Spring 2016 Newsletter

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Spring Newsletter 2016
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Quarterly Newsletter
SPRING 2016
This Issue:
  • Managing Partner's Update
  • Top Ten Reasons for an Estate Plan
  • Contractors: Not Getting Paid?
  • Family Law: Child Custody
  • Why Business Owners Should Consider a Buy-Sell Agreement
MANAGING PARTNER'S UPDATE
 

         With the firm’s continuous growth and our ever pressing desire to exceed our clients’ expectations, we have hired Ms. Laura Goodnow to fill the role as Business Development Manager within the firm.  In Ms. Goodnow’s new role she will be working intimately with various networking groups, transforming the firm’s social media and internet presence, acting as the lead coordinator for the Office Managers Association of Mid-Michigan, and assisting the firm’s attorneys in expanding their business.
 
        The firm is delighted to have Ms. Goodnow as a part of our team and hopes that our clients will provide her with a warm welcome upon their next visit.


-Christopher Kroll        
TOP TEN REASONS FOR AN ESTATE PLAN
Written By: Matthew S. Nowak
 
            “In this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin.  Death is a reality that everyone faces regardless of age, gender, race, or religion.  As humans we spend a lifetime building our own personal empires yet most are unsure of what will happen with that empire upon their death.  Having a properly executed estate plan will ensure a smooth transition of one’s personal effects to their chosen beneficiaries.  However, the majority of individuals do not have a well-structured plan or, for that matter, any plan in place. 
 
People of all ages and walks of life have a variety of questions on estate planning, but very few seek professional assistance in answering those questions.  There are a myriad of reasons why people fail to create an estate plan, but that does not alleviate the necessity to have one in place.  Estate planning can be a sensitive topic for many and for that reason estate planning remains a mystery to a large portion of the community.   For that reason, most are unfamiliar with the benefits of creating their own estate plan.
 
I have compiled a list of my top ten reasons for an estate plan.  There are of course more benefits beyond the ten that I have listed, but these are the top ten reasons I feel my clients create their own estate plan. 
 
  1. Choosing Your Beneficiaries.  Having your own personal estate plan will allow you to choose who will receive your assets upon your passing.  There are a variety of options one can choose from including, but not limited to, a spouse, children, friends, charities, or even a pet. 
  2. Incapacity.  Through the use of power of attorney documents you can choose who you would like to act as you advocate if you were no longer able to make financial or medical decisions independently.  Without a plan, the probate court will determine the individual to handle your financial and medical decisions.
  3. Minimize Estate Taxes. There are various strategies that can be implemented to reduce the amount of estate taxes that one’s estate may have to pay.
  4. Minor Children.  A major concern for a parent is choosing the person who will care and raise their children upon their passing.  Without proper planning the court will make that decision, which may not be a parent’s ideal choice.
  5. Providing for a Special Needs Child, Spouse, Sibling, or Parent.  With proper planning one can provide for a special needs beneficiary without disqualifying them from their government benefits while giving them assets to pay for non-covered expenses. 
  6. Protecting Your Loved Ones from Themselves. Inherited assets are often wasted and lost in short periods of time. Good planning can help loved ones learn new and appropriate financial habits.
  7. Protect Loved Ones from Their Creditors. You can protect your assets and your loved ones if they are sued by a creditor or are facing a divorce from their spouse.
  8. Succession Planning.  Business owners need to ensure a smooth transition of their business operations/ownership should they become incapacitated or pass away, which can be achieved with a properly structured succession plan.
  9. Blended Families.  For those who have been previously married or have children from a different relationship, a specifically tailored estate plan can ensure that your assets are divided in the manner you choose.
  10. Flexibility.  Estate planning documents can be amended and changed to meet the goals you are looking to achieve during and after your lifetime. 
 
RESIDENTIAL

CONSTRUCTION

LIENS
Written By: Zacharia S. Bonham
Every construction project begins with the best of intentions; the project will be under budget, the proper materials will be delivered, and everyone will be paid on time.  Unfortunately, even the best laid plans of mice and men often go awry.  When there is a problem with your construction plan you should expect, at a minimum, there will be escalating costs and project delays.  However, to ensure you receive the compensation you are entitled to, then you need to comply with the applicable statutory requirements.
 
The Michigan Construction Lien Act (“the Act”) allows contractors, subcontractors, suppliers, or laborers, who provide an improvement to real property, to acquire a lien against that property in the event of non-payment of wages.[1]  That lien will “attach” to the interest of the owner or the lessee that contracted for the improvement to be made.[2]  The Act is comprised of numerous caveats and nuances.  In general, some requirements include the following: (1) Providing sworn statements[3]; (2) Filing the construction lien within 90 days after the last labor or material was supplied to the real property[4]; and (3) Foreclosing on a construction lien within one year after it is filed[5].  These are some of the requirements that must be met in order to perfect a commercial or residential construction lien.
 
There are some additional requirements that must be met before a residential construction lien will be perfected.  Specifically, there are two additional requirements that must be met.  First, if required by the Occupational Code to be licensed, and the residential builder is not so licensed, then the builder cannot file a claim of lien against the real property.[6]  Furthermore, if the builder is not licensed as required, then they also cannot sue the owner or lessee for their unpaid wages.[7]  Secondly, the contractor must have a written contract with the owner or lessee regarding the improvement to the real property, and it must include very specific language.[8] 
 
The above information should provide contractors some guidance regarding the proper procedures to follow in order to secure their compensation for labor and materials.  However, to fully protect their rights, contractors should seek the advice of an experienced attorney to ensure that all procedural requirements have been met.
 

[1] MCL 570.1101, et seq.  [2] MCL 570.1107  [3]MCL 570.1110(1)(a)  [4] MCL 570.1111(1)  [5] MCL 570.1117   
[6] MCL 570.1114   [7] MCL 339.2412   [8] MCL 570.1114
TYPES OF

CHILD CUSTODY



Written By: Christopher Kroll
Over the course of my practice I’ve noticed that people often have a fundamental misunderstanding regarding the vocabulary used within the family law context.   The unfamiliarity with the verbiage causes most parents unnecessary stress during a time that is already replete with feelings of anxiety.  The purpose of this article is to define the common terms used within the family law setting in plain English.

 
Legal Custody: MCL 722.26a(7)(b) defined legal custody as the “decision-making authority as to the important decisions affecting the welfare of the child.”  Having legal custody means that a parent has the ability to make decisions related to the child’s schooling, religious affiliation, and medical treatment.  The court may award one or both parents legal custody.

 
Physical Custody: This is known by different phrases, such as, “sole physical custody,” “primary physical custody,” or “joint physical custody.”  Physical custody merely identifies which parent has the child in their physical presence.
  • Sole physical custody – refers to the fact that only one parent is to have the minor child in their physical custody.
  • Primary physical custody – refers to which parent has the minor child in their physical custody the majority of the time.
  • Joint physical custody – refers to the fact that the parents are to exercise the same amount of physical custody with the minor child.
 
Typically, I advise my clients not to get too caught-up regarding the verbiage used to describe their custody situation.  It is more important to review the parenting time arrangement as that dictates the minor child’s daily life.  The parenting time arrangement outlines which parent has the child on a daily basis, the holiday parenting time, and the summer parenting time.
BUSINESS LAW

BUY-SELL

AGREEMENTS: A

BUSINESS OWNER'S

BIGGEST NEGLECT


Written By: Adil Daudi
 
Small businesses in America have played a substantial role for the economy when it comes to an improved job market. Surprisingly enough, small businesses are responsible for nearly sixty-percent (60%) of the jobs in the country. Undoubtedly, they are the driving force for a healthy economy. So what is to happen when a small business owner suddenly dies or becomes disabled; what strategies have business owners implemented to help withstand such tragic events?
 
Succession planning is one of the most overlooked aspects of a business, where business owners are much too focused on running their business, and forget to strategize on the succession of their business. Put simply, a succession plan is an exit strategy for the owner, where the owner ensures their business will go through a smooth change of ownership in the event of the owner’s death, disability or retirement.
 
Although a plan is not necessarily designed for every owner, it is valuable to those who look to monetize their investment and find the importance of having continuity of their business. Regardless of the stage of the business, whether the beginning or the end, developing a succession plan is vital for its continued success and growth.

All owners, whether full or partial, should know about one of the most important documents associated with succession planning: Buy-Sell Agreements. Unless an owner feels they are immune to death or disability, or believe they will never retire, not having a Buy-Sell Agreement can be the cause of severe financial and tax problems. Take the following example:
 
Mike and Joe run a construction business as 50/50 partners, with no written partnership agreement, simply a handshake.  Joe dies.  Does Mike still have a business?  Is Joe’s wife or child Mike’s new partner?  Does Mike have the right or the obligation to buy them out? If so, for how much and under what terms? How will Mike pay for Joe’s percentage interest?

This is where the value of a Buy-Sell Agreement is shown.

What is a Buy-Sell Agreement?
It is a legally binding document between owners of a business that establishes guidelines for when a co-owner dies, becomes disabled, or chooses to retire.
When is the right time to have a Buy-Sell Agreement in place?
Any business with multiple partners should have a Buy-Sell Agreement in place. With the uncertainty of death or disability, understanding the terms that govern such triggering events can help the remaining business owners go through the process of selling the deceased/disabled individual’s ownership interest. When a co-owner wants to retire, sell their shares, get divorced or simply die, the Buy-Sell Agreement serves to protect everyone's interests, by having a predetermined formula on establishing the value of the selling owner’s share.
 
What is the cost-benefit in having one prepared?
The cost of a buy-sell is minute compared to the benefits associated with it. By establishing an agreement and keeping it updated, it can help avoid disputes between family members, co-owners and spouses. It helps keep the business alive and ensures the reputation of the business survives by avoiding having the business dissolve/liquidate due to infighting amongst family members or spouses.

Disputes and confusion over the business often result after one co-owner decides to leave or dies. The stakes are even higher depending on the size of the business itself. Implementing a buy-sell further helps avoid a co-owner being able to sell their interest to a competitor, as the agreement could outline such restrictions.
 
Do I need to be in a specific type of business and/or industry?
No. A Buy-Sell Agreement is relevant for any business owner, operating any business, in any industry, under any structure. The more owners involved in the business, the larger the role of the document.


How does insurance tie into all this?
Insurance plays a large role in Buy-Sell Agreements. Although they don’t need to be used, it can provide comfort in knowing there is cash available when the time comes. Using the above example, if Mike or Joe die, and it was agreed between the two that the survivor will buy-out the other’s interest, a life insurance policy on each owner can secure the buyout, thus mitigating the need of funds.
 
Who can help?
With any sound Buy-Sell Agreement, an owner needs an equally sound business attorney. Paying an attorney to discuss the goals and strategies of the business, to help draft a concise and clear succession plan should be seen as an investment rather than an expense. If the purpose of a business is to continue beyond the life of the original owners, then investing the time to meet with professionals should become a top priority.
 
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