Suttons Bay Law

One of the most important lessons we need to learn from our economic crisis concerns the necessity of protecting our assets and insuring that our loved ones have the opportunity to enjoy benefits of our years of hard work and sacrifice. While it is easy to get caught up with all the negatives resulting from our current economic crisis, there have been key estate tax law changes and positive planning opportunities resulting from these changes which may, in some instances, may be a silver lining to the dark cloud hovering over us.

Estate and Gift Tax Law Changes – Effective January 1, 2009, the estate and generation-skipping tax exemption increases to $3.5 million from $2 million which had been in effect since 2006. The federal estate tax and generation-skipping tax rate imposed on taxable estates is 45%. The amount of the exemption that can be used for gifts during ones lifetime remains at $1 million. While the estate and generation-skipping tax is scheduled for repeal in 2010, they are reactivated in 2011 with a reduction in the exemption to $1 million.

President Barack Obama plans to keep the federal estate tax. Stated in The Wall Street Journal on January 12, 2009, then President-elect Obama stated he intends to block the repeal of the federal estate tax by locking in the current estate and generation-skipping tax exemption and tax rates. We expect a detailed estate tax proposal to be included in the new congressional budget which should be made public within the coming months.

There will also be a change in the Annual Gift Tax Exclusion. Effective January 1, 2009, the annual gift tax exclusion increases to $13,000 from $12,000. This exemption applies to both gift tax and generation-skipping tax.

Based on the fact that there has been a significant reduction in the valuation of stocks and real estate, combined with historically low interest rates, there are many opportunities to transfer wealth to succeeding generations with little or no transfer taxes, resulting in a substantial reduction in estate taxes for persons whose estates are likely to exceed the federal estate tax exemption at the time of their death. These techniques range from outright gifts, installment sales and split interest techniques which are grantor-retained annuity trusts, sales to a defective grantor trust and charitable lead annuity trusts. Many of these opportunities are discussed in The Wall Street Journal article reprinted below.

Tough Times Are Good Times to Trim Estates

By TOM HERMAN and MIKE SPECTOR

Investors have taken a huge hit as the prices of stocks, bonds, real estate and most other assets have tumbled. But sharply lower prices, combined with rock-bottom interest rates, make this an unusually attractive time for many people to transfer wealth to the next generation.

Among the tax-smart strategies advisers are recommending are low-interest loans to other family members and “grantor-retained annuity trusts,” or GRATs — which are designed to transfer assets to family members while minimizing gift and estate taxes. These and other interest-rate sensitive techniques are likely to look even more attractive next month, thanks to even lower rates.

Many estate planners say they’ve structured more family loans and GRATs in recent months amid these historically low rates, which allow lenders to charge less to family members and to shelter the potential growth of certain assets. Gary Pittsford, the owner and founder of Castle Wealth Advisors LLC in Indianapolis, expects he’ll more than double the amount of these transactions this year, compared with 2008. Strategists also are urging more clients who can afford it to take advantage of a recent increase in the annual gift-tax exclusion to $13,000.

Beaten-down prices and sagging interest rates provide opportunities to move potential appreciation out of your estate, while passing investment gains to heirs. “What we’re looking at is a perfect combination of conditions for GRATs, at least for people who have some degree of optimism about the economy,” says Carlyn McCaffrey, a partner at Weil, Gotshal & Manges LLP.

Many financial advisers are urging their clients to take action quickly, pointing to rumors that Congress may soon take action, as part of a major estate-tax overhaul, to make GRATs less attractive. “When you toss in the possibility of legislative changes that would negatively impact some of these techniques, it becomes more compelling,” says Joseph Toce, a managing director at WTAS LLC, a tax-planning and consulting firm. “It’s almost a call to arms.”

Estate-tax changes appear inevitable. Under current law, the basic federal estate-tax exemption for 2009 is $3.5 million, and the top estate-tax rate is 45%. (Transfers between spouses typically are tax-free.) Next year, the tax is scheduled to disappear entirely — only to reappear in 2011 with a $1 million exemption and a top rate of 55% on the largest estates.

But don’t bet on a total repeal. While that was the Bush administration’s oft-stated dream, President Obama, who was sworn in Tuesday, has said he is opposed to that idea. Instead, he said during the presidential campaign that he favors extending this year’s $3.5 million per-person exemption level and the 45% top rate into future years. Another factor to consider: Many states impose their own death-related taxes.

Here is a summary of a few techniques that financial planners say look especially attractive:

Direct gifts. Under current law, you can give away as much as $13,000 a year to anyone you want — and to as many people as you wish — without any tax consequences and without even having to report it to the IRS. You can give away even more by paying directly for someone’s tuition or medical expenses. Those payments don’t count toward the annual limit. Financial advisers say more people should consider taking advantage of this provision to reduce their taxable estates and help heirs.

The stock market’s deep slump makes this provision even more attractive as an estate-planning vehicle. “With prices as depressed as they are, in many cases blocks of stock can be transferred completely free of gift tax under the umbrella of the $13,000 annual exclusion,” says William E. Massey, senior tax analyst at the tax and accounting business of Thomson Reuters in New York.

For example, 1,000 shares of stock previously worth $50 a share and now trading at $13 a share “can be transferred to a single individual at no gift-tax cost,” Mr. Massey says. “If the stock bounces back to its earlier highs or beyond, the post-transfer appreciation will escape transfer-tax costs.”

Intra-family loans. Suppose you want to help a child take advantage of an investment opportunity. You don’t want to make a direct gift, and the child is having difficulty qualifying for a bank loan, or is facing a painfully high interest rate. You can lend money to the child at rates well below bank rates.

The IRS sets minimum rates for such loans; the rates for January range from 0.81% to 3.57%, depending on the maturity of the loan. For February, those rates will range from 0.60% to 2.96%, says Catherine Grevers Schmidt, a partner at Patterson Belknap Webb & Tyler in New York.

Another idea: Make a low-interest loan to a child but forgive part of that loan each year through the annual gift-tax exclusion. But just make sure your loan is structured properly and fully documented, says Ms. Schmidt.

Parents often use family loans to help children buy a home. Mark Bookman, a 60-year-old resident of Agoura Hills, Calif., wants to help his son relocate to a larger home so that he and his wife have more room for their three children. Brett Ellen, the president and chief executive of American Financial Network, a Calabasas, Calif.-based firm that advises clients nationwide, suggested Mr. Bookman explore a family loan.

Mr. Bookman, senior vice president and chief operating officer at American Jewish University in Los Angeles, is currently mulling a loan of $100,000 to help his son’s family relocate to a better neighborhood closer to the son’s law firm. For Mr. Bookman, lower interest rates mean he’ll be receiving less money back into his estate than if he had made a conventional loan. What’s more, he can reduce that amount further by making annual gifts to his son to lower the loan’s principal.

“This way we’re moving a significant amount of money now at a low cost factor versus significantly more — probably three times more — at our demise,” Mr. Bookman says.

Grantor-retained annuity trusts. These vehicles are especially popular among wealthy investors who own a valuable asset, such as a family business or deeply depressed stock, that they expect to increase sharply in value in coming years. A well-constructed GRAT can help them pass on most of that increased value to their heirs tax-free.

In a typical GRAT, you put assets into a trust set to expire within a specified time — often as little as two years — name your children as beneficiaries, and get annuity payments from the trust. Assuming all goes well and the asset values increase, most of the appreciation can pass to your heirs tax-free when the trust expires.

These trusts have grown in popularity as the applicable IRS interest rate has fallen. The rate, known as the “hurdle rate,” is set monthly by the IRS. If the assets in the trust appreciate beyond this rate, the excess amount will eventually pass to the beneficiaries tax-free. The January hurdle rate is 2.4%, down from 4.4% a year ago. In February, the IRS rate will drop to only 2% — “an all-time low,” says Mr. Massey of Thomson Reuters.

If you’re considering setting one up, “I wouldn’t wait much longer,” says Nadine Gordon Lee, president of Prosper Advisors LLC, an Armonk, N.Y., wealth-management firm. She is working right now on a GRAT for one client and a low-interest loan for another.

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Know Your Business. Grow Your Business. Protect Your Business.

Dan A. Penning

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Tags: Asset Protection, Estate Planning by Dan Penning
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Many family business owners confuse their ability and success in running their family businesses with the ability to effectively orchestrate the sale of the business to a third party. The excerpt below from an article in the current edition of Family Business Agenda is an excellent summary of common mistakes that are often times made with respect to selling family businesses.

7. Mistakes to avoid when selling your family business. In the current issue of Family Business Agenda, Dennis J. White of the law firm of McDermott Will & Emery LLP warns readers of ten common mistakes made by family business owners when they try to sell their companies. Here are five of them:

1. Failure to integrate estate and business planning. Without appropriate planning, effective control of the business can be spread among a disparate group of beneficiaries with very different levels of business acumen and varied objectives. Such arrangements often result in stalemate and disaster.
2. Failure to line up the family members. If the selling group appears to be in disarray, some potential buyers will not even spend the time to investigate the opportunity. One approach is to designate a single person as the selling group’s representative and negotiator.
3. Failure to assemble an experienced team. Family business leaders are often out of their depth when it comes to an M&A transaction. Moreover, they often avoid or delay engaging a team to help them maximize value.
4. Failure to prepare for due diligence. A buyer who is truly interested will deliver to the seller a lengthy and detailed due diligence questionnaire. All too often, inexperienced sellers are unprepared to complete these forms. Well-advised sellers anticipate the suitor’s questions by setting up data rooms, often electronic in nature, where all the information is waiting.
5. Failure to properly structure the deal. If planning is undertaken early enough, the sellers can structure the operating entity as an S corporation or an LLC and avoid corporate-level tax.

Know Your Business. Grow Your Business. Protect Your Business

Dan A. Penning
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Tags: Business Management/Law, Business Succession by Dan Penning
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To state that our economy is less than business friendly would be a tremendous understatement. From real estate, to stock investments, to credit line decreases, to credit unavailability, both consumers and businesses have been devastated. As a result, businesses cannot sustain themselves with a “business as usual” mentality.

It is easy to get caught up in the day-to-day reports of dismal economic news and assume a “victim” mentality. In order to survive, business owners need to be more proactive than ever before. In “The Seven Habits of Highly Effective Businesses”, Stephen Covey defines habit number 1 as being proactive as follows: “It means more than merely taking initiative. It means as human beings we are responsible for our own lives. Our behavior is a function of our decisions, not our conditions.” The key to survival is not worrying about things in the economy and business environment that you have no control over. Focus on the things you can control.

Below are some key ingredients to focus on for you and your business:

1. Don’t Panic and Embrace Reality. It is difficult to make good decisions unless you understand the reality of the condition of your business and stay calm. To get a better sense of where you stand, review issues like your business’s current cash position and anticipated cash needs.

2. Adjust Expenses. Cut cost to maintain current income, eliminate unnecessary costs and look to reduce your remaining costs like changing vendors or renegotiating prices.

3. Plan Now. Create a plan now to respond to possible declines in future revenues before they occur. Develop a business strategy by reviewing your product/service line, identify the most profitable items and determine how to leverage those areas for future growth and profits.

4. Don’t Be the Bank/Collect Receivables. Watch for new patterns of slow payments by customers and follow up immediately. Review your largest customers and assess whether the credit constrain or economic slowdown will affect their ability to pay you. Keep receivables aging current at all times.

5. Evaluate your Business “Value Proposition”. How do you make money? Who buys from you? What do they buy? Is it location, customer service, cheapest price, convenience, best value, unique offering, etc.? It is surprising how many businesses take what they have for granted and are not really aware of the answers to these questions in the first place. Hopefully understanding the answers to these questions will assist you in putting together an effective customer service strategy that not only retains your existing customers but also attracts new ones in this economy.

6. Review Your Marketing Program. Often times when business begins to suffer economically, the marketing expense is one of the first cost-cutting targets. However, avoid the temptation to suspend marketing activities. Some cutbacks are probably warranted; however, a well directed targeted marketing campaign can be highly effective in getting people through your door. During a recession, sometimes you need to spend money to help improve the bottom line. It is easy to make the mistake of trying to manage a recession by cutting expenses and sitting back and hoping something good will happen.

7. Calming Your Employees. Retaining good employees is a key to surviving an economic downturn. A business is nothing without good people. During this time of uncertainty, it is very important to regularly communicate with employees how things are going and your plans for the future of the business. They need to be concentrating on your customers and success factors you identify in your plan for survival and growth for the future.

In conclusion, it is important to maintain communication with your key business advisors such as your CPA, attorney and other trusted advisors. Those individuals understand you and your business, as well as the challenges you face on a day-to-day basis.

Know Your Business. Grow Your Business. Protect Your Business.

Dan A. Penning
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Tags: Business Management/Law by Dan Penning
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Michigan’s Unemployment Security Act was recently amended to extend unemployment benefits to certain employees who previously would not have been eligible.

Generally, individuals who leave work voluntarily are not eligible for unemployment benefits. The change to the Act creates an exception for an individual who is the spouse of a full-time member of the United States armed forces and who is forced to resign and relocate because of the military reassignment of the spouse.

Beginning after March 30, 2009, benefits paid to such individuals shall not be chargeable to the employer, but instead to the “nonchargeable benefits account” covered by the state.

Dirk Beamer
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Tags: Employment Law by Dan Penning
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At Wright Penning & Beamer, we contact our corporate clients on at least an annual basis to remind each client of the necessity of maintaining their corporate records in order to comply with the requirements referenced below. In order to assist our clients with organizing the information required to be included in the annual minutes of the corporation, we have prepared a checklist identifying the various events and actions needed. If you are a Wright Penning & Beamer corporate client, you probably have seen this checklist in a different format before. If you are not a Wright Penning & Beamer client, you may want to utilize the checklist to organize the information to be provided to your own corporate counsel.

The Michigan Business and Corporation Securities Act requires that corporations of all types maintain corporate records on an annual basis in the corporation’s record book in order to qualify as a valid entity in the state of Michigan. Further, the Act requires that special or unique actions taken by shareholders or directors on behalf of a corporation throughout a fiscal year also be recorded in writing and made part of the corporate records. Finally, the Internal Revenue Service also requires several actions taken by shareholders and / or directors on behalf of a corporation be reflected in writing in the corporation’s records for audit purposes.

We hope you find the checklist of assistance to you. If you have further questions, please feel free to contact Wright Penning & Beamer.

Shareholder Information
1. Identification:
____Who are the present shareholder(s) of the Company? (Please provide full names.)
____Have any shareholders taken action by proxy? (i.e. by a person appointed to act on his/her behalf.)
____Are there any new shareholders?
____Were there any changes in Company stock? (Issuance of preferred, common voting, non-voting shares, etc.)

2. Actions:
____Have the shareholders approved any board actions, resolutions and/or board decisions in the past fiscal year in any written documents? If so, please provide a copy.
____Did the shareholders hold any formal special meetings since the last annual meeting? (If yes, please provide the purpose of the meeting, business discussed, and any resolutions or actions approved, together with copies of any documents confirming the meeting.)

Director / Officer Information
1. Directors:
Identify the individuals who were last elected and served on the Board of Directors.

2. Appointment/Election of Officers:
Identify the individuals who were last elected and served as Officers of the Corporation:
President
Vice-President
Treasurer
Secretary
Other
Also, please indicate if the same individuals will continue to serve as Officers in the current fiscal year and note any changes.

Personnel Matters
1. Personnel Matters / Benefits
____Please identify any new insurance policies purchased by the Company on behalf of any employer/officer/director, including health, disability, or life insurance (or identify any changes in these types of coverages).

2. Compensation of Key Employees / Owners:
____Review and approve salary, bonuses and any other compensation received by key employees / owners.
____Review and approve any proposed changes to compensation in current fiscal year.

Financial Statements and Related Information
1. Financial Statements:
____Please provide a copy of the Company’s year-end financial statements.

2. Annual Report:
____Please provide a copy of the Company’s annual report filed with the state of Michigan or the state of incorporation, if not a Michigan corporation.

3. Authority to Do Business Documents:
____Has the Company filed all required documents for authority to do business in states where the Company is doing business, other than in the state of original corporation?

Administrative Action
1. Banking Matters:
____Has the company opened or closed any bank accounts?
____Has the Company changed banking institutions?
____Please identify any changes in authorized signers with regard to bank accounts.
____Has the Company made any resolutions with regard to depository accounts? (If yes, please provide copies.)
____Has the Company taken out any new loans? (If yes, please identify the amount, purpose, and lending institution for each loan.)

2. Property / Equipment Matters:
____Please identify all purchases / leases of equipment by the Company in excess of $15,000.00. (Identify the equipment by name, model number if applicable, purchase price and date purchased / leased.)
____Please identify any sales of Company equipment. (Include sale price, date of sale, and description of equipment sold.)
____Please identify any increases or changes in rents, leases, or other contracts with respect to the Company’s buildings, real estate holdings and place of business operations.

Liability / Insurance & Related Matters
____Has the Company been sued in the past year? If so, please provide all information regarding the lawsuit and its status.
____Has the Company obtained new or changed any of its liability coverages? Please list all of the liability insurance coverages carried by the Company, together with the carriers, annual premiums and a summary of coverages.

Please visit our website at www.wrightpenning.com where we have additional checklists for your business.

Dan A. Penning
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Tags: Asset Protection, Business Management/Law, Personal Management by Dan Penning
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The North-American Free Trade Agreement (NAFTA) eases the temporary entry of citizens of the United States, Mexico and Canada, whose activities are related to the trade of goods or services, or to investment. Business visitors can be admitted for business purposes under R186(a) and can carry out their activities without the need for a work permit if certain conditions are met. We are providing you this information in the event that you send employees across the border that fit under this exception. If your situation does not qualify under an exception, we can provide you with the documentation necessary to apply for a work permit. (If you are contracting with a Canadian company, you will also need to obtain an LMO. An LMO is a Labour Market Opinion issued by the HRSDC, otherwise known as Service Canada, allowing Canadian employers to hire foreign nationals in a variety of occupations.)

Business Visitors (R187):

Requirements:
1. citizenship of the United States or Mexico;
2. business activities as described in Appendix 1603.A.1 (selected summary below);
3. activities are international in scope;
4. no intent to enter the Canadian labor market;
5. the primary source of remuneration remains outside Canada;
6. the principal place of business remains outside Canada; and
7. compliance with existing immigration/admissibility requirements for temporary entry.

Business Activities:
Activities of a commercial nature that reflect the components of a business cycle. (Please see relevant provisions of Appendix 1603.A.1; selected summary below)
1. research and design;
2. growth, manufacture and production;
3. marketing;
4. sales;
5. distribution;
6. after-sales service; and
7. general service.

Application:
1. Business visitors must apply at a Point of Entry (POE); an application cannot be made prior to arriving in Canada.
2. Business visitors can be admitted at the Primary Inspection Line (except persons applying for entry under the “after-sales service provision,” who must be referred to Immigration Secondary).

Required Documentation for Each Individual:
1. proof of American or Mexican citizenship;
2. documentation to support the purpose for entry, for instance a business activity listed in Appendix 1603.A.1; and
3. evidence that the business activity is international in scope
4. evidence that the person is not attempting to enter the Canadian labor market.

The business person can usually satisfy these requirements by demonstrating the following with a signed document (company officer’s signature) from the Company stating that:
1. the primary source of remuneration is outside Canada;
2. the person’s place of business remains outside Canada (business cards, business papers, advertising pamphlets, etc. may be provided as proof); and
3. the profits of the business are accumulated primarily outside Canada.

The officer at the border will likely request that the applicant/business visitor establish that the applicant retains employment outside Canada (as an employee of an enterprise or as a self-employed individual) and that the primary source of remuneration remains outside Canada. In general, an individual who is to be paid in Canada would be considered to be joining the labor market and could not be admitted as a business visitor. (The payment of expenses incidental to the trip is allowed, as is an honorarium.) Thus, the need for a signed document from the company will help demonstrate the requirements above. We recommend the individual name of the person requesting entry be in the document.

NAFTA is a facilitative agreement, so the applicant should be given every opportunity to establish that the admission criteria for business visitors are being met and to provide any missing documentation by alternative means, such as by fax. A verbal statement that the business of the applicant is being carried on outside Canada can be acceptable, but may not be, depending on the circumstances.

Business Activities defined

Selected provisions of Appendix 1603.A.1 that fall under the “Business Visitor” exception to a work permit–
Marketing:
• Market researchers and analysts conducting independent research or analysis or research or analysis for an enterprise located in the United States or Mexico.
• Trade fair and promotional personnel attending a trade convention.
• Where the business of the convention involves sales rather than simple promotion, the provisions under Sales apply.

Sales:
• Sales representatives and agents taking orders or negotiating contracts for goods or services for an enterprise located in the United States or Mexico but not delivering goods or providing services.
• Buyers purchasing for an enterprise located in the United States or Mexico.
• Sales representatives and agents cannot sell Canadian-made goods or services provided by a Canadian.
• This provision allows persons to sell to the general public, provided that the goods or services are not delivered or available to the buyer at the time of sale (on the same business trip). The seller may only take orders for the goods or enter into contracts for the services.

Conventions:
For events held by the following organizations:
• Associations;
• Corporations, and
• Governments.

Events can be one of the following:
• association meetings, conventions and congresses;
• corporate meetings;
• incentive meetings, or
• trade shows, exhibitions and consumer shows.

Setting up display:
Company employees will require work permits to install and dismantle a booth or display if it is larger than a portable pop-up. Work permits for this purpose do not require an LMO.
Contract Service Providers:
Foreign service providers who are working under contract for exhibitors require work permits.

This includes persons who are involved in activities such as:
• the installation and dismantling of a show or exhibit;
• audio video, staging, or show decorating services, and
• lighting, carpet laying, carpentry, or electrical work.

All foreign service providers working under contract to Canadian events require work permits. Work permits for this purpose require an LMO.

Foreign service providers who are supervisory personnel working under contract for foreign
events require work permits. Work permits for this purpose do not require an LMO, as long as the supervisors will be directing local hires.

Exhibitors are expected to hire Canadians to do all the labour on the convention floor.

After-sales Service:
After-sales services include those provided by persons repairing and servicing, supervising installers, and setting up and testing commercial or industrial equipment (including computer software). “Setting up” does not include hands-on installation generally performed by construction or building trades (electricians, pipe fitters, etc.). R187 also applies to persons seeking entry to repair or service specialized equipment, purchased or leased outside Canada, provided the service is being performed as part of the original or extended sales agreement, lease agreement, warranty, or service contract.

Service personnel coming to perform service work on equipment or machinery that is either out of warranty, or where no service contract exists, continue to require a positive LMO and a work permit.

Warranty or Service Agreement:
Service contracts must have been negotiated as part of the original sales or lease agreements or be an extension of the original agreement. Service contracts negotiated with third parties after the signing of the sales or lease agreement are not covered by this exemption. If, however, the original sales agreement indicates that a third company has been or will be contracted to service the equipment, R187 applies. Where the work is not covered under a warranty, a confirmed work permit is required.

General Service:
Public relations and advertising personnel consulting with business associates, i.e. colleagues or clients, or attending or participating in conventions.

We welcome your comments.

Heather Brenneman Miles
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Tags: Employment Law by Dan Penning
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As the U.S. economy and, in particular, the housing market, comes to a grinding halt, many Americans who spent their home equity like monopoly money find themselves with no equity in their homes and, in many cases, individuals owe the bank and mortgage companies more than their homes are worth.

The traditional strategy of finding a smaller and less expensive home to provide excess proceeds at retirement to fund living expenses has all but disappeared for some individuals. The downturn in property values and almost impossible credit market to acquire new financing has made home selling and buying a struggle in many markets.

I read about an interesting concept in a recent USA Today article reproduced below involving the concept of “house swapping”. Individuals with good credit and jobs not substantially impacted by the current recession are looking for opportunities to “move up” to larger homes and this activity is being inhibited by housing markets where selling their existing smaller home is next to impossible. The solution, a seller looking to “move up” connects with a seller looking to “downsize” and both sellers become purchasers and help each other. Although the person downsizing may not extract equity for retirement, it may provide that person with lower overhead which, together with perhaps a decision to work longer, can be a solution other than having his or her more expensive home foreclosed upon by the mortgage company.

Dan A. Penning
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The original source for the article below is from USA Today:

By Lisa Bernard-Kuhn, The Cincinnati Enquirer
Linda and Peter Gatchell’s dream was simple.

After years of saving, the Deerfield Township, Ohio, couple was ready to move from their suburban cul-de-sac to a 5-acre spread in Morrow, Ohio.

So in June they placed their three-bedroom home on the market for $175,000. Then they waited. And waited. And waited.

“I thought it would be really easy to sell my house because of the price and the location. Boy was I wrong,” Linda Gatchell, 49, said. “I had this big old plan, and now it’s crumbling before me.”

Caught between a deepening recession and poor housing market, the Gatchells decided on a different approach. They became one of a growing number of home sellers nationwide turning to a new strategy — permanent housing swaps.

A familiar practice in Europe, home swaps have largely remained uncharted territory for most U.S. consumers, said Daniel Westbrook, CEO of OnlineHouseTrading.com, a website that matches up eager sellers.

As the financial meltdown and credit crisis have squeezed housing markets, though, the concept is gaining popularity.

“Think of it as reciprocal selling. I’ll buy your house, if you buy mine,” said Westbrook. “There are a lot more motivated sellers out there today than there are buyers. This is as simple as two sellers helping each other out.”

For the most part, Westbrook said, swapping a home should work like a typical real estate transaction — just with double the paperwork.

“It’s really two real estate transactions happening simultaneously,” he said. “The biggest concern should be that both contracts are signed when you leave the table. You don’t want anyone walking away, holding on to two mortgages.”

He recommends anyone considering the approach to consult a real estate attorney or Realtor.

‘Trying to get creative’

Interest in the emerging trend is playing out daily at websites such as Westbrook’s and social networking sites such as Craigslist.org, where homeowners are posting pleas such as the Gatchells: “We want to live in the country, do you want do to live in the city?”

In the past year, home-swap postings to Craigslist have grown by 50%, with more than 12,300 postings in November, according to Craigslist.

Most posts are from homeowners in New York, Los Angeles and San Francisco — markets hit hardest by the burst in the housing bubble.

Like the Gatchells’ posting, the majority of listings tell the stories of home owners looking for creative options in a tough market.

Some shed light on the desperation delivered by the troubling times: “2br — looking for someone to take over our loan,” reads a posting from a Loveland, Ohio, mobile home owner looking to shed a $32,000 mortgage.

“The reality is folks who own a home are having trouble selling, and everyone is trying to get creative,” said R.J. Seiffert, a Realtor with RE/MAX in Highland Heights, Ohio. “This time of year is always the valley in the slope, but of course the valley now is a little deeper and getting out will take a little more time.”

A Realtor since 1990, Seiffert said he knows of very few local home-swap transactions that have come to fruition.

“Like any deal, everyone has to come away feeling like they won a little bit of something, or no one is going to shake hands,” he said.

Website listings increase

So far, Linda Gatchell has had one response from her Craigslist posting.

“Unfortunately, our house wasn’t what the person was looking for,” she said.

Others have had more luck.

Burlington, Ohio, homeowner Debra Settimio-Fiorelli has two postings on Craigslist: One for her daughter who wants to move from Salt Lake City back to Cincinnati, and another for her condo.

Recently, she said, a poster contacted her about swapping a $279,000 home in Greendale, Ind., for her $119,000 condo.

“He said he’s recently divorced, looking to downsize and is willing to sell the house to me for $229,000,” she said. “We’re still working out the details, but it’s a very interesting concept.”

At OnlineHouseTrading.com, Westbrook said he has roughly 60,000 active listings.

“It might be a niche now, given the market, but as the concept gets out there I think more people will understand that this is a viable option for selling their home,” he said.

Tags: Asset Protection, Estate Planning, Personal Management by Dan Penning
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Michigan Governor Jennifer M. Granholm recently signed the last of two bills of a three-bill package paving the way for growth of a previous market for home-grown food products that was unexplainably subject to stricter state limitations than those limitations dictated by federal law. Previous state regulation on bidding to buy Michigan food products limited school districts to only $20,000 per year. Under the new law, that limit was increased to $100,000 per year which is the federal limit.

The aforementioned action exhibits that the legislature and governor can provide leadership in creating positive business opportunities. Unfortunately, our lawmakers and governor are inconsistent when it comes to enhancing and expanding the business environment for certain growing industries within the state. One such example was the passage of Bill 6644 in December, 2008 substantially restricting the shipment of wine by Michigan retailers directly to Michigan customers. The passage of that law will only stifle the expansion of the distribution and sale of Michigan wines and related businesses supporting the wine-making industry. The farm-to-school bill gives some hope for our state and its governmental leaders that the right decision to support business in Michigan can be made. We now need to work to make this behavior more consistent to grow Michigan’s economy.

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Dan A. Penning

Tags: Agribusiness, Wine Industry by Dan Penning
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UPDATE ON LEDBETTER FAIR PAY ACT – ACTION NEEDED

I wrote last week about this legislation that was then pending in the U. S. House of Representatives. Despite serious concerns from the business community, the House passed the legislation by a vote of 256 to 163. The legislation now sits with the United States Senate, and fast action is expected there as well. If you would like the business community’s concerns to receive a fair hearing, act quickly to contact both of your senators and share your views.

Dan A. Penning

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Tags: Employment Law by Dan Penning
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The following is information provided by the Society for Human Resource Management, the largest national association of Human Resource Professionals. The Society works to protect and promote high standards of fairness and integrity in the workplace, while also making sure that common sense and the needs of business owners and management are not forgotten in the process. Take a moment to learn about legislation that is pending before the new Congress and how it might affect your business. If you share the Society’s concerns, contact your elected officials in Washington and let them know.

The new Congress begins today, and SHRM has learned that the U.S. House of Representatives plans to quickly consider important legislation to address pay discrimination in the workplace. These bills are:

***The Ledbetter Fair Pay Act – would eliminate the statutory time limit for filing pay discrimination claims.

***The Paycheck Fairness Act – would prohibit an employer’s ability to justify paying different salaries to workers based in different geographic locations.

The House is scheduled to vote on both the Ledbetter Fair Pay Act and the Paycheck Fairness Act by the end of this week. Please let your Representative know TODAY that these bills go far beyond reasonable, balanced approaches to address wage discrimination.

Background

Ledbetter Fair Pay Act (H.R. 11) – The Ledbetter legislation is a congressional response to the U.S. Supreme Court’s May 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co. In that case, the Court held that the 300-day time limit for filing a charge Title VII of the Civil Rights Act starts after the alleged unlawful employment action, and does not re-start a new upon receipt of each successive paycheck

The Ledbetter Fair Pay Act would effectively eliminate the uniform statue of limitations on pay discrimination claims and restart the time clock for filing such a charge with the EEOC upon the receipt of each successive paycheck. The bill would also re-start the time clock when a retiree receives an annuity check from an employer, and would thus keep employers liable to a discrimination claim potentially decades after an alleged act of misconduct. The legislation would amend the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act.

Paycheck Fairness Act (H.R. 12) – The Paycheck Fairness Act would amend the Equal Pay Act of 1963, which requires that jobs requiring comparable functions, skills, effort and responsibility in similar working conditions must compensate equally. Some stakeholders contend that the Equal Pay Act is not sufficient to remedy wage discrimination. While wage differentials remains an important workplace issue, debate continues over whether the differential is attributable to discrimination or the result of legitimate pay practices such as education, skill, experience, or tenure.

The Paycheck Fairness Act would limit an employer’s ability to justify paying different salaries to workers based in different locations with different costs of living. Second, the bill would lift the caps on compensatory or punitive damages for which employers would be liable, in addition to current liability for back pay. These damage penalties would apply to even unintentional pay disparities.

Many employers and human resources professionals fear that the proposed legislation goes too far to address perceived problems in the workplace. At a minimum, Congress should slow down its deliberations and make sure all arguments have received a fair hearing before rushing through this legislation.

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Dan A. Penning

Tags: Employment Law by Dan Penning
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