, as I did last year, about Steve McNair and how he could have saved his family thousands of dollars in estate taxes had he done some basic estate planning.
Also, since a large part of my practice caters to songwriters and recording artists, it is important to stress the need to divide the royalty income and/or copyright income the way you want it divided rather than either by the laws of your state (i.e. intestate succession) or by a well meaning but perhaps uninformed spouse. As Gary Roth, from BMI recently wrote:
Your state legislature determined what you’d likely want to do with your personal property and wrote the law that way, but you may have wanted to do it differently. That’s what you can accomplish with a will – but only if you create one.
From a personal standpoint, I know that people don’t like to contemplate their mortality, and a will makes you do that. On the other hand, the peace of mind that comes from knowing that you have done everything in your power to look

Tuesday, January 26, 2010

Danny Tate's Conservatorship

Like many Nashvillians of a certain age, I read with horror and a certain amount of lurid fascination the story of Danny Tate and the involuntary conservatorship initiated by his brother. The story was reported in the Nashville Scene.( Danny was the golden boy of Nashville pop in the 1980’s, and he had a successful career into the 1990’s. He apparently still has some success today when he is not battling some horrific addictions.

While the article was gripping, I thought the author unfairly criticized Judge Randy Kennedy in his handling of this case. Conservatorships are not pleasant and they are not tidy. In these actions, the Court gives one person power over the “person and property” of another person, if the facts indicate such action is necessary for the second person’s welfare. Presented with a petition to establish a conservatorship, the judge can only review the facts presented and appoint a guardian ad litem, to give a (hopefully) unbiased report to the Court as to the condition of the respondent and then, based on the statute, take the most appropriate action necessary.

I have been involved in a handful of conservatorships, both as a lawyer, and in one case as the conservator for a disabled songwriter and his wife. The latter case was one of the most challenging and rewarding cases of my career. It lasted more than a dozen years. Having served in that position, I got a firsthand appreciation of the awesome responsibility and the need to be resolute in the face of the oftentimes competing demands of family members and friends. I also developed an acute appreciation of the tough responsibility a probate judge faces in dealing with all of these demands and ensuring the well-being of the ward. The cases I have been involved in all concerned elderly or disabled people. I can’t even imagine all the challenges involved in dealing with an able-bodied person caught in a spiral of addiction. Reading Danny Tate’s story makes me appreciate the difficulty of the system, but I don’t really see any villains. It seems to me this is a bunch of people trying to use an imperfect and expensive legal system to deal with a terrible situation. I hope they can resolve this soon.

Tuesday, January 12, 2010

An Apparent Tax on Musicians and Producers in Tennessee

I learned this week that two adages are true.

First: You are never too old to learn something new.

Second: Everything you know is wrong.

Case in point: I had a client call and ask me whether, as a musician and producer, he was required to have a business tax license and pay business taxes in Tennessee. I confidently told him “no.” I had researched this very point some time ago and had never heard anything to the contrary. He persisted in saying that his accountant told him I was wrong, so after reviewing the statute (which neither mentions nor exempts musicians), I asked a music business accountant. She confirmed that musicians and producers are, in fact, subject to the Tennessee business tax.

Here is what the statute states:

The Business Tax Act makes it a taxable privilege to make sales or engage in any vocation listed in Tenn. Code Ann. Sections 67-4-708(1)-(4). Any county or incorporated municipality in Tennessee may levy the privilege tax on those listed activities that take place within its geographical boundaries. (Tenn. Code Ann. Section 67-4-704).

Engaging in any business, business activity, vocation, or occupation described under this act is declared to be a privilege for state purposes and taxable by the state alone. (Tenn. Code Ann. Section 67-4-705).

The tax imposed under the Business Tax Act may be collected in addition to any other applicable privilege taxes established by law. The tax will be in lieu of any or all ad valorem taxes on the inventories of merchandise held for sale or exchange by persons taxable under this law. (Tenn. Code Ann. Section 67-4-701).


Prior to engaging in business, every person taxable under the Business Tax Act, except for those taxable under Tenn. Code Ann. Section 67-4-705, must register with the county clerk, in the case of taxes owed to the county, and/or with the city tax collector, in the case of taxes owed to a municipality. Taxpayers must contact the respective county or city official for registration information and forms. (Tenn. Code Ann. Section 67-4-706).

The fee for registration is $15 and must be paid at the time the application is submitted. Upon presentation of the application and payment of the $15 fee, the registering official will issue the taxpayer a license.

Annually thereafter, upon notification from the Department of Revenue that the taxpayer has filed the required business tax return and remitted the amount of tax due, the licensing entity will renew the taxpayer’s business license for another year. There is no additional fee for annual business license renewal.

The taxpayer must exhibit the license in the taxpayer’s place of business.

“Business” as defined by
Tenn. Code Ann. Section 67-4-702(a)(2):

“Business” includes any activity engaged in by any person with the object of gain, benefit, or advantage, either directly or indirectly. “Business” does not include occasional and isolated sales or transactions by a person who is not routinely engaged in business.

There are all types of businesses included and excluded (attorneys, for example, are excluded), but curiously, musicians and producers are not mentioned. Presumably they are meant to be covered under the catch-all category of “each person making sales of services or engaging in the business of furnishing or rendering services…” It just seems strange to me that in a state with such an important music industry, that such an activity is not mentioned at all.

The bottom line is that this is a tax that I was not fully aware of, and I would urge you to check with your accountant or tax professional to determine if your particular business requires a license and is subject to this tax.

Friday, January 8, 2010

Copyright Criminals

I just learned that the documentary "Copyright Criminals",made by Benjamin Franzen and Kembrew Mcleod is going to run in Nashville on NPT on Tuesday January 19 at 9:00 p.m. as part of the PBS "Independent Lens" series. I saw this documentary at a screening last October and thought it was really the best examination of the legal issues surrounding sampling that I have ever seen. It is really entertaining and thought provoking. I highly recommend this.

Friday, January 1, 2010

New Years Resolutions Repost

Happy New Year. I am going to repost something I wrote nearly a year ago which I think is relevant for this, the first day of 2010.

I have always had an attraction/repulsion relationship with New Years’ resolutions-while I am drawn to the concept of change and renewal, I hate the stereotypical pattern of adopting resolutions in January just to abandon them by February. Think of all the people you see on the treadmills at the YMCA during the first week of January and how they seem to fade away by the Super Bowl.

However, a client called me last week, energized by the New Year (and perhaps the new administration). He wanted to get his will finalized, his business interests and intellectual property interests organized and in general take care of a lot of the small details that had been left hanging for some time. I was impressed and somewhat inspired by this and began my own list of dreaded tasks that I had been putting off for some time. January and February are probably great months to organize one’s professional and personal life (“to get your life in order” as one of my old English professors used to say).

If you have a will (and you should have a will) you should see that it’s up to date. If you own a corporation or a limited liability company, you should make sure that your organizational documents are up to date. If you own copyrights or trademarks, you should review their relevant dates. If you’re like me you should also hit the Y, go to bed earlier eat more vegetables, etc. but those are different resolutions for a different post.