REPORT FROM COUNSEL

SUSAN T. PETERSON JOINS THE FIRM

The law firm of Henningson & Snoxell, Ltd. is pleased to announce that Susan T. Peterson, after practicing law both as an associate and as principal of her own law firm, has joined the law firm as an associate attorney.

Ms. Peterson graduated with honors from St. Olaf College in 1986 and with honors from William Mitchell College of Law in 2002. Following law school, Susan clerked for Justice Russell Anderson of the Minnesota Supreme Court for the 2002-2003 term.

Susan brings extensive related experience to her practice of law. She completed a Master's Degree in English and American Literature in 1988 and taught English, including argumentation, persuasion and research paper writing at the college level for several years.

Susan and her family are residents of Maple Grove, and Susan has a leadership role in many community activities. She serves on the board of her neighborhood association and volunteers at her children's school. In addition, Susan is an active member of her church where she teaches Sunday School and serves as a congregational coordinator.

Susan will continue to practice in the areas of Estate Planning, Wills and Trusts, Probate and Estate Administration, and Elder Law.

TAKE THE TIME TO UPDATE YOUR WILL

By some accounts, 70% of adult Americans do not have a will. If you at least have gone to the trouble of getting a will, consider yourself ahead of the curve and pat yourself on the back. Then come back to earth and understand that your work is not completely done. A will is not a static instrument. To serve its purposes, it must keep current with life changes, including an individual's financial circumstances, and with some external factors, such as tax laws. With the help of a professional, you should periodically review your will, staying alert to new or different circumstances that might call for updates.

Marriage, Divorce, and Remarriage

Obviously, a marriage usually brings a new beneficiary into the picture, and a divorce may remove one. Some of the changes in a will prompted by a change in marital status may not be so apparent. For example, when a widow or widower remarries, the will may need to be updated to show how children from the previous marriage and the new spouse are to be provided for.

Additions and Subtractions

A new child is a new beneficiary, but a will can and should cover more than just the distribution of property to heirs. Parents can name a guardian, and even an alternate guardian, to care for their children in the event that something happens to both parents. Absent such a provision in a will, a court will appoint a guardian.

The death of an executor, guardian, beneficiary, or trustee creates a gap in how the will is supposed to operate. Fill in the gaps by making necessary changes, such as naming a new individual or, in the case of a deceased beneficiary, simply removing the lost beneficiary from the will.

Changing Fortunes

If you enjoy an unexpected windfall, you may still want the larger pie divided up as before. But it is likely that some changes in your will are called for. If the increase in the potential estate is large enough, it might trigger the need for planning to avoid or minimize estate taxes. A reversal of fortune also could suggest some changes. For example, you may have to revise downward that fixed sum you were planning to leave to a favorite charity.

Moving Out of State

You will not have to start from scratch if you move to another state, because all of the states recognize a will that was properly created in another state. Nonetheless, legal advice should be sought in the new state because changes in the law from state to state could require some tinkering with the will. There may be more than tinkering involved if you move to or from a community property state.

Changes in Tax Laws

The Government's intentions can change even if your intentions have not. Some of the changes benefit individuals with wills, but you can take full advantage of them only if you are aware of them. The big item here is the schedule of changes to the federal estate tax exemption, which is the amount an estate can reach before it is subject to a (hefty) estate tax. The good news is that the exemption is headed up. It goes from the current $1.5 million to $2 million in 2006.

You Change Your Mind

If you decide you want to change beneficiaries, a guardian, an executor, or anything else in a will, you can do so. For example, you want to make sure that the beneficiaries in your will are the same as the beneficiaries you have named in your insurance policies and retirement accounts. Otherwise, the beneficiaries actually named in those documents will get the money from them, not the beneficiaries under the will. Bear in mind that no amount of talking about your new intentions will make them happen. The changes must be indicated in a properly executed will.

You should keep the finished (at least until the next update) product in a safe place. When "they" say "keep this with your important papers," think of your will. Your family should know where to find the executed will. An unsigned copy of your will in its latest form is a good starting point for the next periodic review.

E-MAIL PRIVACY IN THE WORKPLACE

Richard was an independent insurance agent who sold policies for a major insurer on an exclusive basis. After a period in which there was some dissatisfaction and acrimony on both sides of the relationship, the company terminated its agreement with Richard. In subsequent litigation brought by Richard, the parties disagreed as to the reason for the termination. The company's position was that it had fired Richard for disloyalty. How the company came by its evidence of disloyalty led to a separate element of the ensuing lawsuit.

When other events raised suspicions about Richard, an attorney for the company and a systems expert searched the company's main file server for any e-mail to or from Richard that caught their attention because of the e-mail headers. There, they claimed to find two messages from Richard to a competing insurance company that essentially asked if the competitor might be interested in acquiring some clients who supposedly were unhappy with Richard's company.

Richard argued to no avail that his former company violated his rights under the federal Electronic Communications Privacy Act (ECPA). First, he asserted that there was a violation of that part of the law that prohibits "intercepts" of electronic communications such as e-mails. However, courts, including the one hearing his case, have reasoned that an intercept can only occur contemporaneously with the electronic transmission. The company did not access Richard's e-mails as he was sending them, but read them later, so it did not "intercept" them.

The second claim was brought under a different part of the ECPA, which creates liability for intentionally accessing without authorization a facility through which an electronic communication service is provided, and thereby obtaining access to a communication while it is in electronic storage. "Storage" in this context means temporary, intermediate storage, or backup storage. A related part of the law makes an exception from liability for the person or entity providing the communications service. Since Richard's e-mails were stored on a system controlled and administered by his company, the company could not be liable for accessing the e-mails.

OSCAR WILDE AND COPYRIGHT LAW

Nineteenth-century writer Oscar Wilde had not yet produced the works for which he is best known when he came to the United States in 1882 for a lecture tour to promote a touring opera. He clearly was a celebrity in the making, however, and that is what brought him to the attention of Napolean Sarony. Sarony was making a name for himself, and lots of money, in the still emerging field of photography. He took photographs of the rich and famous, to whom he paid large sums in return for the exclusive right to distribute the photographs.

Wilde posed for 27 pictures taken by Sarony. When the most famous of these was used in an advertisement without Sarony's permission, he sued. The defendant was a lithographer who was said to have reproduced many thousands of copies of the image. Sarony alleged a violation of his copyright in the photograph. The defense was that Congress had the power to protect authors' writings, but not authors' photographs, which were described as mere reproductions of nature created by the operator of a machine.

The case went all the way to the United States Supreme Court (which itself was later the subject of a formal photographic portrait by Sarony). In a decision that has been valuable to photographers and copyright seekers ever since, the Court ruled that Sarony's photograph did indeed have copyright protection. The photograph was deemed a work of art and the product of the photographer's "intellectual invention," no different in nature from a novel. Rebutting the argument that taking a photograph has nothing to do with imagination, the Court described Sarony, as an art critic might have done, as having set up his subject "so as to present graceful outlines, arranging and disposing the light and shade, suggesting and evoking the desired expression."

The essential holding in Sarony's case is no less valid today, but more than a century later there are added layers of legal analysis to consider in our copyright jurisprudence. For example, in a recent case, a photographer took pictures of a blue vodka bottle for use in the vodka producer's marketing. The company then had other photographers take similar photos of the bottle and ended up using them in its advertising campaign. The first photographer sued for copyright infringement in his photographs. He reached back into the 19th century to cite the Sarony case, but lost.

The problem was not that the photographs were unworthy of copyright protection. Everyone agreed they were. However, under a doctrine that is now well established in copyright law, courts will not protect a copyrighted work if the idea underlying it can be expressed only in one way, such that the idea and the expression of it "merge." The basic question in the case was, "How many ways are there to create a 'product shot' of a blue vodka bottle?" The court's answer was "not very many."

NEW BANKING RULES AFFECT CHECKING ACCOUNTS

We Americans write about 40 billion paper checks each year. In addition, for the first time that number recently was eclipsed by the annual number of automated transactions involving checking accounts. Checking account transactions are such a widespread part of our lives that consumers of banking services are well advised to become acquainted with major changes affecting banking laws. Federal legislation called the Check Clearing for the 21st Century Act, or "Check 21" for short, went into effect on October 28, 2004.

The Dangers of "Floating"

Check 21 will allow financial institutions to process "substitute" checks--high-quality paper reproductions created from electronic images of both sides of an original check. In time, check processing will be faster, and this is where there will be ramifications for check writers and depositors.

While it has always been prudent to have enough money in your account to cover a check the moment you write it, who has not used the lag time in check processing to make a necessary deposit? That will soon become a riskier strategy as electronic check processing becomes more prevalent. It will also be more important than ever to keep checkbooks up to date, especially bearing in mind deductions for ATM withdrawals, bank fees, and debit-card purchases. (Another downside to faster check processing is that you may have less time to place a "stop payment" on a check that you have written.)

As a last resort, there are overdraft services, including overdraft lines of credit. They have their place, but remember that each use of an overdraft service is essentially a loan, usually with interest charges or other fees.

Electronic Substitute Checks

Today, most banks do not return customers' actual checks with their monthly statements. Under Check 21, even your bank may not receive your original check but, rather, an electronic substitute check created by the bank where the check was deposited. As long as the substitute check meets standards established under Check 21, it should be just as effective as the original for a customer who needs to prove a disputed payment. Of course, long before the enactment of Check 21, images of checks, rather than the real thing, have enjoyed widespread acceptance as proof of payment. Even if the substitute check falls short in some way, Check 21 provides warranties and remedies to protect the parties to a transaction.

Expedited Recrediting

Erroneous or fraudulent payments are largely the domain of state laws, which can vary greatly. Usually, a bank can be held liable to its customer if it charges the customer's account for a check that is not "properly payable." Check 21 has provisions for "expedited recrediting" in the event of improper payment.

A bank customer can make a claim for expedited recrediting from the bank holding the customer's account if the customer asserts in good faith that the bank improperly charged the account for a substitute check. The customer must show that producing the original check, or a better copy of it, is necessary to determine the validity of the charge to the account. A claim for expedited recredit must be made within 40 days of delivery of the relevant bank statement to the customer, or the date when the substitute check is made available to the customer, whichever is later.