Know Your Business

Suttons Bay - June 2008

Fortunately, there is a traditional alternative to wills and probate. It is called a revocable living trust. It avoids all probate and makes sure your plan won’t be altered by the court or relatives at your death or disability.

Probate is the legal process through which the court makes sure that, when you die, your debts are paid and your property is distributed according to your will. If you don’t have a will, the state has laws that govern how your assets are distributed among your relatives. The probate court can also take control if you become physically or mentally incapacitated.

What’s so bad about probate? Well, probate can be an expensive, time consuming process in which your family has no privacy in that all probate proceedings are public and they also may have very little control.

The solution to avoid probate is to have a living trust. A living trust is a legal document that looks a lot like a will. In fact, it does what most people think a will does–and much more. It says who will inherit from you, but it also spells out how and when your heirs will receive their inheritances. In addition, because there is no probate with a living trust, all expensive court proceedings and delays are eliminated, your privacy is preserved and emotional stress on your family is minimized. A living trust can also reduce/eliminate estate taxes on larger estates, is hard to contest, and even can provide very effective pre-nuptial protection in a multiple marriage situation.

Everyone should consider having a living trust. The chart on the back of this page provides a good comparison for an individual having no will, a will or a living trust.

Advantages of a Living Trust
• Avoids all probate and related costs
• Can reduce or eliminate estate taxes
• Allows quick distribution of assets to beneficiaries
• Preserves privacy – completely confidential
• Allows for professional asset management with selection of corporate trustee
• Very hard to contest
• Lets you keep control, even upon physical or mental incapacity, and after your death
• Prevents a conservatorship if you become incapacitated
• Minimizes emotional stress on your family
• Prevents unintentional disinheriting
• Avoids problems of joint ownership
• Relatively inexpensive, easy to set up and easy to maintain
• Can be changed or cancelled at any time
• Protects minor children from court-imposed conservatorships
• Can protect dependents with special needs

With No Will

At Physical/Mental Incapacity Probate: Court appoints conservator, must keep detailed records and report to court. Court controls your finances and assets, approves all expenses.
Court Costs You pay all court costs, legal fees
At Death Probate: Court orders your debts paid and possessions distributed according to state law, which may not be what you would have wanted.
Court Costs Your estate pays all court costs and legal fees.
Time Often 1-2 years or more before heirs can inherit.
Flexibility & Control None. Your property is controlled and distributed by probate court according to state law.
Privacy None. Probate proceedings are public record. Exposes family to unscrupulous solicitors and greedy heirs.

With a Will

At Physical/Mental Incapacity Probate: Same as with no will.
Court Costs Same as with no will
At Death Probate: After verifying your will, court orders your debts paid and possessions distributed according to your will.
Court Costs Same as with no will, or higher if your will is contested.
Time Same as with no will.
Flexibility & Control Limited. You can change your will at any time, but it can easily be contested. Family has no control over probate costs.
Privacy None. Same as with no will.

With a Living Trust

At Physical/Mental Incapacity No probate. Your successor trustee manages your financial affairs according to your instructions for as long as necessary.
Court Costs None
At Death No probate. Debts are paid and possessions distributed to beneficiaries by successor trustee according to your written instructions.
Court Costs None
Time If the trust does not require delaying distributions to beneficiaries, the trust will customarily be administered much faster than a probate estate.
Privacy Total: You can change your trust at any time, even discontinue it. Your property remains under control of your trust, even if you are incapacitated. Hard to contest.

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The information contained in this publication is meant for informational purposes only and is not intended as legal advice. Laws and their application vary based upon a client’s unique facts and circumstances. Wright Penning & Beamer disclaims any responsibility for action taken in reliance on this publication without further consultation and analysis. For questions, please contact us at (231) 271-4500 or at dpenning@wrightpenning.com.
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Know Your Business

Suttons Bay - June 2008

Many businesses use leased employees to fill their workforce. These leased workers are hired and paid by employee leasing companies, often referred to as Professional Employer Organizations or PEOs. Employee leasing offers certain benefits, but businesses that use leased workers cannot ignore certain traditional obligations of an employer. In dealing with most civil rights or similar employment claims, courts will typically treat a business that uses leased employees as a joint or secondary employer subject to liability.

In a recent decision from the Federal Sixth Circuit Court of Appeals, a leased worker took a leave of absence under FMLA. Once she returned from leave, she tried to return to the same position she had filled before taking the leave. The company who had used her services filled her position with another leased worker. She sued both the PEO and the company that had leased her services. The latter argued that it was not an employer since it only leased her services.

The federal appellate court sided with the worker and ruled that the leasing company was at least a “secondary” employer with some measure of control over the employee’s work and working conditions. It relied in part on language in the Department of Labor’s FMLA regulations which state that “joint employment will ordinarily be found to exist when a temporary or leasing agency supplies employees to a secondary employer.”
In a particularly troubling aspect of the opinion, the court also found that the “secondary” employer could be liable for interfering with the worker’s ability to return to work even if the secondary employer did not have the 50 or more employees typically required to invoke coverage under the FMLA. The ramifications of this portion of the decision remain unclear. For the time being, companies with a work force that is smaller than 50 workers but that includes some leased workers should pay close attention to FMLA requests from those leased workers.

This recent court opinion serves as a reminder that businesses using leased workers cannot afford to delegate to PEOs sole responsibility for analyzing and implementing compliance with state and federal labor laws.

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The information contained in this publication is meant for informational purposes only and is not intended as legal advice. Laws and their application vary based upon a client’s unique facts and circumstances. Wright Penning & Beamer disclaims any responsibility for action taken in reliance on this publication without further consultation and analysis. For questions, please contact us at (231) 271-4500 or at dpenning@wrightpenning.com.
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Know Your Business

Suttons Bay - June 2008

There are a few supercharged tax breaks for autos purchased or leased for business use in 2008. If your business buys a new, heavy SUV this year (“heavy” means a loaded weight over 6,000 pounds) for $50,000, it can expense $25,000. The remaining cost is subject one-half to bonus depreciation and one-half to regular depreciation. The result is a total first year write-off of 80% of the purchase price!

If your business leases a car this year worth more than $18,500, IRS tables will allow you to report about 25% less income than in 2007.

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The information contained in this publication is meant for informational purposes only and is not intended as legal advice. Laws and their application vary based upon a client’s unique facts and circumstances. Wright Penning & Beamer disclaims any responsibility for action taken in reliance on this publication without further consultation and analysis. For questions, please contact us at (231) 271-4500 or at dpenning@wrightpenning.com.
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Know Your Business

Suttons Bay - June 2008

Employers who have 50 or more employees during 20 or more weeks of the current or prior year must extend leave to eligible employees under the Family and Medical Leave Act (FMLA). On January 28, 2008, Congress amended the FMLA to increase protections for members of the United States Armed Forces and their families.

Broadly speaking, employers must make leave available to eligible service personnel or their families in two situations:

• Injured Service Member Leave – the next of kin of a service member injured in active duty is eligible for up to 26 weeks of unpaid leave to care for that injured service member.

• Active Duty Leave – service members called to active duty may themselves be eligible for up to 12 weeks of unpaid leave in order to deal with exigent circumstances arising out of the call to active duty.

The right to Injured Service Member Leave took effect on January 28, 2008. Active Duty Leave is not in effect until the Department of Labor finalizes the regulations covering such leave. Employers should note that, in addition to their obligations to comply with the law as amended, they also are required to post updated notice posters reflecting these changes in the law.

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The information contained in this publication is meant for informational purposes only and is not intended as legal advice. Laws and their application vary based upon a client’s unique facts and circumstances. Wright Penning & Beamer disclaims any responsibility for action taken in reliance on this publication without further consultation and analysis. For questions, please contact us at (231) 271-4500 or at dpenning@wrightpenning.com.
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Know Your Business

Suttons Bay - June 2008

I-9 FORMS HAVE CHANGED, HAVE YOU?
Every employee working in the United States and hired by the employer after November 6, 1986, must complete a Form I-9. This is true of citizens and non-citizens alike. The Department of Homeland Security recently amended Form I-9, and any employee hired after January 1, 2008, must complete the updated form. Failure to properly complete and maintain Form I-9 can result in significant fines and penalties for the employer. A copy of the updated form can be found online at www.uscis.gov/files/form/i-9.pdf. Check to make sure that you are using the proper form for all of your new hires.

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The information contained in this publication is meant for informational purposes only and is not intended as legal advice. Laws and their application vary based upon a client’s unique facts and circumstances. Wright Penning & Beamer disclaims any responsibility for action taken in reliance on this publication without further consultation and analysis. For questions, please contact us at (231) 271-4500 or at dpenning@wrightpenning.com.
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Tags: Know Your Business by Dan Penning
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