tag:blogger.com,1999:blog-87954158479636029762024-02-19T08:31:05.249-08:00Williams and Knack, P.C.Anonymoushttp://www.blogger.com/profile/08663864572000383658noreply@blogger.comBlogger32125tag:blogger.com,1999:blog-8795415847963602976.post-27005987417162585082017-12-12T07:13:00.003-08:002017-12-12T07:13:34.177-08:00TAX REFORM – WHAT ARE THE CHANGES IF IT’S ENACTED INTO LAW?<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, Helvetica, sans-serif;">BY: Tim Williams<o:p></o:p></span></b></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">On Saturday, December 2, 2017, the
Senate garnered 51 votes to pass its proposed Tax Reform Bill. It now goes to
the Joint Committee on Taxation, a joint creature of the Senate and the House,
for reconciliation to try to work out the differences in the two proposed versions
of the Tax Bills.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The Senate Bill contains both tax
and non-tax legislation. The following explains the basics of the tax and
non-tax provisions of the Senate’s Bill. The House is also working on its own
version of the Bill. The specifics of the House legislation are not settled at
this time and could impact the way these provisions are worded in the final
version of the legislation.<o:p></o:p></span></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;">TAX PROVISIONS<o:p></o:p></span></b></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></b></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;">Business Taxation<o:p></o:p></span></b></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The
most significant proposed tax change is the tax rate for large corporations,
which would fall from 35 percent to 20 percent starting in 2019. This would
presumably place the US on an equal footing with other western nations in terms
of their business income tax structure.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The
second most significant change is that the Bill would transform the tax system
on business income from a worldwide approach to a territorial system.
Currently, U.S. companies are taxed on all income earned throughout the world.
The territorial system would change this, focusing taxation of businesses primarily
on their earnings in the U.S., a change corporations have advocated for many
years. Historically, the U.S. was the only nation to utilize the worldwide
taxation approach to companies and individuals.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The Bill
would also allow companies to bring back any money they have stored
overseas at a tax rate of 14.5 percent.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Additionally,
in an attempt to spur new investment by American businesses, companies would
also be able to write off most of their cost for new buildings and other
investments for the next five years. The usual method for companies to recover
the cost of buildings and other investments is through a deduction for depreciation
over many years. This makes this particular
change significant, especially for large corporations seeking to expand their
operations.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The Bill
also would lower the tax on non-professional service companies that are
structured as pass-through entities. This includes S corporations, limited
liability companies, and partnerships. The Bill allows owners of such entities
to deduct 23 percent of their pass-through earnings. There is an exception for owners
of professional service businesses. Owners of professional corporations would only
be allowed to take the 23 percent deduction if their income is less than
$500,000. If left unprotected, the Bill would create a very strong incentive
for owners of pass-through entities to not pay themselves a salary because the
salary would be taxable at one of the new tax bracket rates. By not taking a salary, the business owner would
utilize the overall lower effective rate on all income generated by the entity
resulting from the 23% deduction of all pass through earnings. In addition, the
incentive that exists today, which is to avoid the 15.3% Social Security Tax on
Self-Employment income, would continue under the new law. The Bill does have
some measures built into it to prevent this from happening.<o:p></o:p></span></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></b></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;">Individual Income Taxation<o:p></o:p></span></b></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The
top tax rate for higher income taxpayers would fall under this plan from 39.6
percent to 38.5 percent. The other tax brackets would also be slightly lower
than under current law. However, some of the deductions which save taxpayers
taxes – particularly in the Midwest – would be limited, which would result in
net higher taxes for some starting in 2018, rather than lower taxes.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">At
the moment, Americans are able to deduct $4,050 as a “personal exemption” for
themselves, their spouse and each dependent. The Senate Bill eliminates the
personal exemption entirely. Instead, the Bill expands the standard
deduction so the first $24,000 of income for a married couple ($12,000 for an
individual) would not be taxed. The Bill also would bump up the child tax
credit from the current $1,000 to $2,000. The overall effect here is that most
people are better off, but not everyone. <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Taxpayers
would still be able deduct their contributions to charity under the Bill. In
addition, the deduction for mortgage interest would still be available. The
deduction for state and local property taxes would be capped at $10,000.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The
threshold for deducting medical expenses would be reduced from medical expenses
exceeding 10 percent of adjusted gross income down to 7.5 percent.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Under
the current law, if a taxpayer owns and has lived in their home for two out the
past five years and they sell the home, they can exclude up to $500,000 of capital
gain. Under the proposed Bill, a taxpayer would have to own and live in the
home for five out of the last eight years. This change will discourage “house
flippers” and home builders who typically build or rehab, live in the home for two
years, and then sell it off at capital gains tax rates, repeating this process
every two years. With respect to Michigan construction law in particular, this change
may serve to further discourage the abuse of builders failing to obtain a residential
builder’s license by “flipping” the house as an unlicensed Michigan builder. Currently, the tax code is more favorable to
unlicensed builders who may utilize the exemption to build houses under the
veil of their own personal use and then sell them to unsuspecting buyers after
living in the home for a short period.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The
House Bill, unlike the Senate Bill, would eliminate the tax deduction for
ex-spouses that pay alimony for divorces occurring on and after January 1,
2018.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The deductions
for moving expenses, casualty losses, biking to work and tax preparation have all
been eliminated in the proposed Bill.<o:p></o:p></span></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></b></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;">Estate Taxation<o:p></o:p></span></b></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Under
present law, up to $5,490,000 can be excluded from the Estate Tax per
individual. This number would be doubled under the Bill, but not eliminated as
rumored. <o:p></o:p></span></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></b></div>
<div style="text-align: justify;">
<b><span style="font-family: Arial, Helvetica, sans-serif;">NON-TAX CHANGES<o:p></o:p></span></b></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The
Bill would eliminate the individual mandate under the Affordable Care Act. The Congressional
Budget Office estimates this will result in 13,000,000 Americans losing health
insurance.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The
Bill would also allow for oil drilling in the Alaskan Arctic Wildlife Refuge.<b> <o:p></o:p></b></span></div>
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<b><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></b></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;"><b>ACTION STEP</b><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">We
urge business and individual clients alike to review their own situation in
light of the Senate Tax Bill, and to begin to consider what changes in their
future plans may be necessary to take advantage of the positives in the Bill
and avoid the negatives. For example, if you are thinking about constructing a
building or making long-term capital expenditures, doing so in the next five
years makes sense. Additionally, if you live in a home that has greatly
increased in value, and you are thinking of selling, beware of the five of
eight year “live-in” requirement for exclusion of capital gain that would be
imposed by the Bill.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Please
contact us if you have questions about the likely impact of the tax legislation
on your business or personal situation. <o:p></o:p></span></div>
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Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-57074197678717218602017-06-05T09:04:00.001-07:002017-06-05T09:04:19.161-07:00TAX REFORM – WHAT WILL IT MEAN TO YOU? <div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; text-align: justify; text-indent: -.5in;">
<b><span style="font-family: "Arial",sans-serif;">By: Tim Williams<o:p></o:p></span></b></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">The White House first released its proposed Tax Reform Plan in
April, 2017. The initial release was one page and short on details. Following
that, the Secretary of the Treasury released more details on the proposed “Trump
Tax Plan.” <o:p></o:p></span></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">The Trump Tax Plan would have the most dramatic changes for wealthy
individuals, as well as for corporations, both large and small. Individual tax
rates for the super wealthy and high income families would drop dramatically. Corporate
income tax rates would decrease by 57%.<o:p></o:p></span></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">The following highlights will allow you to roughly estimate the
impact of the specific proposals on your personal tax situation if the proposed
plan becomes law. </span><span style="font-family: Arial, sans-serif; font-size: 12pt;"><o:p></o:p></span></div>
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<b><span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">INCOME
TAX <o:p></o:p></span></b></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">The Trump
Tax Plan would replace the current seven personal income tax brackets with
three tax rates – 12%, 25% and 33%. The 33% tax rate is lower than the highest
marginal rate today – 39.6%. In addition, the 3.8% Affordable Care Act Investment
Tax and the Pease 1.3% unlimited Medicare Tax on compensation would be
repealed. <o:p></o:p></span></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">Income up
to $24,000 would not be taxed. As such, the present standard deduction of
$12,000 would double to $24,000. All itemized deductions would be eliminated
except for mortgage interest, the charitable deduction, and child care
expenses. This will negatively impact taxpayers who have higher itemized deductions
in relation to their adjusted gross income.<o:p></o:p></span></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">Several credible
organizations have modeled the income tax impact of the Trump Tax Plan at
various income levels for married persons filing jointly. It is concluded that, for the majority of the middle class,
taxpayers would experience only a slight increase in net Federal Income Tax or
no change at all. <o:p></o:p></span></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">Under
present law, capital gains are most commonly taxed at 15%. Certain high income taxpayers
pay these at a 20% tax rate. Capital gain taxes would be restructured and essentially
return to the law as it was prior to Congress implementing a flat rate capital
gain tax structure. The capital gain tax would be structured such that one-half
of a capital gain would be taxable at the taxpayer’s regular tax rate. So, with
the highest personal income tax rate at 33%, the highest capital gains tax rate
would be 16.5%. The capital gain tax rate would apply to capital gains, interest
and dividends.<o:p></o:p></span></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">The Alternative
Minimum Tax would be repealed in its entirety. This is a tax that applies to individuals
whose calculated income tax is considered to be below a theoretical “acceptable”
composite income tax rate. This normally results from having a
disproportionately high percentage of income coming from “passive sources” or
from very high itemized deductions.</span><span style="font-family: Arial, sans-serif; font-size: 12pt;"><o:p></o:p></span></div>
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<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">BUSINESS TAXES<o:p></o:p></span></b></div>
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<span style="font-family: Arial, sans-serif; font-size: 12pt;">The Trump
Tax Plan would reduce the corporate income tax from 35% to 15% on C
corporations. C corporation taxation status is typically chosen by companies
that are larger, and thus can handle the income tax burden. These companies pay
tax at the company level on their net taxable income in addition to their
shareholders paying tax on dividend distributions. It is believed that this change
will make America more competitive with respect to attracting and retaining corporations
in relation to other western economies.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif; font-size: 12pt;">The Trump Tax
Plan calls for S corporations, limited liability companies and partnerships to
be taxed at a rate of 15% on flow through income to the shareholders, members
or partners. This rate would be payable by the shareholders, members or
partners, as opposed to the current rule which taxes S corporation, LLC, or partnership
income at the individual taxpayer’s income tax rate. The new structure would create
a strong bias towards not paying compensation to the shareholders, members or
partners which would be taxed at one of the three new tax rates. If the net S
corporation, LLC or partnership income is allowed to “flow through” to the individual
shareholder’s Form 1040, as opposed to reporting it as compensation, it will be
taxed at a flat 15% rate, as opposed to 12%, 25%, or 33%. In addition, such a payment structure would
avoid Social Security Tax of 15.3% to the extent it is not paid as wages.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif; font-size: 12pt;">With the restructuring
of the C corporation and S corporation tax structure, there would be a strong
incentive for C corporations to elect S corporation status to take advantage of
the single 15% tax on net corporate income. Under present law, in order for a C
corporation to elect to be treated as an S corporation for tax purposes, one of
the key requirements is that the corporation can have no more than 100 shareholders.
Thus, that avenue would not be open to large, publicly traded companies.<o:p></o:p></span></div>
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<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">ESTATE TAX<o:p></o:p></span></b></div>
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<span style="font-family: Arial, sans-serif; font-size: 12pt;">The estate
tax proposal is radical. First, the Trump Tax Plan would eliminate the estate
tax. This is a tax imposed on individuals with over $5,490,000 in total assets
(adjusted annually), or $10,980,000 for a married couple. Assets over this
amount are taxed at 40%.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: Arial, sans-serif; font-size: 12pt;">The Trump Tax
Plan would replace the estate tax with a deemed capital gain tax. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: Arial, sans-serif; font-size: 12pt;">Under
current law, upon death, any assets owned by the deceased taxpayer are marked
up to their fair market value on the date of death. Thus, death transfers do
not incur any capital gain taxes if the appreciated asset is sold immediately
following death. The Trump Tax Plan would tax the capital gain that is deemed
to occur at death whether or not the deceased taxpayer’s beneficiaries have
sold the assets. The decedent’s tax basis would be deducted from the fair
market value of the appreciated asset, and the capital gain tax immediately
payable on the difference. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: Arial, sans-serif; font-size: 12pt;">The capital
gains tax would be payable even though the individual has no cash proceeds to pay
the capital gain tax. This suggests that if this part of the Trump Tax Plan is
enacted, it would make sense for individuals to purchase life insurance on the decedent’s
life to pay the tax associated with the deemed capital gain tax. Otherwise, the
requirement to pay the deemed capital gain tax would necessitate selling the
appreciated asset to pay the tax. This would be particularly harmful if the
asset is in a “value through”, such as stocks and securities were in 2007 -
2011. <o:p></o:p></span></div>
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<br /></div>
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<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">SUMMARY<o:p></o:p></span></b></div>
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<br /></div>
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</div>
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<span style="font-family: Arial, sans-serif; font-size: 12pt;">Congress
and the Trump Administration have set December 31, 2017 as the deadline for
enacting tax legislation. Please review your specific situation and let us know
if there is any aspect you wish to address.<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-53303118552832084472017-06-05T09:03:00.001-07:002017-06-05T09:03:24.010-07:00SHOULD YOU BE CONCERNED WITH THE IMPACT OF THE ALLARD DECISION ON PRENUPTIAL AGREEMENTS?<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;">By: Andrew Burrows<o:p></o:p></span></b></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;">On January 31,
2017, the Michigan Court of Appeals issued an opinion in <i>Allard v. Allard (Allard III)</i> that seemed to have a dramatic impact
on the status of prenuptial and postnuptial agreements under Michigan law.
Despite the initial outcry, the actual impact of this decision on such agreements
is fairly negligible, with prenuptial agreements remaining an important tool
for couples contemplating marriage.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;">Above all,
Michigan contract law protects the principle of freedom to contract by recognizing
all contracts entered into upon the mutual agreement of the parties. As such,
many legal provisions that provide specific rules or expectations can be
modified, waived, or supplanted by contractual agreements. That being said, it
is also well recognized that freedom of contract does not permit contracting
parties to impose obligations or waive the rights of third parties without their
permission to do so.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;">In its most
simple form, <i>Allard</i> affirmed the
power of a divorce court to invade the separate property of one spouse if the
martial estate is insufficient to provide for the suitable support and
maintenance of the spouse seeking additional support. This accounts for the needs of any children
in their care despite the presence of a contractual agreement to the contrary. In
exercising this equitable power, the court is also limited, as it may only be exercised
over property for which the spouse seeking additional support contributed to
the acquisition, improvement or accumulation. Necessarily, this would likely
include all property accumulated during the course of the marriage.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;">As such, where
prenuptial agreements are concerned, this does not change the effectiveness of
these agreements where property accumulated prior to marriage is concerned, nor
does it affect provisions controlling any inheritance by a spouse. In addition,
unless there is an equitable reason for the court to invade the individual
property of a spouse, the terms of a prenuptial agreement will remain binding. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;">As the Court of
Appeals stated in <i>Allard III,</i> however,
a divorce proceeding is an equitable one that allows the court the freedom to
afford whatever relief is necessary to accomplish its own directives. In the decision,
the Court emphasized these equitable principles and pointed out that the
couple’s children are third parties whose rights are impacted without their
consent via a prenuptial agreement.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;">The broad impact
of the decision is that the bounds of contractual freedom for creating a prenuptial
agreement have been diminished, at least
to the extent to which these agreements may be utilized to maintain economic
inequity between spouses upon divorce. Practically speaking, most couples signing
prenuptial agreements are doing so to protect property accumulated prior to
marriage, and inherited during marriage, not to ensure that they will retain a
disproportionate portion of property accumulated during the marriage.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;"><br /></span></div>
<div class="MsoNormal">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;">In summary, here are the key highlights:<o:p></o:p></span></div>
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</div>
<ul>
<li><span style="color: #0a0a0c; font-family: Arial, sans-serif; font-size: 12pt; line-height: 106%; text-indent: -0.25in;">Prenuptial agreements continue to
be critical to protect the separate property of each spouse accumulated prior
to marriage, as well as any property or assets inherited during marriage by a
spouse.</span></li>
</ul>
<ul>
<li><span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="color: #0a0a0c; font-family: Arial, sans-serif; font-size: 12pt; line-height: 106%; text-indent: -0.25in;">A divorce court will only employ
equitable principles to redistribute property – despite such property having
been deemed as separate by a prenuptial agreement – when necessary to resolve
an inequity of property between the spouses that makes support of one of the
spouses impossible without such redistribution.</span></li>
</ul>
<ul>
<li><span style="color: #0a0a0c; font-family: Arial, sans-serif; font-size: 12pt; line-height: 106%; text-align: justify; text-indent: -0.25in;">Continued and future support of minor
children is an extremely important factor in the court’s decision to judicially
redistribute separate marital property.</span></li>
</ul>
<br />
<br />
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 106%;">If you are
looking to have a prenuptial agreement drafted, please contact your attorney to
address your individual concerns.<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-42617736831227862652017-06-05T09:00:00.005-07:002017-06-13T08:21:35.053-07:00The Elimination of Dower Rights in Michigan<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; line-height: 115%;"><b>By: Adrienne B. Knack</b></span><br />
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; line-height: 115%;"><b><br /></b></span>
<br />
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Michigan
recently repealed widow’s dower rights going forward after a long history of granting dower to widows.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">The
concept of dower rights dates back centuries and was intended to protect a surviving
widow following her husband’s death. The widow could elect to retain one-third of (her
deceased husband’s real estate that her deceased husband had held during their
marriage. This included all real estate brought into the marriage and acquired
during the marriage, whether by purchase, gift or inheritance. In Michigan, dower rights were recognized in
common law, as well as in the Michigan Constitution, statutes, and land title
standards. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">One
of the consequences of dower rights in Michigan was the statutory provision
that a real estate deed show the male seller’s marital status on the document,
in order to identify the spouse as having a potential dower right in the
property being sold. Additionally,
language needed to be included in deeds addressing the spouse’s dower rights in
the property. If this was not addressed
on the deed, it became an issue when the husband attempted to sell the property
and created a cloud on the title.
Because of this, although dower rights were considered inchoate
(incomplete) until the husband’s death, the presence of dower rights prevented a
husband from selling or transferring property without his spouse’s permission and completely
disinheriting his wife. This was the
case even if the wife was not an owner of the property. It also created an issue when the husband
attempted to mortgage the property. Whether
dower should be applied and how to handle it also became a unique issue in the
case of same-sex marriages in Michigan. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Legislation
to abolish dower in Michigan had been presented to the legislature many times,
but did not pass and until recently, Michigan was the only state to continue to
recognize this archaic concept. However,
since the United States Supreme Court’s landmark decision in 2015 in <i>Obergefell v. Hodges</i>, holding that
states must license same-sex marriages, Michigan’s dower was put in question
again since it applied only to “wives” and not to “spouses.” Rather than extend the protection to husbands,
the Michigan Legislature voted to abolish dower rights. On January 5, 2017, Governor Rick Snyder
signed into law a package of bills that formally abolished dower rights in the State
of Michigan. The legislative package
consisted of House Bill 5520, Senate Bills 558 and 560. They are now Public
Acts 378, 489 and 490 of 2016. The new
law took effect April 6, 2017. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">This
means that a widow will no longer have the option to elect the dower share when
her husband dies, unless he died prior to April 6, 2017. It also means that a wife should no longer
have to join in the signing of a deed for property owned solely by her spouse. However,
while Michigan works out the kinks with the new laws, it may make sense to
still address dower rights in a deed, especially if the property was conveyed
to the husband while the spouses were married and before the abolishment of
dower. Additionally, the abolishment of dower does not affect or alter
Michigan’s laws regarding “homestead”, and so a spouse may still be required to
sign the mortgage for their homestead property, depending on whether the
mortgage is granted to secure debt which was not incurred in the purchase of the
property.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; line-height: 115%;">
</span><br />
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">If
you have any questions about dower rights, please contact us.<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-76270972713334474482017-06-05T09:00:00.001-07:002017-06-05T09:00:11.257-07:00Protecting Yourself in Residential Real Estate Transactions<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">By: Ashley Prew<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">When selling or purchasing a new
home, individuals often do not think to hire an attorney to assist with the
transaction and review the key legal documents.
Generally, it seems that consumers tend to rely solely on real estate agents
to assist with the transaction. Although
we absolutely recommend hiring a real estate agent when buying or selling a home,
we also recommend using a trusted legal professional to review the documents
prior to the execution of any agreements with the agent or the other parties to
the transaction.</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"> <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">The sale of real property is a
legal transaction that has very specific requirements. All sales require a purchase agreement, which
is a legally binding contract whereby the seller agrees (and becomes
contractually bound) to sell the property to the purchaser under the particular
terms of that purchase agreement. Oftentimes,
standard form purchase agreements fail to address key issues in the transaction
as they do not contemplate the particular agreement between the parties. For example, many standard form real estate purchase
agreements fail to include what is known as a “risk of loss provision” which
designates who is liable for any potential loss to the property during the period
between the execution of the purchase agreement and the closing. If, for example, the property burns down the day before
closing, there should be adequate provisions to address what would happen and
how that unfortunate event would be handled.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Another example of a key
provision that is often missing from a purchase agreement is a provision to
address what happens if the property does not appraise for the purchase price
or higher. If the sale requires
financing through a mortgage, this provision becomes particularly
relevant. Mortgage lenders typically
will not lend for the purchase of property if the sale price is higher than the
appraised value. There are equitable
ways to address this scenario, such as readjusting the purchase price or
allowing the parties to rescind the contract.</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">
<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">As stated above, once the
purchase agreement is signed, it is a legally binding contract and typically
can only be amended by an additional signed writing between the parties. Therefore, the time to negotiate the
contractual provisions is before the agreement is signed. In order to avoid disputes after the fact, we
highly recommend having an attorney review the purchase agreement, explain the
key provisions, and indicate whether any major provisions are missing. Given
the magnitude of most real estate transactions, the failure to do so often
creates catastrophic results for one party, or simply creates costly litigation
between the parties. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Beyond the purchase agreement,
the review of the closing documents by an attorney prior to closing is also an
important step. The closing documents – specifically
the deed conveying the property to the buyer, closing statements, and title
commitment – are what transfers and guarantees title to the property. It is imperative that the deed is one hundred
percent accurate in order to ensure there are no title discrepancies or
disputes in the future. As a purchaser,
it is also extremely important to have an adequate title insurance policy to
ensure that if a title dispute arises in
the future, there will be insurance to
cover that issue. Again, once the
closing documents are signed, they are legally binding. The time to have them
reviewed for accuracy by an attorney is prior to the closing.<o:p></o:p></span></div>
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><br /></span>
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">Residential real
estate transactions often reflect an individual’s biggest investment and can be
an exciting and emotional time. In order
to ensure the transaction goes smoothly, it is important to protect this
investment by hiring a qualified attorney, in addition to other chosen real
estate professionals, to assist with the buying or selling process.</span>Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-53491564259059786182017-02-27T08:42:00.005-08:002017-02-27T08:42:54.354-08:00 UTILIZING BUSINESS AGREEMENTS AS A DETERRENT TO LAWSUITS AND AS AN OFFENSIVE WEAPON<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;">By: Andrew Burrows<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none;">
<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">Despite the inherent usefulness of service agreements and/or
purchase agreements in memorializing the terms of a transaction between
businesses (“Business to Business” or “B2B”), or between businesses and their
customers (“Business to Customer” or “B2C”), many entrepreneurs forego having
these documents drafted. From our experience, the primary reason for delaying
or altogether avoiding having a formal agreement drafted for their business
dealings is one of cost. Unfortunately, clients who do not have effective agreements
and who find themselves in a B2B or B2C dispute are at a drastic disadvantage
once they find themselves in the negotiation or litigation.<o:p></o:p></span></div>
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<br /></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">One of the primary benefits of effective agreements is the
impact they have on litigation, or a situation that may give rise to litigation.
A well-drafted service agreement or purchase agreement will lay out all the
material terms for a service based business, and will ideally leave no “grey
area” for the parties to dispute. Although litigation sometimes arises because
of outright wrongdoing by one party, lawsuits also often arise because of a
misunderstanding of the terms of an agreement between the parties. This most
often occurs where the agreement between the parties is never memorialized by a
writing (an oral agreement), or where the parties use an agreement that is not
specifically tailored to their business. The most common example of this is
finding a service agreement from the Internet and modifying it in an attempt to
tailor it to the needs of the business.<o:p></o:p></span></div>
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<br /></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">Despite the perceived
initial cost savings, these patchwork agreements fail to address key areas that
give rise to disputes. Although it may be difficult to rationalize shouldering
the cost of a formal agreement as a business owner, the cost of preparing an agreement
to protect your business is small in comparison to having your business
involved in disadvantageous litigation.<o:p></o:p></span></div>
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<br /></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">Beyond the protective aspects of these agreements, a service agreement
or purchase agreement is often a business’ best weapon in taking action to
collect a receivable or right a wrong. A well-drafted agreement will
specifically define the terms of the agreement between the parties. This is of
utmost importance. First, the mere existence of a well drafted agreement will
almost always cause customers and suppliers to live by it without a lawsuit. If
there has to be lawsuit, the chances of good result are much better with a
soundly written agreement. In these situations, litigation may be avoidable,
allowing the parties to negotiate a resolution without the expensive legal fees
associated with business litigation.<o:p></o:p></span></div>
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Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-33458670433427990302017-02-27T08:42:00.003-08:002017-02-27T08:42:16.558-08:00MICHIGAN ADOPTS DOMESTIC ASSET PROTECTION TRUSTS<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;">By: Tim Williams<o:p></o:p></span></b></div>
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<br /></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">On December 8, 2016,
Michigan signed into law two bills
that allow the creation of Domestic Asset Protection Trusts (DAPT). The law goes into effect on March 8,
2017. Michigan is now the seventeenth state to allow such trusts.<o:p></o:p></span></div>
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<b><span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">The
Basics <o:p></o:p></span></b></div>
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<b><span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></b></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">A DAPT is
an irrevocable
trust that protects the assets of the
person who sets up the trust from the usual claims that apply to trusts.
The person who creates the trust, called the "Grantor",
transfers a portion of his or her assets into the trust. The Grantor is typically a lifetime beneficiary of
the trust. The Grantor can also retain decision-making authority over
the administration of the trust. The assets in the DAPT are not subject to the Grantor’s creditors, even though the
Grantor is a beneficiary. Moreover, under recent IRS rulings, if drafted properly, the assets in a DAPT are not
included in the Grantor’s Gross Estate
for Federal Estate Tax purposes. </span><span style="font-family: Arial, sans-serif; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">The creditor protection aspect
of the law with respect to DAPTs is quite lenient. The law provides that the Grantor’s creditors may not attack assets transferred to the DAPT upon expiration of
a two-year period, which begins with the
date the assets are transferred to the Trust. There are only a
few exceptions to this protection, including instances of fraudulent
transfers and bankruptcy.<o:p></o:p></span></div>
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<br /></div>
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<b><span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 111%;">Practical Uses for a DAPT<o:p></o:p></span></b></div>
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<u><span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 111%;">Adult Child Needing Protection<o:p></o:p></span></u></div>
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<br /></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 111%;">The first situation where a DAPT is useful
is one in which a person’s adult child needs to be financially supported but it
is not desirable to make out-right gifts to the child annually. Circumstances
that could make out-right gifts undesirable include if the child is involved in
bankruptcy, insolvency, divorce, child support issues, judgments against the
child, student loan default, or an IRS Federal Tax Lien. <o:p></o:p></span></div>
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<br /></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 111%;">The DAPT can be set up so that funds are available
to support the child, enable the purchase of a house for the child’s use, etc.,
but not subject the assets or income to risk of loss if placed directly in the
hands and ownership of the child.<o:p></o:p></span></div>
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<br /></div>
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<u><span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 111%;">Reducing Federal Estate Tax<o:p></o:p></span></u></div>
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<br /></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 111%;">A second situation where a DAPT will be
useful is where the Grantor needs to reduce the size of his or her estate for
Federal Estate Tax Purposes. The use of a DAPT will allow the Grantor to shift
an amount of assets into the DAPT to reduce his or her Federal Estate Tax below
the Federal Estate Tax dollar exclusion, thus eliminating any Federal Estate
Tax at his or her passing. <o:p></o:p></span></div>
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<br /></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 111%;">Despite the benefits of the DAPT to persons
in situations such as those described above, care should be taken to consider
the Capital Gain Tax consequences when planning a Federal Estate Tax Reduction
DAPT. The IRS may take the position that the Grantor has “gifted” the capital
gain tax to the beneficiaries. This is known as carryover tax basis. If assets
are transferred at death, the Capital Gain Tax is forgiven.</span><span style="font-family: Arial, sans-serif; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="color: #0a0a0c; font-family: "Arial",sans-serif; font-size: 12.0pt;">Overall, the Michigan DAPT
can be a powerful tool in both estate planning
and asset protection planning. Considering whether a DAPT is appropriate
involves many considerations. Therefore, an
attorney that specializes in estate planning and estate tax issues should be
consulted to ensure a DAPT is appropriate for your situation. </span><span style="font-family: Arial, sans-serif; font-size: 12pt;"><o:p></o:p></span></div>
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Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-26094707850711211822017-02-27T08:41:00.003-08:002017-02-27T08:41:38.049-08:00Purchasing Intellectual Property<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">By: Ashley Prew<o:p></o:p></span></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">A sometimes overlooked part of
a business transaction is the sale of intellectual property rights. Specifically, any trademarks, service-marks,
patents, and copyrights that a business owns need to be handled properly in the
sale of the business. Unfortunately, some
of our clients have purchased trademark and service-marks in the course of acquiring
another business, but failed to receive legal title via proper transfer to the
new business owner at or immediately after the closing.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">If a business owns and then
sells a federal trademark or service-mark, the required transfer of title
document is an Assignment of Interest that is filed with the United States
Patent and Trademark Office (“USPTO”).
The assignment can be compared to a deed for real estate. If the assignment is never recorded or filed
with the Trademark Office, then ownership remains with the previous owner. If this occurs, additional expense will be incurred
later when the discovery is made and the mistake has to be corrected. In addition, if there is a dispute over
ownership, costly litigation may result to resolve the ownership dispute. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Properly addressing the
intellectual property rights of a company in the Asset Purchase Agreement or
Buy/Sell Agreement is only the first step in ensuring the trademark or service-mark
is properly sold in the transaction. Beyond
these agreements, it is up to the parties to ensure that the Assignment of
Interest is both executed prior to or at the closing, and then properly filed
with the United States Patent and Trademark Office. After the ownership transfer is properly recorded
with the USPTO, it becomes the new owner’s responsibility to ensure it
adequately protects the intellectual property interest. Some of these
protective acts include continuously using the mark, filing the required
renewals with the USPTO, and taking steps to ensure competitors do not infringe
on the registered mark. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">When purchasing, selling,
applying for, or maintaining a federal trademark or service- mark, it is
important to ensure you have an attorney who can advise you on the required
steps to protect this intellectual property. If you have questions regarding trademarks, service-marks, or copyrights,
please do not hesitate to contact us directly.<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-87191652437196152072016-11-01T08:41:00.002-07:002016-11-01T08:41:16.056-07:00What is a board of directors all about?<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><b>By: Adrienne B. Knack<o:p></o:p></b></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">In
Michigan, corporations (including non-profits) are required to have a board of
directors. The board is responsible for
overseeing the affairs and activities of the company or organization. The board of directors is elected by the
shareholders of a corporation, including the chairperson of the board of
directors. The company’s bylaws will
dictate how the board operates. The
bylaws will also indicate how many directors need to be on the board. This can be as few as one director, which is
very common for a single shareholder corporation. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">One
of the more important things that the board of directors is responsible for is
selecting the company’s officers – president, secretary, and treasurer. The officers are responsible for the
day-to-day affairs of the company and running the business. Michigan requires an annual meeting of
directors to select each year’s officers.
This is usually done on the first Tuesday in March each year. Michigan also requires there to be an annual
meeting of shareholders whereby the directors are elected each year. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The
bylaws of the company will also dictate how often the board will meet. The bylaws can be set up so that consent
documents can be prepared and signed every year in place of having actual,
physical meetings of the directors and the shareholders. This is typical for companies that have a
single officer, shareholder, and director.
On the other hand, some organizations have ongoing affairs that need to
be addressed by the board of directors, so monthly or bi-monthly meetings are
necessary. For other organizations,
annual meetings are all that is needed.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">For
a company that requires an actual, physical board meeting, the protocol for the
meeting varies based on the organization.
Typically, an agenda for the board meeting will be sent out to the board
members in advance of the meeting.
Often, this will constitute notice of the meeting to the board of directors
pursuant to the bylaws. The agenda will
include reports of the officers and committees, new business that the board
needs to discuss, and old business from a prior meeting. The secretary will take notes (minutes) of
the meeting to report back to the shareholders what the board discussed and
decided. The minutes also memorialize
the board meeting and should be kept with all important company records. The minutes will include all motions brought
in front of the board, notes on the discussion, who seconded a motion, and
whether or not the motion passed.
Motions are required to be made, seconded, discussed, and voted on to
adopt (or deny) significant proposals before the shareholders and directors,
such as the organization borrowing funds, potential mergers or sale, adding a new
line of business, etc. Typically, the
“significant” events are outlined in the company’s bylaws.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">These
formalities are imperative to maintain proper legal standing for a corporation
and keep separation between the entity and its shareholders, officers, and
directors as individuals. If these formalities are not complied with, the
personal assets of shareholders, officer and directors may be at risk despite
the purported protection of the corporate form.
The company should also be sure that its business insurance policy
includes officer and director coverage.<span style="color: red;"><o:p></o:p></span></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-36902844943507616602016-11-01T08:40:00.001-07:002016-11-01T08:40:46.890-07:00TAX ISSUES WHEN SELLING OR TRANSFERRING REAL ESTATE<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;">By: Tim Williams<o:p></o:p></span></b></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;"><br /></span></b></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">Michigan
has some unique tax provisions which can negatively impact the sale, transfer,
and/or purchase of real estate. Being aware of these rules is important when
making decisions with regard to selling, purchasing, and gifting real estate in
Michigan. <o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">In
addition, there are several Federal and Michigan tax provisions to be aware of
when selling or transferring real estate. <o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;">“UNCAPPING’ FOR PROPERTY TAX PURPOSES<o:p></o:p></span></b></div>
<div style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;"><br /></span></b></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">Under
Michigan law, the increase in a property’s value for property tax purposes
cannot exceed the rate of inflation. This value, known as the “Taxable Value”,
is used for property tax calculation and assessment. After the economic reverie
following the Great Recession, it is quite common for real estate in Michigan
to have a lower Taxable Value upon which property taxes are determined, as
compared to the Assessed Value, which is not limited by the rate of inflation.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">If property
is sold or transferred in Michigan, the purchaser will pay property taxes on
the assessed value of the property, as opposed to the taxable value. This sale
or transfer permits the municipal taxing authorities to mark-up the value of
the property for tax purposes, causing the purchaser to pay much higher
property taxes than the seller had been paying. This is known as “uncapping”
and it can be quite expensive. On investment and rental real estate, uncapping
can factor heavily into the annual carrying cost of the real estate. <o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">There
are some exceptions to uncapping, many of which are quite complex. The most
common exceptions include transfers between husband and wife, transfers from
one family generation to the next, corporate real estate involved in a transaction
which is a tax-free merger or consolidation, transfers pursuant to a court
order, and transfers out of a probate estate to the decedent’s heirs and beneficiaries.
<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">A transfer
out of a living trust to a beneficiary will result in uncapping unless the beneficiary
is the person who set up the trust or that person’s spouse.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;">MICHIGAN REAL ESTATE TRANSFER TAXES<o:p></o:p></span></b></div>
<div style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;"><br /></span></b></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">Michigan
has a State Real Estate Transfer Tax and a County Real Estate Transfer Tax. The
taxes are levied upon the sale of real estate. Together, these taxes are levied
at the rate of $8.60 for every $1,000 of value or sale price or fraction
thereof. Therefore, the sale of a home for $300,000 will trigger a tax on the
seller of $2,580. <o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">There
are some exceptions to these taxes as well. One exception that is particularly prevalent
is a transfer where no money changes hands. This can occur when real estate is
gifted, when it is transferred in satisfaction of a judgment of divorce, and
when a spouse transfers the real estate to himself or herself and his or her spouse.
Another common exception is transfers made by U.S. Federal agencies as sellers,
such as the Department of Housing and Urban Development and the Department of
the Interior.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">Other
exceptions include the entering into of a land contract, a transfer from a
parent to a child, transfers to a limited liability company if the ownership
percentages in the company are equal to the ownership percentages before the
transfer, and a transfer from an owner to a new joint tenant where the owner remains
a joint tenant. <o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;">FEDERAL AND MICHIGAN CAPITAL GAINS AND
ORDINARY GAIN TAXES<o:p></o:p></span></b></div>
<div style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;"><br /></span></b></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">For Federal
income tax purposes, gain on the sale of real estate is taxed at either a flat
15% or 20% rate. High income taxpayers pay capital gains tax at the 20% rate.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">For
Michigan tax purposes, gain on the sale of real estate is taxed at the rate of
4.25%. Thus, the combined Federal and Michigan tax rate on gain on the sale of real
estate is either 19.25% or 24.25%.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">There
are some exceptions to the imposition of the capital gains taxes. Married
taxpayers can exclude up to the first $500,000 in gain on the sale of their
principal home. Single taxpayers can exclude up to $250,000 in capital gain. The principal residence exemption can be used
on the principal residence as long as the owner occupies the home for at least
two years within the five year time period immediately before you sell it.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">Other
exceptions include “like-kind exchanges” and transfers of real estate to a
company owned by the person transferring the real estate.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">Certain
situations give rise to ordinary gain as opposed to capital gain. This includes
gain from the sale of business or rental real estate, upon which the
depreciation deduction was taken. Gain from the sale of business and rental
property will be partially taxed as ordinary gain and not at capital gains
rates. This places the rate on the ordinary gain portion as high as 39.6%.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;">ACTION STEP<o:p></o:p></span></b></div>
<div style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;"><br /></span></b></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">In
order to avoid the pitfalls of selling or buying real estate, seek the advice
of a qualified attorney. A real estate attorney can often structure the
transaction so as to avoid, or at least minimize, the negative impact of the
Michigan and Federal tax rules impacting real estate transactions.</span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-75073086247080131822016-11-01T08:39:00.002-07:002016-11-01T08:39:41.672-07:00PROTECTING YOUR PERSONAL ASSETS AS A BUSINESS OWNER: IS FORMING A CORPORATION OR LIMITED LIABILITY COMPANY ENOUGH?<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">By: Andrew Burrows<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">Many business owners seek to form a formal business entity for the
primary purpose of protecting their personal assets from any future legal
claims there may be against their business. Although forming a corporation or a
limited liability company (“LLC”) is surely a step in the right direction, this
protection can be lost if the business owner does not comply with other
formalities required by Michigan law. These formalities must be complied with in
order to ensure that a potential lawsuit or creditor’s claim against the
business does not reach the business owner’s personal assets.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">HOW MAY MY PERSONAL ASSETS
BE AT RISK?</span></b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">In a civil lawsuit, a business defending a lawsuit may lack sufficient
funds to pay the entire judgment that is awarded to the plaintiff. In order to
ensure recovery for the full amount, plaintiffs will often argue a legal theory
called “piercing the corporate veil” in order to allow the plaintiff to move
beyond the assets of the business and recover directly from the personal assets
of the business owner. This is not to say all businesses are at risk from this.
Piercing the veil is only proper where the court perceives there is abuse of
the corporate form, which is simply another way of saying that corporate
formalities are not being followed by the business owner. It is also important
to note that under Michigan law, piercing the veil is applied to LLC’s by
courts in the same manner as corporations.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">In addition, a plaintiff may name the individual directors and officers
of a corporation (or members and manager of an LLC) as defendants in a lawsuit in
order to have additional pockets to reach and to intimidate the directors and
officers into settling the case. The best means to protect against this is for
the business owner to add directors and officers liability coverage to the
general liability insurance policy maintained by the company. This coverage
will protect directors and officers (to the same extent as the business) for
the types of claims and lawsuits the general liability policy covers. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">WHAT FACTORS ARE
CONSIDERED BY THE COURT WHEN DETERMINING WHETHER FORMALITIES HAVE BEEN COMPLIED
WITH?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">Outside of engaging in illegal acts such as fraud, here are a few of the
most common reasons Michigan courts may permit a plaintiff to pierce the corporate
veil:</span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<u style="text-indent: -0.25in;"><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></u></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<u style="text-indent: -0.25in;"><span style="font-family: Arial, sans-serif; font-size: 12pt;">1. Absence of Corporate (or LLC) Formalities:</span></u><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;"> </span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">This is most commonly a problem for businesses that have attempted to
create an entity, but have not retained an attorney who specializes in
assisting business owners and entrepreneurs. In starting their business, many
entrepreneurs will pay an attorney a one-time fee to prepare the necessary
documents to form a corporation or LLC. Sometimes business owners who have
attempted to set up a corporation or an LLC on their own only use inception
documents consisting of only a short document called the Articles of
Incorporation (for corporations) or Articles of Organization (for LLCs). There are several other documents, however, that
must be prepared beyond these Articles to ensure all formalities are met. Additionally, there are documents required to
fulfill these formalities every year the company is in existence. An experienced business attorney will prepare
all of the required documents for the business.</span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;"><u>2. </u></span><u style="text-indent: -0.25in;"><span style="font-family: Arial, sans-serif; font-size: 12pt;">Commingling Personal and Business Funds:</span></u></div>
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;"> If you operate your business under a corporation or LLC, it is
imperative that you open a separate bank account under the name of your
business entity. It is equally important that all transactions of the business
flow through the business’s bank account and none of the business transactions
flow though the owner’s personal bank account. It is equally important that
none of the owner’s personal expenses and transactions flow though the
corporate bank account. Although personal funds may be contributed to the
business as a capital contribution, for all intents and purposes, the
contribution must be treated as a formal transaction (ex: shareholder exchanges
cash for stock in the corporation).</span></div>
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; text-align: justify;">
<u style="text-indent: -0.25in;"><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></u></div>
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; text-align: justify; text-indent: 0px;">
<u style="text-indent: -0.25in;"><span style="font-family: Arial, sans-serif; font-size: 12pt;">3. “Undercapitalization”, a/k/a Siphoning Funds to a Shareholder
(Corporation) or Member Interest Holder (LLC):</span></u></div>
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; text-align: justify; text-indent: 0px;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; text-align: justify; text-indent: 0px;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">A
business must maintain enough capital to sustain itself as a separate entity
and not operate as a mere façade for the personal operations of a shareholder.
Some small business owners, especially those who operate a single-shareholder
corporation or single-member LLC, may distribute all annual profits of the
business to themselves as dividends, leaving their business’ bank account
barren. It is a violation of Michigan law for a business entity to pay all or
almost all of its cash to its owner(s) if doing so leaves the business unable
to pay its creditors in the normal course of business.</span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">In this situation, courts are reluctant to allow business owners to shield
their personal assets, and may reach the personal assets of the business owner to
satisfy a judgment. The simple solution here is to keep the appropriate amount
of capital in the business to support its operations and run such operations independent
of the personal needs of the business owner(s).<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">ACTION STEP: PREVENTING A
PLAINTIFF FROM REACHING YOUR PERSONAL ASSETS<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
</div>
<div class="MsoNormal" style="line-height: normal; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">The first step is to engage an attorney who specializes in assisting
business owners and entrepreneurs and direct them to do a review of your
business documents and operating procedures. By putting a plan in place to
create or update these documents to comply with current law, a savvy business
owner can ensure their business complies with all requisite formalities, as
well as ensure that the business is being run and managed in a way that does
not abuse the corporate (or LLC) form under Michigan law. <o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-71868588398297556732016-11-01T08:35:00.000-07:002016-11-01T08:35:10.127-07:00Funding Your Revocable Living Trust<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">By: Ashley J. Prew</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Some of the most common
questions we receive from estate planning clients are regarding which assets
should be owned by or payable to their Revocable Living Trust. The process of transferring assets into a Revocable
Living Trust during life or upon death is known as “funding” the Trust. The Revocable Living Trust funding process is
a crucial, yet often overlooked, step in the estate planning process. Properly
titling and setting up beneficiary designations on your bank accounts,
investments, and other assets ensures that if you become incapacitated during
life, or pass away, your relatives are able to handle your affairs without
initiating a probate court proceeding. Since
every estate planning situation is different, if you have specific questions
about whether or not your assets are properly held in order to avoid probate,
you should consult with your estate planning attorney. With that being said, the following are some general
considerations to make when determining ownership and beneficiary designations
if your estate plan is complete and includes a Revocable Living Trust
Agreement.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">How
do I fund the Trust?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Funding your Revocable Living Trust
is the last step in the estate planning process and it is done after your Revocable
Living Trust is executed and in existence.
This includes making sure that all of your assets are properly
designated so that they will either pass to your Revocable Living Trust or a
living beneficiary when you pass away.
The key item to remember is that if an asset is owned by an individual
and not by their Revocable Living Trust, or their Revocable Living Trust is not
the named beneficiary of the asset, that asset will require probate when the
individual dies, even if they have a Will and a Trust. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Therefore, it is important
that when you meet with your estate planning attorney, you disclose all of your
real estate ownership interests, business ownership interests, and the types of
accounts in which you hold your liquid and investment assets. At the end of the estate planning process, Williams
& Knack, P.C. provides you with a letter detailing the necessary steps to
fund your Revocable Living Trust that are tailored to your specific situation,
and follows your wishes in terms of how property is to be distributed to your
beneficiaries upon your death. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">When
should I fund the Trust?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">The answer is right away, but
many people have questions about whether assets need to be owned by their Revocable
Living Trust while they are still living.
Generally, the answer is typically no, unless your situation includes
special circumstances. Remember that
properly funding your Revocable Living Trust requires proper beneficiary
designations and that does not necessarily mean that there will be any change
in account ownership. The instructions
our firm provides in the letter referenced above will properly accomplish
funding the Trust, but only if they are followed completely and accurately.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Are
there any assets that should <u>not</u> be put into the Trust when I die?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">The answer to this question
depends on your financial and family situation, but generally we do not
recommend naming a Revocable Living Trust as a beneficiary of any IRA, 401(k), or
other “qualified” retirement funds and annuities. The reason for this
recommendation is there are significant income tax advantages to naming your
spouse, your adult children, or other persons as the beneficiaries of these
types of accounts. A living beneficiary
can continue to defer the distribution and withdraw the balance of these
accounts slowly over a period of years.
The amount they will be required to withdraw is based on certain factors
including your age when you die and the beneficiary’s current age, life
expectancy, and the beneficiary’s relationship to you as the account
owner. Alternatively, if you name your Revocable
Living Trust as the beneficiary of this account, when you die, the Trustee will
likely be required to liquidate and distribute the funds in the account within five
years from the date of your death. The
assets in the account will then be taxed all at once, and as a consequence,
will be subject to the higher taxation rates for Trusts. Furthermore, the
assets will not be able to earn interest, dividends and capital gains,
compounding tax free. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Something to keep in mind,
however, is that if your situation includes minor children or a special Trust
for amenities for a beneficiary with a disability or if it is not your
intention to have your beneficiary have complete access to the funds
immediately upon your death, this recommendation would not apply to you.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Conclusion</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
</div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">As indicated, funding your Revocable
Living Trust is specific to your own personal, family, and financial
situation. In addition, if you obtain a
new account or a new piece of property, you need to take the steps to fund your
Revocable Living Trust (or designate a beneficiary) with those accounts and
assets as well. We recommend that you
confirm your beneficiary designations at least every few years to make sure
that none of your assets will fall to probate.
If you have questions regarding funding your Revocable Living Trust and
designating beneficiaries, please do not hesitate to contact our office
directly. <o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-91690478670576662262016-06-07T07:58:00.000-07:002016-06-07T07:58:05.391-07:00THE IMPORTANCE OF A WELL-DRAFTED LEASE<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><b>By: Adrienne B. Knack</b><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Often,
people or companies that rent real estate get into trouble with a tenant. There are numerous problems that can arise as
a landlord – both with residential tenants and commercial tenants. A landlord should have the proper protection
by having a professionally drafted, case-specific lease that conforms with
state, county, and municipal regulations and statutes. There are many things that need to be present
in most – if not every – lease agreement.
This includes items such as a description of the premises, rent amount,
payment specifics, the county where a collection or eviction suit can be
brought, etc. In addition, every piece
of real estate is unique and comes with its unique set of concerns and issues. If there is a specific issue with a certain
piece of property, it needs to be addressed in the lease. A lease needs to function as both a sword and
a shield. It needs to protect the
parties, both proactively when the other party does not perform and defensively
when the other party attempts to come after (them) owner/landlord under the
lease. A bit confusing – can you name the parties?<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Landlords
much too often use a boilerplate lease that they find on the internet, receive
from a realtor, friend, or wrote themselves.
While it is certainly better to have <i>something</i>
instead of nothing, the leases that we see that are not properly drafted can be
dangerously lacking. One example that we
have seen recently is a commercial lease that did not include a default
provision. The lease neither defined
what it meant for the tenant to be in default of the lease, nor did it dictate
the landlord’s available remedies. This left the landlord vulnerable when the
tenant ceased making rent payments. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">It
is important for a landlord to protect itself by building certain items into its
lease agreement. Michigan law requires that a residential lease contain certain
specific lanaguge. Michigan law also requires that the landlord and tenant have
an inventory checklist and itemized list of damages. All of these documents work together to allow
the landlord remedies from the tenant, as well as protect the landlord if a
tenant attempts to make a claim that is not within the purview of the lease.
All of these documents work together to allow the landlord remedies from the
tenant, as well as protect the landlord if a tenant attempts to make a claim
that is not within the purview of the lease.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Another
bad situation that is made worse by having a poorly drafted lease is when a
residential lease is used with a commercial tenant. We have seen this situation too often, which can
be detrimental to a landlord when there is an issue with a tenant. There are certain items that need to be
included or addressed in a commercial lease that would not be present in a
boilerplate residential lease. There
will also be items included in a residential lease that should not be included
in a commercial lease. It is also
important to ensure that any kind of extension of or amendment to the lease is in
writing signed by both parties.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">There
are very specific Michigan statutes regarding what needs to be included in a
lease. When a lease is sourced online or
is a fill-in-the-blank type lease, these items are missed. This can be fatal to the landlord when
attempting to evict or collect from a tenant for breach of the lease. One specific example is that pursuant to MCL
§554.603, the landlord must inform the tenant of the name and address of the
financial institution where the security deposit is held. The statute specifies the language, in
12-point boldface font, which must be included in a lease. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">On
the flip side of what we have discussed thus far, there are also many things
that can go wrong as a tenant. If a
landlord does not perform as they are supposed to, such as not making repairs
or paying property taxes, the tenant needs to ensure there are protections in
the lease to allow them to force the landlord to perform and give the tenant
remedies if the landlord does not do what he is supposed to do.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<br />
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">If
a proper lease is not used, both parties could end up in a long, expensive
court battle. It is well worth the time
and money up front to have a professionally drafted lease prepared to protect
everyone involved. It certainly makes
things much easier when an issue arises.<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-50002193648720011592016-06-07T07:56:00.001-07:002016-06-07T07:56:53.110-07:00THE IMPORTANCE OF FEDERAL ESTATE TAX PORTABILITY<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif;">By: Tim Williams<o:p></o:p></span></b></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">Estate
Tax Portability represents the single biggest change in the Federal Estate Tax
since 1986. Understanding the workings of Portability could have huge financial
implications for your heirs – an impact just as significant - if not more so – than
your previous estate planning prior to the advent of Portability. Portability
was added to the Federal Tax Code in 2011 as a temporary measure that was made
permanent in later legislation.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">Portability
comes into play upon the death of the first spouse to die. It is the ability of
a surviving spouse to utilize the unused Federal Estate Tax Exclusion of his or
her deceased spouse by filing a timely Federal Estate Tax Return (Form 706) for
his or her deceased spouse. Practically speaking, the Personal Representative
of the deceased spouse’s estate chooses whether to utilize the Federal Estate Tax
exclusion amount for the deceased spouse ($5,450,000 in 2015), or transfer the Deceased
Spouse’s Unused Exclusion (DSUE) amount to the surviving spouse.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">It
is very common for a spouse to die with an estate less that the Federal Estate
Tax Exclusion amount, which is $5,450,000, indexed annually for inflation. In
these situations, the surviving spouse will not normally file a Federal Estate
Tax Return for his or her deceased spouse because there is no Federal Estate
Tax payable. However, if there is a possibility that the surviving spouse will
have in excess of the Federal Estate Tax Exclusion in the year of his or her
death, it is imperative that the surviving spouse file a Federal Estate Tax Return
for the deceased spouse by the deadline for filing the return.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">The
following situation highlights the need to file a Federal Estate Tax return
upon the death of a spouse even when the estate is less that the Federal Estate
Tax Exclusion amount:<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">John
was killed in a tragic car accident in 2014 when a large truck rear ended him.
An Estate was opened in the county Probate Court in the county John lived in at
his death. John’s surviving spouse, Linda, had herself appointed Personal
Representative by the county Probate Court. John’s Estate for Probate purposes
was $400,000 and for Estate Tax Purposes was $610,000 because life insurance on
John’s life is includible for Federal Estate Tax purposes.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">Linda
did not file a Federal Estate Tax return for John by the due date, which is nine
months following John’s death. The reason that Linda did not file a Federal Estate
Tax return is that there was no Federal Estate payable upon John’s Estate. Subsequent
to John’s death, John’s Estate filed a wrongful death lawsuit against the
driver of the truck. The case ultimately settled in 2016 for $12,000,000. Of
the $12,000,000, $8,900,000 went to Linda as surviving spouse. It may be safely
assumed that when Linda dies, her estate will well exceed the Estate Tax Exclusion
in the year of her death. She will have John’s estate plus her own estate,
which today equals approximately $9,510,000.<o:p></o:p></span></div>
<div class="MsoListBullet" style="margin-left: 0in; mso-add-space: auto; mso-list: none; tab-stops: .5in; text-align: justify; text-indent: 0in;">
<span style="font-family: Arial, sans-serif; line-height: 106%;"><br /></span></div>
<div class="MsoListBullet" style="margin-left: 0in; mso-add-space: auto; mso-list: none; tab-stops: .5in; text-align: justify; text-indent: 0in;">
<span style="font-family: Arial, sans-serif; line-height: 106%;">If John’s Estate had
filed a Federal Estate Tax return, it would have automatically elected for Linda
to utilize John’s unused Federal Estate Tax Exclusion up to the amount of
portability needed, $4,820,000 ($5,430,000 - $610,000). In addition, Linda will
have her own federal estate tax lifetime exclusion in the year of her death. <o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">In
the above example, filing a Federal Estate Tax return within nine months of
John’s death would have saved the surviving spouse’s heirs at least $820,000.<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: "Arial",sans-serif;">*
Names have been changed to protect confidentiality.<o:p></o:p></span></div>
<div style="text-align: justify;">
</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-32658005945425834602016-06-07T07:54:00.000-07:002016-06-07T07:58:19.753-07:00SMALL BUSINESS OPERATIONS IN THE HOSPITALITY INDUSTRY – MICHIGAN ALCOHOL MANUFACTURE/DISTRIBUTION AND LICENSING REQUIREMENTS<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "arial" , sans-serif; font-size: 12pt;">By: Andrew C. Burrows<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;">With the recent rise in popularity of microbreweries in Michigan, there
has been an increase in small businesses/entrepreneurs entering the hospitality
industry. In addition to other off-site distributors of alcoholic beverages,
such as gas stations and liquor stores, many on-site providers of alcohol such
as restaurants, bars and hotels rely on the ability to do so for a significant
portion of their profits. Thus, in starting a hospitality business, it is
necessary to have some background knowledge of liquor law and the licensing regulations
with which to comply. The law in this area varies from state to state, so
specific knowledge of Michigan law is necessary if the business operates in
Michigan.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "arial" , sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "arial" , sans-serif; font-size: 12pt;">The Three-Tier System</span></b><span style="font-family: "arial" , sans-serif; font-size: 12pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;">In Michigan, distribution of liquor, beer, wine and other spirits is
handled by three distinct parties: </span><span style="font-family: "arial" , sans-serif; font-size: 12pt;">1) the manufacturer; </span><span style="font-family: "arial" , sans-serif; font-size: 12pt;">2) the wholesaler; and </span><span style="font-family: "arial" , sans-serif; font-size: 12pt;">3) the retailer. </span><span style="font-family: "arial" , sans-serif; font-size: 12pt;">The second party, the wholesaler, is the State of Michigan,
which acts as a middleman between the manufacturer and the retailer. One reason
for this is to prevent manufacturers from creating exclusivity agreements with
bars or stores. Other reasons include the ability to regulate liquor prices for
taxation and to ensure compliance with licensing requirements.</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;">Typically, a business (or person involved in a business) that serves as
a manufacturer cannot serve or even have an interest in a retailer, and vice versa.
The result of this is to prevent large breweries from opening their own retail
stores which only sell their products. At the small business level, however,
this can cause unique problems when it comes to ownership or ownership
interests in a manufacturer or retailer. For example, if a client was looking
to open a bar (a retailer), but also leases a commercial building to a
microbrewery (a manufacturer), the State of Michigan would likely deny this
client a liquor license for their new bar because of this “three-tier” conflict
of interest.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;">There are some exceptions to this three-tier rule built into the
Michigan Liquor Code. Specific manufacturers such as microbreweries,
micro-distilleries and small wineries are allowed to serve their own products
to customers for on-site consumption at their brewing or distilling facilities.
The rub here is that these business structures are subject to quota limits in
terms of how much of their product they can produce under Michigan law.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "arial" , sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "arial" , sans-serif; font-size: 12pt;">Licensing Requirements<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;">In order to operate as a manufacturer or retailer in the state of
Michigan, a business must obtain the necessary license(s) from the Michigan
Liquor Control Commission (“MLCC”). Depending on the type of business, the
requisite license may be subject to a quota. The quota system limits the number
of licenses that are available in each municipality, which is population-dependent.
Most licenses in Michigan are also freely transferable. However, it is often
very difficult to obtain these licenses. If all licenses in a municipality (up
to the quota) have already been issued by the MLCC, purchasing one from an
existing business is typically very expensive. A business may also hold any
number of these licenses. These licenses include: <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0.75in; text-align: justify; text-indent: -0.25in;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0.75in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "arial" , sans-serif; font-size: 12pt;">1)<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12pt;">Class C license - Permits a business such as a bar to sell beer, wine
and spirits (including liquor) for on-premise consumption. There is one Class C
license available per every 1,500 people in a given municipality.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0.75in; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0.75in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "arial" , sans-serif; font-size: 12pt;">2)<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12pt;">“Resort 550” – A transferable license for hotel resorts allowing the
sale of beer, wine and spirits (including liquor) for on-premise consumption.
The name commonly used for this type of license stems from the initial issuance
of 550 of these licenses by the MLCC.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0.75in; text-align: justify;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0.75in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "arial" , sans-serif; font-size: 12pt;">3)<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12pt;">Specially Designated Distributor (SDD) license – Allows a business such
a gas station or grocery to sell packaged spirits (including liquor) for
off-premise consumption. There is one SDD license available per every 3,000
people in a given municipality.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0.75in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "arial" , sans-serif; font-size: 12pt;">4)<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12pt;">Specially Designated Merchant (SDM) license – This is similar to an SDD
license, but allows the business to sell beer or wine. SDM licenses are not
subject to quota, and can be applied for by filling out an application with the
MLCC. An SDM license is often held in conjunction with an SDD license, if the
business can acquire one.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0.75in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "arial" , sans-serif; font-size: 12pt;">5)<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal;"> </span></span><span style="font-family: "arial" , sans-serif; font-size: 12pt;">There are also separate licenses for manufacturers, including breweries,
microbreweries, small winemakers and small distilleries.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "arial" , sans-serif; font-size: 12pt;">Action Step: Applying for
a License</span></b><span style="font-family: "arial" , sans-serif; font-size: 12pt;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "arial" , sans-serif; font-size: 12pt;">Whether the license is obtained from the MLCC directly or purchased from
an existing business, the prospective license holder must file an application
with the MLCC. Since this application could make or break your prospective
business venture, it is very important to consult with a business attorney or a
liquor law specialist before beginning to expend time and money in a business
venture that will require a liquor license of any type. It is all too common for
an entrepreneur to spend significant money and time to secure all the other
facets of the business and then be denied a liquor license. Depending on the
type of business and the license sought, there are many unique concerns that a
business owner may face. Having an attorney with knowledge and experience in
this area is very important. It can mean
the difference between acceptance or denial of your application. <o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-77769576217273524822016-06-07T07:51:00.000-07:002016-06-07T07:51:35.595-07:00WHAT HAPPENS WHEN SOMEONE DIES WITHOUT A WILL? <div class="MsoNormal">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">By:
Ashley J. Prew<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">The untimely and unforeseen
death of music superstar Prince has brought a lot of attention to the basic
question, “What happens when someone dies without a Will?” As most of our readers have probably heard,
Prince appears to have died without any estate planning documents in place. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Answering the question posed by
this article is not as straightforward as one may assume and generally the
answer is typically “it depends.” How
assets, accounts and policies are distributed after death depends on a variety
of factors including whether the asset, account or policy had a joint owner or
a designated beneficiary. Additionally,
estate planning and Probate law can also vary dramatically from state to state.
This article will describe intestate succession in Michigan. Intestate succession is the legal term for
the process of distributing an individual’s assets through Probate upon death when
there is no Last Will and Testament or Living Trust.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">A Probate Estate must be opened
in Probate Court. The Probate Estate distributes all property that is owned
solely by the individual, meaning there is not a co-owner with rights of survivorship
or a beneficiary. A few examples of property that would require Probate include
real estate, bank accounts, and retirement accounts without designated living
beneficiaries. This list is by no means inclusive,
but provides an idea of some of the types of assets that would end up in Probate
Court. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Individuals often assume that
if they are married, their entire estate will automatically be inherited by
their spouse. In Michigan, this is not the case. If the individual who died has children, grandchildren,
or parents living at the time the individual dies, a portion of the individual’s
estate will pass to the children of the individual. If the individual has no children or
grandchildren, but one or both parents are alive, the surviving parents inherit
a portion of the estate. If the
individual does not have a surviving spouse, children, grandchildren, or
parents, the distributions begin to get more complicated. Generally speaking, the simplified version of
the order of relatives who would inherit if there is no surviving spouse,
children, grandchildren, or parents is as follows:</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%; text-indent: -0.25in;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: 0px;">
</div>
<ul>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%; text-indent: -0.25in;">Siblings, or nieces and nephews if a sibling is
no longer living;</span></li>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%; text-indent: -0.25in;">Aunts and uncles, or cousins if the aunts and
uncles are no longer living. </span></li>
</ul>
<br />
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">The specific percentage each
relative would inherit depends specifically on the family composition of the
individual on the date of his or her death.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">The example of Prince’s estate
is extreme and his estate will take many years to resolve. We should keep in mind that estate planning
is not only for the wealthy. Probate can
be very costly for the administration of an estate, and disagreements can
dominate the process. Additionally,
having only a Will does not avoid Probate.
What is needed for a proper estate plan varies greatly based on
individual circumstances. If you have questions regarding the estate planning
process and how to avoid Probate, please do not hesitate to contact us
directly. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"> <o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-73507124515586233502015-11-18T14:29:00.000-08:002015-11-18T14:29:18.623-08:00FIDUCIARY DUTY OF DIRECTORS AND OFFICERS<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguZaosrUKneG94lr4x803m8FIgwAbnLfLa25aCAOuqUXsHqIcrgpaOTKFA6Q_wYq0iAMyj6raUBOvNNaq3xQHmXOOPpVc55hujnVaWsU6ilkbKM7soZVD6GZryR3TrIsgjDl_QDYrtm2i2/s1600/board+of+directors.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguZaosrUKneG94lr4x803m8FIgwAbnLfLa25aCAOuqUXsHqIcrgpaOTKFA6Q_wYq0iAMyj6raUBOvNNaq3xQHmXOOPpVc55hujnVaWsU6ilkbKM7soZVD6GZryR3TrIsgjDl_QDYrtm2i2/s1600/board+of+directors.jpg" /></a></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">By: Andrew Burrows<b><o:p></o:p></b></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">The legal requirements for the duties of directors and officers of a corporation
in Michigan are not well understood by business owners. This article explains these
requirements, known as fiduciary duty, and briefly details common requirements of
directors or officers of corporations. There
are similar rules that apply to members and managers of limited liability
companies in Michigan. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">It is important to note that under Michigan law, all fiduciary duties
are applicable to both officers and directors of the corporation. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">What is a “Fiduciary?”</span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"> <o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">A corporate fiduciary is an individual who is employed as an officer of
the corporation or has been elected by the shareholders as a director to hold
and exercise power on behalf of the shareholders. Under Michigan law, officers
and directors have a basic obligation to act only in the best interest of the
shareholders. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">What Duties Are Owed?</span></b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">Although fiduciary duties stem from common law principles, they are found
in Michigan’s corporation law, which is the Michigan Business Corporation Act. These
duties include: 1) the duty of loyalty to shareholders to only act in their
best interest; 2) the duty of care; and 3) the duty of good faith. Corporate
fiduciaries are protected by the “Business Judgment Rule” in the absence of a breach
of one of the above-mentioned duties in their day-to-day operation of the
company.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">The Business Judgment Rule<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">The fiduciary rules do not provide that a director or officer of a
corporation will be liable for all bad decisions they make while serving the
corporation, since this would produce an absurd result, making any risk-taking
by officers or directors off limits. The solution to this is the Business Judgment
Rule which states that when a corporation suffers a loss from a lawful
transaction, a director or officer is not liable when he or she acted in good
faith, on an informed basis, and under the honest belief that the action was
taken in the best interest of the company. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">Duty of Loyalty<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">The duty of loyalty is one of the most common fiduciary pitfalls for
directors and is especially magnified in the case of a closely-held corporation
where directors are often also shareholders. The duty of loyalty is most
commonly breached when the director either: 1) engages in a transaction on
behalf of the corporation that constitutes “self-dealing”; 2) engages in a
transaction that constitutes self-interest; or 3) engages in a personal
transaction that rightfully belongs to the corporation. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="margin-left: 0.5in; text-align: justify;">
<u><span style="font-family: Arial, sans-serif; font-size: 12pt;">Self Dealing<o:p></o:p></span></u></div>
<div class="MsoNormal" style="margin-left: 0.5in; text-align: justify;">
<u><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></u></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">Self-dealing occurs when a director has a financial interest in both
sides of a transaction. An example of this would be having the corporation purchase
another company that the director personally holds stock in. Self-dealing essentially
creates automatic liability for the director unless his or her financial
interest in the transaction is disclosed prior to its acceptance by the rest of
the board of directors. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="margin-left: 0.5in; text-align: justify;">
<u><span style="font-family: Arial, sans-serif; font-size: 12pt;">Self-Interest<o:p></o:p></span></u></div>
<div class="MsoNormal" style="margin-left: 0.5in; text-align: justify;">
<u><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></u></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">A director engages in self-interest when he or she will receive a
personal benefit from a transaction that is not equally shared by the
shareholders. This is not the same as self-dealing. An example of self-interest
would be a director obtaining a large bonus from the company every year the
corporation is extremely profitable, but engaging in an extremely risky
transaction to attempt to reach the profit goal. This is known as the “Enron
Pattern”.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="margin-left: 0.5in; text-align: justify;">
<u><span style="font-family: Arial, sans-serif; font-size: 12pt;">Corporate Opportunity<o:p></o:p></span></u></div>
<div class="MsoNormal" style="margin-left: 0.5in; text-align: justify;">
<u><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></u></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">Under the Corporate Opportunity Doctrine, a director breaches his/her duty
of loyalty when he or she personally seizes a business opportunity for personal
gain, which the corporation could have taken. This includes any opportunity the
director learns of from his/her position in the company or any opportunity to
engage in a business in which the company is engaged or expects to engage.
Again, disclosure is the solution to potential corporate opportunity issues. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">Duty of Care<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">Generally, a director has a duty to keep him/herself informed of the
activities of the corporation. The duty of care is not often included in a
lawsuit against a director because a corporation may indemnify its directors
for breach of the duty of care under Michigan corporate law. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">Duty of Good Faith<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">Since the duty of care is often subject to indemnification, the duty of
good faith has somewhat replaced it in lawsuits against directors. The duty of
good faith may be breached either by objective or subjective bad faith. This
means that an officer or director must either consciously disregard his or her responsibilities
or act with an intent to harm the company or its shareholders. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">Action Step:</span></b></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">In order to ensure you are meeting your duties as a director or officer,
or as member of a limited liability company, you should ensure your business
has a corporate/business attorney to advise you and make sure you understand
your fiduciary duties in the context of your particular situation. In addition,
you should consult with your insurance agent to make sure you have directors
and officers liability coverage under your business general liability insurance
policy.<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-58653438088816328032015-11-18T14:25:00.003-08:002015-11-18T14:25:52.965-08:00DO I NEED A LICENSE TO WORK IN MY TRADE?<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfGEKPTUO8BJstIYO1vSnerY-BU97_oh6UVl0nCJBOr7qyJJc0ptynuRAjd6H_frPeuvM3TlNRToLdNPtzGOmC1zAlwvU8NaJbCGCaDjXm48_6Be9Cy6Qopd5noP80g9F5iPJAP8sVzyqK/s1600/Worker.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfGEKPTUO8BJstIYO1vSnerY-BU97_oh6UVl0nCJBOr7qyJJc0ptynuRAjd6H_frPeuvM3TlNRToLdNPtzGOmC1zAlwvU8NaJbCGCaDjXm48_6Be9Cy6Qopd5noP80g9F5iPJAP8sVzyqK/s1600/Worker.png" /></a></div>
<br />
<span style="font-family: Arial, sans-serif; font-size: 16px; line-height: 18.4px; text-align: justify;">By: Ashley Prew</span><br />
<br />
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">In Michigan, individuals and
businesses engaged in residential building and residential improvement or
maintenance work need to be mindful of the licensing requirements for specific
trades. </span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">This article will provide a
brief overview of some of the issues surrounding licensing requirements, including
examples of some of the “less obvious” trades that require licensing in
Michigan, the consequences of engaging in a trade without a proper license, and
the steps to take to obtain the required license. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Does
My Trade Require a License?<o:p></o:p></span></u></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></u></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">In general, a person or
business who contracts with a property owner to do residential construction or
remodeling on a project with a total value is $600 or more (including material
and labor) is required to be licensed as either a Residential Builder or a
Maintenance & Alteration Contractor under Michigan law. The definitions of a Residential Builder and a
Maintenance & Alteration Contractor are very broad in terms of what falls
under each license. The differences between the two types of licenses are as
follows:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .5in;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Residential Builder License<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .5in;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">A
residential building license is required to operate as what most people think
of as the typical construction contractor.
A residential builder may build a new home or do any kind of repair work. It is important to note that even if a
residential builder contracts for the whole job, there are separate licensing
requirements for certain specialty areas included in such work, such as
plumbing, electrical, heating and cooling, and ventilation work. If the residential builder contracts for the
entire job, the builder may use licensed subcontractors for the other areas of
work. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .5in;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Maintenance and Alteration Contractor
License<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-indent: .5in;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<div class="MsoNormal" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">A
maintenance and alteration contractor need only be licensed for a specific
trade(s) and may only accept contracts for completion of services in which they
are licensed. This requirement exists
whether or not the building being worked on is a new build or a remodel. The definition of a maintenance and
alteration contractor is very broad and generally includes any repairs and most
improvements or changes to a residential structure. Some of the unique types of activities that
require licensing are:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">painting and decorating;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">siding;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">gutters;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">tile and marble;<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">swimming pools; and<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">laying wood floors. <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Please note that this list is
not comprehensive. If you are unsure
whether your trade requires a license, please contact us. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">What
Are the Consequences if I or My Business Engages in a Licensed Trade Without
the Required License?</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></u></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">The consequences of failing to
obtain the proper license are harsh. In fact, engaging in a licensed trade
without a license is a criminal offense.
In the case of a first offense, failing to be licensed when necessary is
a misdemeanor punishable by a fine of not less than $5,000.00 or more than
$25,000.00, or imprisonment for not more than one year, or both. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">In addition, an unlicensed
builder or maintenance and alteration contractor cannot collect monies if they
are not paid by a customer. Examples of
collection measures afforded to licensed builders are the use of construction
liens, foreclosure, and the potential to obtain money damages through a
collection law suit. If an unlicensed
builder or contractor attempts to use these measures, the contractor and their business
may not only be subject themselves to the criminal consequences above, but may
also be liable for civil damages and restitution. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">How
Do I Obtain a License</span></u></b><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">?<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;"><br /></span></b></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 115%;">Generally, the licenses
discussed above require at least sixty hours of approved education courses and
that the contractor must take and pass a required examination for the specific
type of license. It is important to
remember that each profession, trade, and business entity has different license
requirements. If you have questions
regarding licensure requirements, whether your profession requires a license,
or the steps you need to take to become licensed, please, do not hesitate to
contact us directly regarding your specific situation. <o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-32164776860561839742015-11-18T14:20:00.000-08:002015-11-18T14:20:16.214-08:00COTTAGE LEGACY PLANNING<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_sWEVfj68iYXfOz4f_HLhWYarnz87oEEQA4t1s_V8UVH_DC8X9WQl86zl_g2IdvFrJUN30GSOiMWvsxWv9Uo3PbDUBB8u0LVokntYGfgOXMPZKUlZNj-khiky7Yjrz5kFKj7D-clqQ1UO/s1600/Cottage.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_sWEVfj68iYXfOz4f_HLhWYarnz87oEEQA4t1s_V8UVH_DC8X9WQl86zl_g2IdvFrJUN30GSOiMWvsxWv9Uo3PbDUBB8u0LVokntYGfgOXMPZKUlZNj-khiky7Yjrz5kFKj7D-clqQ1UO/s1600/Cottage.jpg" /></a></div>
<span style="font-family: Arial, sans-serif; font-size: 16px; text-align: justify;"><br /></span>
<span style="font-family: Arial, sans-serif; font-size: 16px; text-align: justify;"><br /></span>
<span style="font-family: Arial, sans-serif; font-size: 16px; text-align: justify;">By: Tim Williams</span><br />
<br />
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">Introduction<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">The real estate industry indicates that cottage ownership in Michigan is
at an all-time high. Cottage owners
enjoy many benefits of ownership. Cottages often appreciate at a faster rate than
primary homes. The owners also receive
the enjoyment of a getaway where they can relax, unwind, and, perhaps most
importantly, where they create a natural social gathering spot for children,
grandchildren, extended family and friends.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">Cottage legacy planning ensures that the cottage remains in the family
for future generations. Proper planning for the cottage can help avoid negative
tax consequences for the parents and their adult children and provide for the
orderly transition of the cottage to the children.</span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">A baseline tool of cottage legacy planning is that the parents need to convey
the cottage to one of their trusts during their lifetime. This will keep the cottage
out of probate and will allow for an orderly plan for the transition of the cottage
to the children.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">The Challenges<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">The key challenges in cottage legacy planning are:</span></div>
<div class="MsoNormal" style="text-align: justify;">
</div>
<ol>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">Avoiding an increase in the property taxes when the cottage passes from the
parents’ generation to the children.</span></li>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">Avoiding capital gains tax upon the appreciation that occurred during the
parents’ ownership of the cottage.</span></li>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">Simply and effectively providing for the payment of the annual expenses
and taxes incurred through cottage ownership.</span></li>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">Having a system in place that distributes use of the cottage among
family members.</span></li>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">Avoiding the threat to ownership that would result from a divorce,
death, or disability of a child, tax lien, or judgment against a child.</span></li>
</ol>
<br />
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Alternative Structures for Maintaining the Cottage in the Family<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">There are two primary
alternatives for maintaining the cottage as a legacy during the life of the
parents and following the parents’ passing. They are: 1) a trust; or 2) a
limited liability company. The principal factors involved in selecting which of
these alternatives should hold the cottage for the duration of the parents’
lives and following the parents’ passing include:</span></div>
<div class="MsoNormal" style="text-align: justify;">
</div>
<ol>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">Parents
are able to impart their wishes for how the property is to be handled after
death.</span></li>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">Flexibility
in changing the use of the cottage and other terms of the trust following the parents’
passing.</span></li>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">Avoiding
an increase in the property tax on the cottage due to events during the
parents’ lives and following the parents’ deaths. This increase in property tax
is often referred to as uncapping.</span></li>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">Limiting
the liability of the parents, the children, and the entity selected to own the
cottage.</span></li>
<li><span style="font-family: Arial, sans-serif; font-size: 12pt; text-indent: -0.25in;">The
ultimate capital gain tax on the sale of the cottage.</span></li>
</ol>
<br />
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Trust</span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Use of a trust can be
employed to continue the ownership of the cottage within the family, manage the
expenses, and dictate use of the cottage. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The transfer by the
parents of the cottage to one of their trusts during their lives would not
result in an increase in property taxes. This is permitted under new legislation
in Michigan which came into effect on January 1, 2015. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The cottage would remain
in one of the parents’ trusts following their passing. Upon the death of one of
the children following the parents’ deaths, however, property taxes could
increase. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The trust would provide
for the contribution by the children of a pro rata share of the expenses,
including maintenance and improvements, property taxes, insurance and
utilities. If a child did not share in the burden of the expenses, after a
period of non-contribution, that child’s interest in the trust would forfeit.
This is intended to be a strong incentive to encourage contribution as opposed
to causing forfeiture. Another alternative would be for the parents to leave a
portion of their assets to provide for the payment of the annual expenses of
the cottage.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">A use agreement is necessary,
either within the trust or as a separate document.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The trust would also
maintain a policy of life insurance to buy out a deceased child’s interest in
the cottage. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">There are certain
disadvantages to using a trust in legacy planning for a cottage. The primary
disadvantage is that trusts offer little capacity for flexibility following the
death of the parents. The children would be unable to alter the terms of the trust
following the parents’ deaths, although this may be desirable in certain
situations. A limited liability company would provide for greater flexibility
in this regard. Another disadvantage is that a trust offers no shield against
liability.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Limited Liability Company<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Use of a limited
liability company is the other alternative to continue the ownership of the cottage
within the family and manage expenses and use. The mechanics of this include the
creation of a “springing” limited liability company during the parents’ lives.
The limited liability company would spring to life upon the death of the second
parent --. At that time, the cottage would be conveyed to the limited liability
company out of whichever of the parents’ trusts owns the cottage. It is believed
that this will not result in an increase in the property taxes. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The children would
enter into an agreement that provides for the remaining children to purchase
the interest of the Cottage upon the death, divorce, bankruptcy, etc. of one of
the children.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The agreement would
provide that the limited liability company would maintain a policy of life
insurance to buy out a deceased child’s interest in the cottage. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The agreement would also
provide for the contribution by the children of a pro rata share of the annual expenses,
including maintenance and improvements, property taxes, insurance, and
utilities. If a child did not share in the burden of the expenses, that child’s
interest would forfeit. Again, this is intended to encourage contribution as
opposed to causing forfeiture.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The death of a child
following the deaths of the parents can result in an increase in the property
taxes. Michigan’s rules provide that when more than 50% of the ownership in
limited liability company changes, the property taxes will “uncap”.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="margin-top: 4.5pt; text-align: justify;">
<b><span style="font-family: Arial, sans-serif; font-size: 12pt;">ACTION STEP:</span></b></div>
<br />
<div class="MsoNormal" style="margin-top: 4.5pt; text-align: justify;">
<span style="font-family: Arial, sans-serif; font-size: 12pt;">If you are a cottage owner or the child of a cottage owner, it makes
sense to explore the alternatives available for passing the cottage to the next
generation. Planning now is critical to avoid undesirable tax consequences and to
provide for the orderly ownership, payment of expenses, and use of the cottage
in the future.<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-89451293187415586122015-11-18T14:11:00.000-08:002015-11-18T14:11:53.163-08:00THE IMPORTANCE OF ESTATE PLANNING IN BLENDED FAMILIES<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
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<br /></div>
<div class="separator" style="clear: both; text-align: left;">
<span style="font-family: Arial, sans-serif; font-size: 16px; text-align: justify;">By: Adrienne Knack</span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">There
are many reasons for placing your affairs in order. Some of the most important
reasons include reduction of liability for estate tax, probate court avoidance,
leaving a legacy for your family, and ease of administration. A very common
situation we assist clients with is estate planning for a blended family. Long gone are the days of The Nelsons, as blended
families are much more common in today’s world.
Whether it’s due to a death or divorce, there are many reasons a blended
family needs to have the proper documents in place.</span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">There
are many different types of blended families.
We often see families that consist of two spouses that each bring
children into the second or subsequent marriage. There are also families where one spouse has
kids from a prior marriage and the other spouse does not have children. Sometimes, that couple wants to have children
together as well, or both spouses bring children into the marriage and then
have a child together. Furthermore, there
are families that have both adult children and minor children. Whatever the family dynamic, there are
serious issues that need to be addressed.
It is preferable to resolve these issues before they become a crisis –
say, before someone passes away or becomes incapacitated. Failure to properly address these issues will
result in a legal mess for a surviving spouse (and children).One very important
question in blended families is what will happen to minor children. A guardian and conservator needs to be
named. Often, there is another parent
that needs to be taken into consideration.
Does the other parent share custody?
If so, it is unlikely that their ex-spouse can (or wants to) leave the
children with anyone else. If the other
parent does not share custody, it is significantly easier to dictate that the
minor children will stay with their step-parent (and usually their other
siblings and/or step-siblings). <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Another
important issue that needs to be addressed is how assets will be divided and
distributed to children in a blended family.
Do assets get divided equally between all children of both spouses? Do the children the couple had together get
more than the other children? Often, specific
language is necessary to inhibit the surviving spouse from disinheriting step-children. Many things need to be taken into
consideration here, including whether or not the children will receive anything
from their other parent or their other parent’s trust or estate. Perhaps there is one child (or more) that is
estranged from the parent and who the parent may want to disinherit. Some families wish for each parent’s
individual assets to go to their own children only. There are many moving parts and many issues
at play. The language addressing these
issues needs to be very specific and is highly specialized on a case-by-case
basis. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Another
complicated question is who will handle the administration of the parents’ affairs
(wills, trusts, powers of attorney) after their death. Some blended families appoint an adult child
of each spouse to serve in a co-capacity. Preferably, these step siblings have
a good head on their shoulders and are looked up to by the other children. Some families want each parent’s own child to
handle their own affairs and not their spouse’s. Or, perhaps, the parents do not want to put
any of their children in the position to be the fiduciary so as to avoid
potential conflict with their siblings or step-siblings. In that case, a non-child fiduciary makes the
most sense. Every family is different
and these issues can be addressed by consulting with an experienced estate
planning attorney and having the proper estate planning documents in place.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Action Step:<o:p></o:p></span></b></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Failure
to address these (and other) blended family questions can result in severe
consequences. If probate is needed, it
will be guaranteed to be a long, expensive, and tedious process through the
court system. It also opens the door for
fighting within the family, which can lead to hard feelings, family
estrangement, and a parent’s assets going to children and stepchildren they did
not intend. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<br />
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Proactively
addressing these issues will help eliminate some of the tension that can arise
in blended families upon a death of one of the parents.<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-21959771953185595242015-08-10T08:02:00.001-07:002015-08-10T08:41:35.277-07:00Why You Should Meet with an Estate Planning Attorney <div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOxrHOs1cHb1vflDP-myaWsNeDiQsKsp1cCk7NAOzi6kLKGxGeeOlh-kPaMKO2RoV9dnRHVIw1S4iFehBDu6Ky8oWRxSNukadT0izXHXPh69X1iHuo5PYwo3J6r8XQ_NMaBOw-UXNoHpxk/s1600/EstatePlanningButton.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOxrHOs1cHb1vflDP-myaWsNeDiQsKsp1cCk7NAOzi6kLKGxGeeOlh-kPaMKO2RoV9dnRHVIw1S4iFehBDu6Ky8oWRxSNukadT0izXHXPh69X1iHuo5PYwo3J6r8XQ_NMaBOw-UXNoHpxk/s320/EstatePlanningButton.png" width="320" /></a></div>
<br />
<b>By: Andrew Burrows</b><br />
<br />
<div class="MsoNormal" style="text-align: justify;">
By having an estate plan, you can avoid placing a significant burden on
your loved ones. This burden includes deciding
who will receive your property after your death and how your affairs will be
administered if you are unable to carry on during life. Failure to plan ahead
can result in high legal costs and a long, drawn out process associated with probate,
both during your life and after your death. It is our hope that this article
will inform people of some of the less obvious reasons to meet with an estate
planning attorney.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<b style="text-indent: -0.25in;"><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Arial;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b style="text-indent: -0.25in;"><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Arial;">1. Placing your Affairs in Order is Much Less
Expensive than Doing Nothing</span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
One of the most common concerns associated
with estate planning is the upfront cost. Although drafting a concise and
effective set of documents is not without cost, it is far less expensive than
not having a plan in place. An experienced attorney can ensure that your fees
are kept as low as possible while drafting a personalized set of documents
including a will, trust, powers of attorney, and the other documents that are
required to meet your needs.</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; text-align: justify;">
<o:p></o:p></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<b><span style="font-stretch: normal; line-height: 17.1200008392334px;"> 2.</span><span style="font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;"> </span></b><!--[endif]--><b><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Arial;">Michigan Law is Particularly Unforgiving for
Those who Do Not Have an Estate Plan</span></b></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<br /></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
The law of estates and trusts varies greatly
between the states. Michigan is a state that greatly benefits those who have a
formal estate plan and punishes those who do not. When someone dies without a
will, a decedent’s property passes through what is called intestate succession.
Under intestate succession, a decedent’s property is distributed at a formal
probate court proceeding to the decedent’s surviving spouse and/or heirs
automatically, and in amounts determined by law. This proceeding is quite
complex and requires significant attorney participation, which can get quite
expensive. Many individuals do not
realize that even if they have a will, probate court is still required to
administer the estate, assets, debts and expenses. By drafting an estate plan
that includes a living trust, formal probate proceedings are avoided, and typically
all the decedent’s property can be distributed without any probate court involvement
whatsoever.</div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; text-align: justify;">
<o:p></o:p></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<b><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Arial;"> 3. Estate Planning Addresses Life Events, Not
Just Death</span></b></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<br /></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
Another common misconception is that
healthy, young people don’t need an estate plan. Estate documents address life events and
death events. A well-designed estate plan contains documents that will allow a
loved one to make medical decisions for you and prevent loved ones from having
to guess what you would have wanted should serious illness or injury occur. The
living trust and the power of attorney permit a family member, as opposed to
the probate court, to help with decision-making and long-term care arrangements.
In addition, all assets, income, expenses, insurances and other financial
obligations can be handled smoothly and inexpensively.</div>
<div class="MsoNormal" style="margin-left: .5in; text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Arial;">Action Step</span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Arial;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
Determining an individual’s unique situation and what documents are
needed is typically outlined with clients in the first meeting. It makes good sense
for individuals and couples to contact an estate planning attorney to get the
process underway sooner rather than later.<o:p></o:p></div>
<br />Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-87902386784219516472015-08-10T07:57:00.002-07:002015-08-10T08:44:19.328-07:00The Importance of Employment Applications, Employment Agreements, and Employee Handbooks<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheiJTwJLqT3C-_RhIfGDrLRxyLKHX6Ues_zV5tx_QOrkGYKcmlCw7BVAefJIKYz0IbqvGMEjk_LK9ISUMIMe2OPu45KSQYeD__2FuygVtk2y_qyFiIfnaXTHyGB9Al8fxQVgy8VXrhr9NS/s1600/download.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="149" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheiJTwJLqT3C-_RhIfGDrLRxyLKHX6Ues_zV5tx_QOrkGYKcmlCw7BVAefJIKYz0IbqvGMEjk_LK9ISUMIMe2OPu45KSQYeD__2FuygVtk2y_qyFiIfnaXTHyGB9Al8fxQVgy8VXrhr9NS/s320/download.jpg" width="320" /></a></div>
<br />
<b>By: Ashley Prew</b><br />
<b><br /></b>
<br />
<div class="MsoNormal" style="text-align: justify;">
Employment applications, employment agreements, and employee handbooks
are sometimes neglected by business owners who hire employees. When used in together, a properly drafted
employment application, employment agreement, and employee handbook can be
effective tools to protect the Company and shield the business owner from some
of the risks associated with maintaining employees. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Arial;">Employment Applications<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Arial;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
An Employment Application provides the key information on a prospective
hire and grants authority to investigate the prospective hire’s credit,
criminal, civil and employment background.
In addition, it sets forth the Company’s at-will employment policy and
permits the Company to discharge the employee if he or she falsified information
in the employment process based upon after-acquired evidence.<br />
<br />
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Arial;">Employment and Engagement Agreements
<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Arial;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
An employment or engagement agreement is a contract used to establish
the rights and responsibilities of both a worker and the Company. Properly drafted employment agreements can
protect the Company by establishing and addressing the following:</div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
</div>
<ol>
<li><span style="text-indent: -0.25in;">Whether the worker is at-will.</span></li>
<li><span style="text-indent: -0.25in;">The relationship between worker and
employee. Specifically, the agreement
should define whether the worker is an employee or an independent
contractor. If a Company decides to
classify a worker as an independent contractor, it is important that the terms
of the engagement and the terms of the agreement meet specific requirements
under the IRS guidelines that allow the worker to be classified as an
independent contractor; </span></li>
<li style="text-align: left;"><span style="text-align: justify; text-indent: -0.25in;">The responsibilities and duties of both the
employer and the worker;</span></li>
<li style="text-align: left;"><span style="text-align: justify; text-indent: -0.25in;">The payment structure for the worker. The
agreement should also clearly establish how commission is earned and paid, if
applicable;</span></li>
<li style="text-align: left;"><span style="text-align: justify; text-indent: -0.25in;">The procedure for termination of employment
or engagement by either employer or worker; and</span></li>
<li style="text-align: left;"><span style="text-align: justify; text-indent: -0.25in;">Appropriate, non-disclosure, nonappropriation,
confidentiality, non-solicit and/or non-compete provisions and work made for hire
should be included to protect proprietary information, current customers and
prospects of the business, and protect the Company from predatory business
practices. </span></li>
</ol>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-align: justify; text-indent: -.25in;">
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Arial;">Employee Handbooks<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span style="font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Arial;"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
Employee handbooks help to provide a strong basis for defining the
relationship between the Company and its employees. Employee handbooks can benefit a Company in
the following ways:</div>
<div class="MsoNormal" style="text-align: justify;">
</div>
<ol>
<li><span style="text-indent: -0.25in;">Provide an in-depth description of company
policies and employee expectations beyond what is contained in the employment
agreement;</span></li>
<li><span style="text-indent: -0.25in;">Address industry specific, applicable
federal and state laws, and protect the Company and employees by articulating that the Company will adhere to
these laws and regulations; and </span></li>
<li><span style="font-size: 7pt; font-stretch: normal; text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">Protect the company from potential disputes
regarding the expectations of employees. </span></li>
</ol>
<br />
<div class="MsoListParagraphCxSpLast" style="mso-list: l1 level1 lfo2; text-align: justify; text-indent: -.25in;">
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
Employment agreements and employee handbooks should be used together to
establish employee expectations, maintain employer/employee relations, and to
protect the Company and its employees.
An effective employment agreement often references the employee handbook
or incorporates the handbook as part of the agreement by reference. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
Agreements and handbooks should always be specialized based on the type
of business, the types of employees/independent contractors, and the culture
and expectations of the company.
Therefore, we do not recommend using the internet to find a generic
employment application, contract or handbook. Instead, working with qualified
professionals such as a business law firm and a human resources firm ensures
that the agreements and handbook are drafted to meet each specific business’
legal and human resources needs. When
properly drafted, used, and upheld, these documents can protect the business
from potential issues with current and former employees. <o:p></o:p></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-48981646294256037672015-08-10T07:53:00.000-07:002015-08-10T08:44:47.815-07:00Buying a Franchise<div class="MsoNormal" style="margin-bottom: 3.75pt; text-align: justify;">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgA6FQfDorn4RW3a_n9mZ2HBg-Ne5YI1AIvH0VCbcgnXBbxhcpDJg8clv9JTWVsENDBv1f9QUsN0k0W4J3o0xYghz8qxynCs1KyTum4kX14_KkN_aCp4r7pVw981UT6_GMYfo2Bo-fnyFx0/s1600/download+%25281%2529.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgA6FQfDorn4RW3a_n9mZ2HBg-Ne5YI1AIvH0VCbcgnXBbxhcpDJg8clv9JTWVsENDBv1f9QUsN0k0W4J3o0xYghz8qxynCs1KyTum4kX14_KkN_aCp4r7pVw981UT6_GMYfo2Bo-fnyFx0/s1600/download+%25281%2529.jpg" /></a></div>
<b><span style="font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 18.0pt;"><br /></span></b>
<b><span style="font-size: 12.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-font-kerning: 18.0pt;">By: Tim Williams</span></b></div>
<div class="MsoNormal" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 0in; margin-right: -2.5pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="margin: 0in -2.5pt 0.0001pt 0in; text-align: justify;">
Franchising is a business model
that companies use to expand their brand or system. If a company (the
“franchisor”) is franchising to expand, it packages and sells its business
concept – with varying degrees of support – to individuals (“the franchisees”). The franchisees, in turn, initiate the franchise
business and pay a franchise fee and royalties to the franchisor. The franchisor
will have detailed written disclosures and contracts it uses to engage franchisees
who wish to buy into the system.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 0in; margin-right: -2.5pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 0in; margin-right: -2.5pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
During and immediately following
the Great Recession, many people have concluded that they want to own and run
their own business. This stems, in part, from individuals who were formerly
employees who wish to have more control over their future. The workplace became,
and to some degree still is, unstable due to a variety of forces, some of which
are cultural.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 0in; margin-right: -2.5pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 0in; margin-right: -2.5pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
Buying a franchise is a life
decision that involves a variety of important factors including, but not
limited to, suitability, financial, and legal issues. The key legal issues in
considering whether or not to buy a franchise include:<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 0in; margin-right: -2.5pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: .5in; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 58.5pt; margin-right: -2.5pt; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l1 level1 lfo1; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -27.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt; font-stretch: normal; line-height: normal;">
</span><!--[endif]-->The
“legal” and business reputation of the franchisor.<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 58.5pt; margin-right: -2.5pt; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l1 level1 lfo1; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -27.0pt; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.25in; margin-right: -2.5pt; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo2; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><!--[endif]-->How has the franchisor dealt with franchisees
in legal disputes?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.25in; margin-right: -2.5pt; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo2; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><!--[endif]-->Has the franchisor generally been compromise
or combat oriented?<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.25in; margin-right: -2.5pt; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo2; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span>Talk to and visit recent franchisees to
inquire into their experience with the franchisor.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 58.5pt; margin-right: -2.5pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 58.5pt; margin-right: -2.5pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
A good legal
and business workup on the franchisor will reveal much, which is important in
advance of paying a significant sum of $100,000 or more for a franchise.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 100%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 0in; margin-right: -2.5pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="line-height: 98%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 58.5pt; margin-right: -1.9pt; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l1 level1 lfo1; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -27.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt; font-stretch: normal; line-height: normal;"> </span>Discover all the
hidden costs, the franchisee’s finances and financial commitments, understand
the market, and the competition in your local area.<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="line-height: 98%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 58.5pt; margin-right: -1.9pt; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l1 level1 lfo1; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -27.0pt; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="line-height: 98%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.25in; margin-right: -1.9pt; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo2; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><!--[endif]-->Is it a business which is easy or more
difficult for others to enter? <o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="line-height: 98%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.25in; margin-right: -1.9pt; margin-top: 0in; mso-add-space: auto; mso-layout-grid-align: none; mso-list: l2 level1 lfo2; mso-pagination: none; text-align: justify; text-autospace: none; text-indent: -.25in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span>Conduct thorough due diligence of the
franchise you are looking to purchase, so you’re able to make an informed business decision.<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 98%; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 0in; margin-right: -1.9pt; margin-top: 0in; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin: 0in -1pt 0.0001pt 58.5pt; text-align: justify; text-indent: -27pt;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt; font-stretch: normal;">
</span><!--[endif]-->Know
the franchise agreement. <o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="margin: 0in -1pt 0.0001pt 58.5pt; text-align: justify; text-indent: -27pt;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in -1pt 0.0001pt 1.25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]-->Your franchise agreement will have a big
impact on whether or not your franchise succeeds. <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in -1pt 0.0001pt 1.25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span>You should know how it’s drafted and whether
it contains an exit opportunity<span style="mso-text-raise: 1.0pt; position: relative; top: -1.0pt;">. </span><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in -1pt 0.0001pt 1.25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><span style="mso-bidi-font-family: Arial; mso-text-raise: 1.0pt; position: relative; top: -1.0pt;">You should know the proper disclosures, any territorial restrictions,
fees, and obligations you have as a franchisee. </span><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in -1pt 0.0001pt 1.25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><span style="mso-bidi-font-family: Arial; mso-text-raise: 1.0pt; position: relative; top: -1.0pt;">You should know what happens if there’s a breach of contract and
your recourse for misrepresentations or
failures on the part of the franchisor to provide support.</span><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in -1pt 0.0001pt 58.5pt; text-align: justify; text-indent: -27pt;">
<!--[if !supportLists]-->4.<span style="font-size: 7pt; font-stretch: normal;"> </span><!--[endif]-->What
happens to your franchise if the franchisor is acquired by another company? <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in -1pt 0.0001pt 1.25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]-->Can the acquiring company change the name of
your business without your permission?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in -1pt 0.0001pt 1.25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;">-<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal;"> </span></span><!--[endif]-->Who pays for all of the costs and lost
business traction that results from a name change?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in -1pt 0.0001pt 58.5pt; text-align: justify; text-indent: -27pt;">
<!--[if !supportLists]-->5.<span style="font-size: 7pt; font-stretch: normal;">
</span><!--[endif]-->Can you
sell your franchise to a third party without undue restriction? <o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin: 0in -1pt 0.0001pt 58.5pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin: 0in -2.5pt 0.0001pt 0in; text-align: justify;">
</div>
<div class="MsoNormal" style="margin: 0in -1pt 0.0001pt 0in; text-align: justify;">
A franchise may be a good choice
for some but not others. A thorough investigation will help you to sort through
the issues and risks in relation to your own situation.<o:p></o:p></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-74310715767146003222015-08-10T07:39:00.000-07:002015-08-10T08:45:07.217-07:00Precautions to Take When Sharing Confidential Business Information<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkDVkRnyKuwoEABm6qBvJYlLXD3SseF0ajrwSGD6APRKt0Qfui6wQK3aiwyNA5Ht6PmBwYR4mia7wrmRmC-GKLmxdiMEpDK98wbuo28tzSNqgfPCzSWl618A4UlbtGXe91m6gdrXgGZ03w/s1600/download.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkDVkRnyKuwoEABm6qBvJYlLXD3SseF0ajrwSGD6APRKt0Qfui6wQK3aiwyNA5Ht6PmBwYR4mia7wrmRmC-GKLmxdiMEpDK98wbuo28tzSNqgfPCzSWl618A4UlbtGXe91m6gdrXgGZ03w/s1600/download.jpg" /></a></div>
<b><br /></b>
<b>By: Adrienne Knack</b><o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
Most businesses have important, confidential business
information that needs to be protected.
This includes customer information, pricing, trade secrets, business
practices, work product, copyrights, trademarks, service-marks, and other
intellectual property and proprietary information. There are many, everyday situations in which
this information is shared, including with employees, independent contractors,
distributors, and manufacturers.
Confidential business information is also shared during the process of
buying or selling a business. Often,
such information is shared without realizing the dangers associated with its
dissemination. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<b><u>Dangers
of sharing confidential information<o:p></o:p></u></b></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
Employers expose much of their confidential
information to their employees without hesitation. Most of the time, it is imperative to the
operation of the employer’s business to do so.
This is also true regarding pricing and business practices. Unfortunately,
an employee who leaves the business may attempt to take this information to a
competitor and use it against his or her former employer. The competing business may then use this
information to try to lure customers away from the business owned by the former
employer, or for another predatory business practice. Another danger is sharing too much
confidential information when exploring the sale or purchase of a
business. A competitor may pretend like
it is interested in acquiring a business simply for the fact that it may obtain
proprietary information to use in its own business in the process.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
Trademarks, service marks and branding are pieces
of information that are used every day.
Businesses use these marketing tools to build the goodwill of their
business. Because this information is
shared so freely, it is most vulnerable to being stolen. If not properly protected, the livelihood of
the business can be copied in an instant and used by a competitor to confuse and
take customers.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
Another relationship that leads to the sharing of
proprietary information is when a business works with a manufacturer and/or a
distributor. Important trade secrets
like recipes, packaging, and labeling are shared with the manufacturer or
distributor out of necessity. Without
the proper safeguards in place, there is nothing that prevents a manufacturer
or distributor from sharing this confidential business information with others.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<b><u>Protections</u></b><o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
There are certain steps that businesses must take
in order to protect valuable confidential information. A lot of these protections are encompassed in
specialized and specific agreements, including:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<ol start="1" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Non-disclosure agreements;<o:p></o:p></li>
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Employee agreements;<o:p></o:p></li>
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Independent contractor agreements;<o:p></o:p></li>
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Licensing agreements;<o:p></o:p></li>
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Purchase agreements;<o:p></o:p></li>
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Consulting agreements;<o:p></o:p></li>
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Confidentiality agreements;<o:p></o:p></li>
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Non-appropriation agreements;<o:p></o:p></li>
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Non-compete agreements; and<o:p></o:p></li>
<li class="MsoNormal" style="margin-bottom: 0.0001pt;">Non-solicitation agreements.<o:p></o:p></li>
</ol>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
Most of these agreements can either be freestanding
or used in conjunction with one another.
Often, specialized clauses encompassing one or more of these ideas are contained
within a single agreement. For example,
an employer’s agreement with its employees will often include non-compete or
non-solicitation covenants, as well as non-appropriation and confidentiality
covenants.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
In addition to having these protective agreements
in place with employees, independent contractors, potential purchasers/buyers,
manufacturers, distributors, etc., there are other precautions a business must
take to protect its confidential and proprietary information. These precautions include having a properly
formed business entity and consistent upkeep of the company’s corporate documents,
registering trademarks and service-marks at the state and/or federal level, and
registering copyrights and patents with the United States Patent and Trademark
Office.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
</div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
It is also very important to have these agreements
and policies reviewed and updated frequently to ensure that the business is
protected as the business environment evolves. <o:p></o:p></div>
Anonymoushttp://www.blogger.com/profile/06935639123002147618noreply@blogger.com0tag:blogger.com,1999:blog-8795415847963602976.post-27591659007873845432015-04-08T13:33:00.002-07:002015-04-14T05:30:56.613-07:00VIRTUAL CURRENCY? THE PROS AND CONS OF ACCEPTING BITCOINS AS A SMALL BUSINESS<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS7PTXe7MZEwR0K9od95OkJ9vwiIHsW1OcPdFH1K-A3EbirxzDNVrNP_XcN1_HPOtsDmgJhvVuPdsAVdnl25IghyphenhyphenyNiUgqraxyDglG_Nk_8vOwjxwW6O6UW7MJ5UJCExMzeyhFcoPJfB4/s1600/bitcoin+image.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS7PTXe7MZEwR0K9od95OkJ9vwiIHsW1OcPdFH1K-A3EbirxzDNVrNP_XcN1_HPOtsDmgJhvVuPdsAVdnl25IghyphenhyphenyNiUgqraxyDglG_Nk_8vOwjxwW6O6UW7MJ5UJCExMzeyhFcoPJfB4/s1600/bitcoin+image.jpg" height="200" width="200" /></a><span style="color: #505050; font-family: Arial; font-size: 12px; line-height: 21px;"><strong><span style="font-size: 14px;">By: Andrew Burrows</span></strong></span><br />
<span style="color: #505050; font-family: Arial;"><span style="font-size: 14px; line-height: 21px;"><br /></span></span>
<br />
<div style="text-align: justify;">
<span style="color: #505050; font-family: Arial;"><span style="font-size: 14px; line-height: 21px;"><span style="font-size: 12px;">Since its inception in 2009 by an unknown inventor operating under the alias </span><a data-cke-saved-href="http://www.coindesk.com/information/who-is-satoshi-nakamoto/" href="http://www.coindesk.com/information/who-is-satoshi-nakamoto/" style="font-size: 12px;">Satoshi Nakamoto</a><span style="font-size: 12px;">, Bitcoin and other forms of virtual currency have gained significant ground as a valid payment option for consumers. For the uninitiated, Bitcoin is what is commonly referred to as a “cryptocurrency”, which operates on peer-to-peer software via the Internet and is created and held electronically, with the collective network taking the place of a central authority or bank to manage its transactions. With the rapid increase in </span><a data-cke-saved-href="http://www.businessinsider.com/us-e-commerce-growth-is-now-far-outpacing-overall-retail-sales-2014-4" href="http://www.businessinsider.com/us-e-commerce-growth-is-now-far-outpacing-overall-retail-sales-2014-4" style="font-size: 12px;">e-commerce</a><span style="font-size: 12px;"> as a subset of total retail spending in domestic GDP in recent years, Bitcoin has gained viability; breaking away from its status as a mere topic of conversation for internet enthusiasts and tech gurus. This positive press, however, has oftentimes been laced with skepticism and these cryptocurrencies still remain a topic of controversy. This is largely due to the recent use of the currency in online illegal activity such as the infamous drug trafficking scandal perpetuated by individuals via the </span><a data-cke-saved-href="http://www.forbes.com/sites/alexknapp/2015/01/19/faking-murders-and-stealing-bitcoin-why-the-silk-road-is-the-strangest-crime-story-of-the-decade/" href="http://www.forbes.com/sites/alexknapp/2015/01/19/faking-murders-and-stealing-bitcoin-why-the-silk-road-is-the-strangest-crime-story-of-the-decade/" style="font-size: 12px;">Silk Road</a><span style="font-size: 12px;"> website. Despite the dark shadow that such activity has cast, Bitcoin can be an attractive alternative for small business owners who are looking to avoid the fees charged by credit card companies and desire to become more tech-friendly and hip to their customer base.</span></span></span></div>
<span style="color: #505050; font-family: Arial;"><strong style="font-size: 12px; line-height: 21px;"></strong></span><br />
<div style="text-align: justify;">
<span style="color: #505050; font-family: Arial;"><strong style="line-height: 21px;"><strong><u>PROS</u></strong></strong></span></div>
<span style="color: #505050; font-family: Arial;">
<strong style="font-size: 12px; line-height: 21px;"></strong></span>
<br />
<div style="text-align: justify;">
<span style="color: #505050; font-family: Arial;"><strong style="line-height: 21px;"><strong>Cost</strong></strong></span></div>
<span style="font-family: Arial;"><strong style="color: #505050; font-size: 12px; line-height: 21px;">
</strong><span style="color: #505050; font-size: 12px; line-height: 21px;"></span></span>
<br />
<div style="text-align: justify;">
<span style="font-family: Arial;"><span style="color: #505050; font-size: 12px; line-height: 21px;">One of the most enticing benefits of Bitcoin as a small business owner is the ability to avoid the fees associated with credit card transactions. Bitcoin only requires a small fee (less than 1%) to pay people called “miners” who help run the Bitcoin network. The fee is only incurred by those who choose not to hold onto their Bitcoin, but rather to pay these “miners” to immediately convert the Bitcoins received into currency and deposit the funds into a bank account. When compared with the fees charged by <a data-cke-saved-href="http://readwrite.com/2013/11/06/why-small-businesses-have-the-most-to-gain-from-bitcoin" href="http://readwrite.com/2013/11/06/why-small-businesses-have-the-most-to-gain-from-bitcoin">credit card companies</a> (an application fee, a surcharge every time a card is swiped, the cost of buying or leasing the equipment, and a percentage of total sales), Bitcoin looks very attractive to small business owners, especially low-volume businesses, as a way to retain more profit per transaction.</span></span></div>
<span style="font-family: Arial;"><span style="color: #505050; font-size: 12px; line-height: 21px;">
</span></span>
<br />
<div style="color: #505050; text-align: justify;">
<span style="font-family: Arial;"><br /></span></div>
<span style="font-family: Arial;">
<span style="color: #505050; line-height: 21px;"></span></span>
<div style="text-align: justify;">
<span style="font-family: Arial;"><span style="color: #505050; line-height: 21px;"><strong>Speed</strong></span></span></div>
<span style="font-family: Arial;"><span style="color: #505050; line-height: 21px;">
</span><span style="color: #505050; font-size: 12px; line-height: 21px;"><div style="text-align: justify;">
Bitcoin transactions are incredibly quick and can be completed in <a data-cke-saved-href="https://www.kabbage.com/blog/does-accepting-bitcoin-make-sense-as-a-small-business-owner" href="https://www.kabbage.com/blog/does-accepting-bitcoin-make-sense-as-a-small-business-owner">as little as 10 minutes</a>. This is largely due to the absence of a bank as an intermediary, which speeds up the process of the transaction. Bitcoin is also held virtually and can be easily accessed through any device with an Internet connection by using a numeric “public key”. In addition, a business does not need to apply to start using Bitcoin. It merely has to download the necessary software to begin accepting the currency.<br />
<br /></div>
</span><span style="color: #505050; font-size: 12px; line-height: 21px;"><div style="text-align: justify;">
</div>
</span><span style="color: #505050; line-height: 21px;"><div style="text-align: justify;">
<strong>“Tech-effect”</strong></div>
</span><span style="color: #505050; font-size: 12px; line-height: 21px;"><div style="text-align: justify;">
Another advantage of Bitcoin is in the concept of virtual currency itself. A small business that accepts Bitcoin will be more <a data-cke-saved-href="http://readwrite.com/2013/11/06/why-small-businesses-have-the-most-to-gain-from-bitcoin" href="http://readwrite.com/2013/11/06/why-small-businesses-have-the-most-to-gain-from-bitcoin">tech savvy</a> as a user of cutting-edge technology. While this may not impact the decisions of some small businesses to accept Bitcoin, the attention that can be gained from customers may be worth the effort.</div>
</span><div style="color: #505050; text-align: justify;">
<br /></div>
<div style="color: #505050; line-height: 21px; text-align: justify;">
<u><strong>CONS</strong></u></div>
<div style="color: #505050; text-align: justify;">
<span style="font-size: 14px; line-height: 21px;"><br /></span></div>
<strong style="color: #505050; line-height: 21px;"><div style="text-align: justify;">
<strong>Volatility</strong></div>
</strong><span style="color: #505050; line-height: 21px;"><div style="text-align: justify;">
<div style="font-size: 12px;">
One downside to Bitcoin not being backed by any particular currency is that this makes its value increasingly <a data-cke-saved-href="https://www.kabbage.com/blog/does-accepting-bitcoin-make-sense-as-a-small-business-owner" href="https://www.kabbage.com/blog/does-accepting-bitcoin-make-sense-as-a-small-business-owner">volatile</a>. Since the value of Bitcoin is not subject to interest rates and fluctuates on a daily basis, it largely derives its value from its use in transactions. Although the supply of Bitcoin is fixed, the currency would decline into worthlessness if people decided to stop using it. This risk is decreased, however, by the fact that businesses need not hold on to the Bitcoin they receive. They can convert it to their respective country’s currency at any time. Important to note, however, is that an unwillingness of users to hold on to their Bitcoin will inherently stymie its worth.</div>
<span style="font-size: x-small;"><br /></span></div>
</span><span style="line-height: 21px;"><div style="text-align: justify;">
<div style="color: #505050;">
<span style="color: #444444;"><strong style="font-size: 14px; text-align: start;"></strong></span></div>
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<b><span style="font-family: Arial, sans-serif; line-height: 107%;"><span style="color: #444444;">Reluctance of Large Companies To Accept
Bitcoin</span><span style="color: black; font-size: 12pt;"><o:p></o:p></span></span></b></div>
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Although some members of the <a data-cke-saved-href="http://time.com/money/3658361/dell-microsoft-expedia-bitcoin/" href="http://time.com/money/3658361/dell-microsoft-expedia-bitcoin/">Fortune 500</a> have begun to accept Bitcoin as a method of payment, they do so by using a middleman to immediately convert that Bitcoin into US Dollars. Although the acceptance of Bitcoin by larger companies is a positive thing and a step in the right direction for the virtual currency, the current reluctance to take on the risk that holding Bitcoin represents is a sign that confidence in Bitcoin’s continuing success is not yet widespread.</div>
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<strong>Tax</strong></div>
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The IRS has deemed that Bitcoin is <a data-cke-saved-href="http://gizmodo.com/irs-declares-bitcoin-is-property-and-must-be-taxed-as-s-1551321725" href="http://gizmodo.com/irs-declares-bitcoin-is-property-and-must-be-taxed-as-s-1551321725">property, rather than currency</a>. As a result, US based businesses must report gains and losses on Bitcoin fluctuation as short term capital gains and losses. . At this point, a business owner would need to be <a data-cke-saved-href="http://bitcoinassociation.org/bitcoin-taxation-part-6-tax-record-keeping-related-to-bitcoin/" href="http://bitcoinassociation.org/bitcoin-taxation-part-6-tax-record-keeping-related-to-bitcoin/">meticulous in tracking their Bitcoin</a> acquisitions and expenditures, tracking each transaction and the exchange rate for Bitcoin at that time. Then, the business owner would provide this information to whomever prepares their taxes. Thus, although tax implications may be a somewhat daunting hurdle at the outset due to the relatively unknown nature of virtual currencies to a business owner, this process will surely become more routine as employers become comfortable and train their employees to account for these transactions.</div>
</span></span>Anonymoushttp://www.blogger.com/profile/08663864572000383658noreply@blogger.com0