What Small Business Owners Need to Know About Non-Disclosure Agreements

DuPage County contract attorneysOne of the most important parts of owning a business is forming beneficial relationships with other entrepreneurs and businesses. In an ideal world, these relationships could be casual, but handshake agreements are not always honored. Informal business agreements can quickly go south and result in damage to your business’s bottom line. Business agreements involving another party should be formalized in writing. One such agreement is a non-disclosure agreement, or NDA. Non-disclosure agreements are often essential to protecting a company’s professional interests and continued success.

How Does a Non-Disclosure Agreement Work?

Non-disclosure agreements are a type of confidentiality agreement used to prevent sensitive company information from being shared with other parties. An NDA is a legally binding document which can be used in a variety of situations, most often during proposed or pending business transactions. A company may choose to use an NDA during the sale or purchase of a business, a merger, or during any other conversation in which privileged information is being shared. When discussing a possible merger, for example, the other party will learn information about your business which you may not want shared with anyone else. Allowing news of the merger to reach other businesses or even the press may not be in your best interest. In this example, an NDA can be used to ensure that the other party does not divulge company information to others.

The Two Main Types of Non-Disclosure Agreements

The most common types of non-disclosure agreement are one-way agreements and mutual agreements. A one-way NDA is also called a unilateral NDA. As the name implies, one-way NDAs only bind one of the parties to confidentiality. A unilateral NDA may be useful in preventing potential investors from revealing your business’s information to other people or companies. If you use a one-way NDA in this scenario, you do not have a reciprocating requirement to keep the potential investors’ information confidential. A mutual NDA, on the other hand, applies confidentiality requirements to both parties in a business transaction. A mutual NDA should be used when dissemination of either party’s information could adversely impact the business or the industry. Companies discussing the possibility of a merger most often use a mutual NDA.

Contact a DuPage County, Illinois Business Law Attorney

The Wheaton business lawyers at Stock, Carlson, Oldfield and McGrath LLC, have experience helping clients create formal contracts like non-disclosure agreements and offer many other business law services as well. Schedule a consultation with our law firm by calling 630-665-2500 today.

Sources:

https://www.businessnewsdaily.com/4760-non-disclosure-agreement.html

https://www.forbes.com/sites/allbusiness/2016/03/10/the-key-elements-of-non-disclosure-agreements/

What You Should Know About a Short Sale

short sale, Wheaton real estate attorneysWhile the economy has steadily improved over the course of the last decade or so, things are still not where they should be in many respects. As people experience financial hardships, some are forced to sell off assets, houses included—often for less than they are worth. This is referred to in real estate as a short sale, and it can be quite complex to navigate through on your own.

Short Sale Requirements

Many people are vastly unaware as to how complex a short sale can be, but it can be because there are not only questions regarding the nature of the asset for sale, but also the remainder of the debt or loan that is not being resolved by the short sale. Short sales are only successful if everyone involved (the seller, the bank or other entity holding the loan, and anyone else) agrees to take less money than they might otherwise make. However, a lender does not actually have to agree to a short sale in order for one to go forward, at least in Illinois; only the mortgage holder must agree, and the two are not always the same.

There are four items generally required in order to complete a short sale and obtain the mortgage lender’s permission. They are:

  1. A hardship letter, with an explanation of why the mortgage is in default;
  2. Proof that the property’s current value is less than the cost of the mortgage and closing costs;
  3. A showing that a buyer for the property exists, and that buyer is not related to the seller; and
  4. Credible testimony that there is no better alternative.

The third item can be a concern in particular, as it is not unknown to simply transfer an asset to a friend or family member as a sort of surreptitious trust; such actions are illegal under the Illinois Fraudulent Transfer Act. These factors all being met do not necessarily guarantee a successful short sale, but they greatly increase the odds that all involved will be able to come to a consensus.

After a Short Sale

Assuming the sale itself goes according to plan, you will still be left with the question of the remaining balance on the mortgage. In Illinois, this may be disposed of in two ways. The lender will either forgive the debt—usually not out of a sense of altruism, but rather because it is possible for them to write it off—or they will try to seek a deficiency judgment. A deficiency judgment is just what it sounds like, where the lender files a civil suit in order in an attempt to collect the remaining balance due on the mortgage.

In a short sale, it is possible to insert language into the offer letter agreeing to waive any remaining liability, but unlike some other states, such as California, this is not required. If a deficiency judgment is entered against you, your wages may be garnished, your bank account may be levied (frozen) and in extreme cases, you may have assets or other financial instruments seized to make up the difference.

Contact a Wheaton Real Estate Attorney

Real estate can be an extraordinarily complex area of law, and a short sale can be one of the most intricate and difficult enterprises to undertake, especially alone. Contact an experienced DuPage County real estate lawyer at Stock, Carlson, Oldfield & McGrath LLC today. Our knowledgeable professionals can help guide you through the short sale process, and answer any questions you may have along the way.

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2055&ChapterID=57

https://www.irs.gov/taxtopics/tc453.html

Should My Will Have a No-Contest Provision?

no-contest, Wheaton estate planning lawyerAre you worried about what will happen to your surviving family members after your death? Maybe in the course of your conversations about your estate plan, you have seen warning signs that your children or other loved ones are not thrilled about your decisions. Or, perhaps you are concerned that one of your family members will be overcome by grief to the point where they cause problems without realizing what they are doing.

If you have such concerns, you may wish to consider adding a no-contest provision to your will. A no-contest provision can help reduce the possibility of your will being challenged after your death.

“In Terrorem” Clauses

A no-contest clause is sometimes known as an “in terrorem” clause. The Latin phrase “in terrorem” translates to “by way of threat.” Put simply, a no-contest provision threatens any heir who files a will contest in an effort to deter fighting between family members after the creator the will dies.

It is common for a no-contest clause to state that any heir who challenges the will forfeits the portion of the decedent’s estate that the heir was set to receive. In some cases, such a clause will drop the challenger’s inheritance down to a nominal amount like $1.

The idea is that if there is a possibility that the heir will get nothing, that heir is more apt to accept the provisions of the will, even he or she is not happy with the decedent’s choices. It is important to understand that a no-contest provision cannot legally prevent an heir from filing a will contest. The clause will only impact what happens afterward.

Important Considerations for No-Contest Clauses

If you are giving thought to a no-contest clause, you should talk to an estate planning lawyer before you make any decisions. For a no-contest provision to work as intended, the amount you intend to leave each of your heirs needs to be large enough to create an incentive. If, for example, you named 15 different beneficiaries, each of whom will inherit $20,000, one of them might be willing to risk $20,000 to try to get more through a will contest. If you only name three heirs, however, with each set to receive $100,000, a no-contest provision may carry much more weight.

Keep in mind that the courts have the authority to set aside an in-terrorem clause if a will contest is filed in good faith. For example, assume you are an heir in your father’s will which has a no-contest clause, but you believe that your father was forced to sign the will under duress or undue influence. You could file the will contest and request that court the invalidate the will. Assuming the court agrees, your father’s previous will would likely be reinstated. Even if that document also had a no-contest clause, the court might consider setting the in-terrorem clause aside because you were acting in the best interest of the estate, not just for yourself.

Call a DuPage County Wills and Trusts Attorney

If you would like to discuss your options regarding a no-contest provision in your will, contact a Wheaton estate planning lawyer. Call 630-665-2500 for a confidential consultation at Stock, Carlson, Oldfield & McGrath LLC today.

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2104&ChapterID=60

https://www.thebalance.com/tips-for-avoiding-a-will-contest-3505204