02.03.10
Posted in Uncategorized at 12:55 pm by Eric
I say “let ‘em surf.” It’s probably the most-useful thing they do all day: “The work computer of one regional supervisor for the U.S. Securities and Exchange Commission showed more than 1,800 attempts to look up pornography in a 17-day span: ‘It was kind of distraction per se,’ he later told investigators. But he wasn’t alone. More than two dozen SEC employees and contractors over roughly the past two years have faced internal investigations after they were caught viewing pornography on their government computers. . . “. Link.
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12.22.09
Posted in Uncategorized at 1:34 pm by Eric
An email from our exalted local probate judge. Summary: Get your paws off that will . . . until the guy dies.
There have been extensive discussions among the Probate Registers as to whom may a Register disclose the existence and contents of a will filed for safekeeping with the Probate Court. Since there was a split of opinion among the Registers on how this question should be resolved, the Probate Judges decided to resolve the issue. Judge Murkowski of Kent County reviewed the matter.
His summary basically states that when a will is filed for safekeeping under Section 2515 of EPIC, the filing is NON PUBLIC. The Court receives the will in sealed form and can return the sealed will to the testator or designee during the lifetime of the testator. The will is never unsealed until the death of the testator. A court may not reveal to ANYONE whether a will is filed for safekeeping with the court, and because the will is sealed cannot reveal the contents of that will. The proper response to an inquiry whether a will is filed with the Court is “no public record exists.” A conservator cannot view a will filed for safekeeping. A conservator may examine a protected person’s will from a source other than a will deposited with the Probate Court. When a designee presents to the court the notarized authorization to retrieve the sealed will from safekeeping, the designee should produce picture ID that is photocopied, attached to the authorization form and retained by the court.
Once a testator has died and the Probate Court has proof of the death, the will can be unsealed and photocopies given to anyone for a fee.
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11.21.09
Posted in Uncategorized at 1:45 pm by Eric
I’ve often wondered: With seven minor children, what’s the maximum amount my family would receive from Social Security if I died? The bad news is, I don’t get any credit for children four through seven. Benefits max out at three children. The good news is, based on my Average Indexed Monthly Earnings, my family would receive $4,424 per month. This would continue for about ten years (total pay-out: over $500,000), at which point my fifth child would reach age 19 and the monthly payment would start to decrease. When my youngest child reaches age 19 (fifteen years from now), it would end.
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11.12.09
Posted in Uncategorized at 1:07 am by Eric
Answer to a question we field occasionally: An IRS tax lien is good for ten years from the date of the IRS assessment. If you signed a waiver, the lien might be good for even longer.
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11.11.09
Posted in Uncategorized at 1:51 pm by Eric
If you’re a creditor of a corporation and you’re not getting paid, don’t forget that many corporations have included a compromise provision in their articles of incorporation. The following provision has been a part of the State of Michigan pre-printed form for decades, and although it’s perfectly permissible for corporations to cross it off before filing the form, the vast majority of corporations leave it in, and therefore the provision is binding on the corporation and people dealing with the corporation:
When a compromise or arrangement or a plan of reorganization of this corporation is proposed between this corporation and its creditors or any class of them or between this corporation and its shareholders or any class of them, a court of equity jurisdiction within the state, on application of this corporation or of a creditor or shareholder thereof, or on application of a receiver appointed for the corporation, may order a meeting of the creditors or class of creditors or of the shareholders or class of shareholders to be affected by the proposed compromise or arrangement or reorganization, to be summoned in such manner as the court directs. If a majority in number representing 3/4 in value of the creditors or class of creditors, or of the shareholders or class of shareholders to be affected by the proposed compromise or arrangement or a reorganization, agree to a compromise or arrangement or a reorganization of this corporation as a consequence of the compromise or arrangement, the compromise or arrangement and the reorganization, if sanctioned by the court to which the application has been made, shall be binding on all the creditors or class of creditors, or on all the shareholders or class of shareholders, and also on this corporation.
It might offer you an avenue that’s not often considered.
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11.02.09
Posted in Uncategorized at 12:12 pm by Eric
Health Savings Accounts are neat vehicles. If you’re covered by a high-deductible health insurance plan, you can deposit money into a health savings account and receive a tax deduction for the contribution. If you later take a distribution from the HSA to reimburse or pay medical expenses (dental, optical, prescriptions, whatever), you don’t have to recognize the distribution as income. If you have family coverage, you can deposit $5,950 annually into the HSA. Because many families don’t burn through that much in medical expenses, the unused portion accumulates and earns income.
And that’s where the money-making opportunity comes in. Someone manages those funds. Places like UnitedHealth Group earn money doing it, but the previous arrangements weren’t profitable enough for them, so they took advantage of regulatory changes last January and tripled the annual fees . . . to the detriment of their customers:
UnitedHealth Group controls roughly 15% of the market for HSAs, which it offers through OptumHealth Bank, a wholly owned subsidiary. Until late last year its HSA clients had 11 mutual fund choices from Vanguard Group. Annual fees ranged from 18 cents to 35 cents per $100 invested.
By late 2008 Optum had yanked the Vanguard options for new customers. Funds on the menu now hail from firms like Munder and Thornburg; fees range from 76 cents to $1.37 per $100.
Why the switch? No coincidence, perhaps, that regulatory changes this January enabled entities like OptumHealth and their consultants to start pocketing a cut of fund management fees. Nor, perhaps, is it purely random that many fund firms popping up in HSAs these days kick back fees to plan managers. Vanguard does not pay kickbacks.
Link.
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10.30.09
Posted in Uncategorized at 3:50 pm by Eric
Have you ever heard of “ToD” or its brother, “PoD”? They mean “Transfer on Death” and “Payable on Death.” They’re basically beneficiary designations that you can attach to all sorts of investment properties. You, for instance, can set up your savings account the following way: “Your Name, PoD Your Daughter.” Upon your death, your daughter would receive the savings account, as though she were a joint owner (read: without probate), but while you’re alive, she has no rights over it (which has many benefits: prevents fraud, precludes estranged spouses from trying to claim it in a divorce, no bankruptcy problems if the daughter files Chapter 7, etc.).
The procedure has one major drawback: It doesn’t apply to real estate. Therefore, the only way to avoid probate with real estate is to put your offspring on the real estate title as a joint owner (which has many risks) or put the real estate into a trust.
But that’s changing. Effective July 1, 2009, Indiana enacted legislation that allows people to transfer real estate into a ToD designation, as long as you follow the statutory requirements. If you do so, your heir will receive the real estate without the need for probate.
This a huge development for Indiana estate planning. Michigan is supposedly considering similar legislation. We’ll keep you posted.
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10.26.09
Posted in Uncategorized at 2:08 pm by Eric
Happy one-year anniversary to this blawg. We’re averaging two posts a week, which is double the initial goal (update at least once a week). We hope everyone is enjoying it.
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10.12.09
Posted in Uncategorized at 7:13 pm by Eric
I hear it all the time: “That guy who owes me money filed bankruptcy, but don’t worry about it. He’s going to pay me. He didn’t list me on his schedules.”
Problem is, the mere fact that you’re not listed on the schedules doesn’t mean your claim isn’t discharged in the bankruptcy. If you’re listed on the schedules or you have notice of the bankruptcy, your claim is extinguished during the bankruptcy (unless you file an adversary proceeding to prevent it from being discharged).
And even if you’re not listed on the schedules and don’t have notice, you’re probably out of luck. The debtor must merely file a Motion to Reopen the case. It’s an easy Motion to file, and in the Western District of Michigan, they make it real easy: The judge will enter an order that says, “This case will be re-opened, but only if the omitted creditor first files an adversary proceeding to contest the discharge, along with an affidavit that swears the creditor didn’t know of the bankruptcy while it was pending. If the creditor doesn’t file the adversary proceeding and affidavit within 60 days, the claim will be deemed discharged.”
In other words, the bankruptcy court puts all the work on the creditor, instead of the debtor. As a practical matter, unless you have grounds to object to the debtor’s discharge (such as fraud, criminal act, etc.), it’s not worth hassling the debtor. Just assume your claim got wiped out with everyone else’s.
Aside: If you attempt to collect a discharged debt, you’ll be in violation of a federal court injunction. It’s serious stuff. You’re probably better off messin’ with Sasquatch.
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10.05.09
Posted in Uncategorized at 6:47 pm by Eric
I have a friend out in the stix. He has neighbors, but it’s definitely rural; nothing but woods and fields. He’s an individualist with a unique personality, but lots of friends. He likes to work a little, farm a little, and drink a little.
One day, he decided to combine all three: He was going to make vodka. He’d take corn, turn it into mash, let it ferment, distill it many times, filter it, and dilute it to 80 proof. As of today, he’s only a few months away from going commercial. As his attorney, I visited his still a little while ago and talked about the process . . . the legal process.
I was disgusted. Not surprised, mind you, but disgusted. The maze of regulations and requirements he had to traverse made my head spin. It took him over a year just to jump all the hurdles. Here’s a partial list:
Submit application to Michigan Liquor Control Commission, along with $1,000 application fee.
Obtain local governing body’s approval.
Confirm proper zoning and obtain necessary exceptions.
Attend training class(es).
Install specialized electric connections under the micro-management of a local bureaucrat, which was pretty much the electrical equivalent of an IRS audit.
Pass a local equipment inspection.
Pass a state equipment inspection.
Apply for a permit under the Federal Alcohol Administration Act.
Install an explosion-proof light (found on eBay for $2,000; new ones cost over $3,000)
Install appropriate locks and surveillance cameras to protect distillery from burglars.
Post a surety bond.
Submit bottle label to feds for approval, with application.
All that is just to get started. When he starts selling, the abuse continues:
He can only sell to state package dealers who enjoy a state-imposed monopoly, who will then charge a fixed price to retailers (bars and liquor stores).
When he sells his vodka to the state package dealers, he has to pay a 16% federal liquor tax. When the retailers later buy it, they have to pay heavy state taxes. The consumers later pay a six percent sales tax. On top of all that, of course, he has to pay state and federal income taxes on his net earnings, plus social security and medicare taxes. He already pays real estate taxes on the still. I didn’t have the heart to tell him that, once he goes into commercial gear, his local township can start imposing a personal property tax.
Only use corn produced by a farm that complies with Department of Agriculture requirements.
If he wants to market his vodka at a local bar, he can’t merely give away free shots. He has to pay the bar for a shot, then he can give it to the patron. Even if the bar owner doesn’t mind if he gives it away, he has to buy it.
Annual licensing fees.
Ongoing surety bond premiums.
And if he expands to the point of hiring employees, watch out: labor posters, minimum wage laws, overtime laws, Americans with Disabilities Act, workers compensation, discriminatory hiring/firing practices, bogus lawsuits for sexual harassment.
Neither of those lists, by the way, is complete. I didn’t keep notes when he told me about all the requirements. I’ve done some Internet research to make it comprehensive, but I guarantee you that I’m missing things. A guy can no more catalog all the legal requirements than he can catalog every single thing he does in an average week
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