Suttons Bay Law

You can’t take it with you, but do credit card bills follow you into the grave? Does the debt die with you? Or, can it come back and haunt those you leave behind?

General Rule:
The general rule is that any debt of a deceased person, including credit cards and medical bills, are solely the responsibility of the decedent or the decedent’s estate. The general rule assumes that no other person was the signer or joint obligator on any particular account or debt of the deceased person. If an account is the deceased person’s alone, the debt is the deceased person’s alone.

The most critical question when determining responsibility for a deceased person’s debt: is whether the debt was individual, or shared? If a spouse, family member, or business partner signed the credit card application as a co-signer (joint account holder), then that person will be liable for the balance on that card along with (or, instead of) the deceased person’s estate.

When you die, your estate is responsible for paying off the balance of a credit card in your name. If the estate goes through probate, your administrator or executor will look at your assets and debts and, guided by the law of your particular state, will determine in what order bills should be paid. Any remaining assets after paying obligations will be distributed to the heirs by following your will (if you have one) or by state law (such as intestate laws if you don’t).

When Does a Credit Card Company Lose?
If the assets of a particular estate do not cover the bills, credit card companies have to “take the bullet”. In this instance, a credit card company, as a creditor of an estate, is notified that the estate is insolvent (lacks funds to pay the credit card company). The credit card company writes off the bills and often that’s the end of it. Spouses, children, friends or relatives cannot inherit debt. A credit card company cannot legally force someone else to pay a debt which they did not assume prior to the date of the deceased person’s death.

Federal Law Governing Collection of Debts After Death
There have recently been changes in federal law altering the rules of engagement for collection of credit card debt after death:

If there is enough money in an individual’s estate to pay the debt, the CREDIT CARD ACT OF 2009 requires the executor of an estate to be informed of the amount quickly and requires credit card companies to stop tacking on fees and penalties during the time an estate is being settled. That portion of the law went into effect in February, 2010. The final rules implementing the law state, “If the administrator pays the balance stated by the issuer in full within 30 days, the issuer must waive any additional interest charges.” The final rule retains the proposed prohibition on the imposition of additional fees so that the account is not, for example, assessed late payment fees or annual fees while the administrator is settling the estate.

The Federal Trade Commission (“FTC”) in July, 2011 issued a series of guidelines for debt collection from a decedent’s friends and relatives. The FTC guidelines were produced as a result of a recognition that many family members may be vulnerable emotionally and psychologically in the aftermath of a relative’s death and, therefore, there needs to be some protection against unscrupulous debt collectors. Debt collectors may legitimately contact individuals who are responsible to pay debts or individuals who are related to the deceased person in order to find out the identity of the person who is responsible to pay debts, at the same time, however, debt collectors may not mislead individuals into believing that they have the authority – or worse, the obligation – to pay the deceased person’s debts when they do not. Under the FTC guidelines, debt collectors are required to state that repayment must come from the deceased person’s estate and that the person being contacted is not required to repay the debt out of his or her own pocket or with assets jointly held with the deceased.

Community Property States
The question of who can inherit debt gets more complicated in states where “community property” laws apply. These states include Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Not all community property states play by the same rules and all states have variations regarding the impact of their community property laws on a deceased spouse’s debts. The bottom line is that in community property states a surviving spouse of a deceased person or an executor of a deceased person’s estate must ask more questions and consult an attorney to determine how the community property laws of that state impact a surviving spouse’s responsibility to pay the deceased spouse’s debts

What if There is No Probate Estate?
Not all assets go through Probate. Some items, such as IRA’s, 401k, brokerage accounts with pay-on-death clauses, and life insurance, typically pass to whoever is named as a beneficiary, which is one good reason to keep those designations up-to-date. In most cases, those assets are not considered a part of a deceased person’s estate. Essentially, those assets pass by designation of beneficiary at the deceased person’s death and bypass the deceased person’s estate.

Since these assets do not go through Probate, the executor cannot use them to pay the estate bills. The general rule is that any individual who receives title to these assets by beneficiary designation is not responsible for the deceased person’s debts.

A less clear area is when assets are owned by a deceased person’s living trust. A living trust is typically a trust which can be modified or amended by the deceased person prior to death and, therefore, is not considered a separate entity free from claims of the deceased person’s creditors. At the same time, assets owned by a trust pass outside of Probate from the trust to the beneficiaries named in the trust and, therefore, such assets are never included in probating a deceased person’s estate. It is much less clear as to whether assets in a trust established by a deceased person prior to death in which assets are titled are subject to the claims of the deceased person’s creditors. Many states, including Michigan, require a notice to creditors to be provided by a deceased person’s executor and deceased person’s successor trustee to a deceased person’s known creditors by an executor of the deceased person’s estate or the successor trustee of the deceased person’s living trust. Typically, it is most often the case that assets in a deceased person’s living trust at the time of his/her death will be subject to creditors’ claims should the creditor initiate a claim against the trust.

When Collection Calls Come
If you start receiving collection calls after the death of a loved one or friend, you need to determine three things:

1. Is that debt valid?
2. Is the debt within the statute of limitations or the time limit when creditors and collection agencies have the ability to collect on a debt?
3. Are you individually liable for the debt?

One Key Factor to Remember is Never Rely Solely on What the Creditor or Collection Agent Tells You
While I have listed general rules above concerning the collection of a decedent’s debts from surviving individuals, there are exemptions to these general rules and, in some instances, the facts of a particular case will govern whether any survivor is possibly liable for the person’s debt. The best course of action is to contact your attorney or legal advisor if you are in a situation where you are facing a collection action by a creditor or credit agency for debts of a deceased person.

Dan A. Penning

Tags: Know it Now by Dan Penning
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Creditors use employer garnishment errors to collect entire debt from employers
Employee wage garnishments appear to be informal and somewhat routine proceedings from the perspective of the employer. Employers are routinely sent writs of garnishment on printed forms, and employers can simply respond to writs of garnishment without using an attorney. Employers, however, face a huge risk relative to its employees’ garnishment proceedings because in the State of Michigan, employers can be held liable for the entire debt of the employee that is subject of the garnishment, including court costs and attorney’s fees, if the employer fails to comply with certain requirements. Some creditors are paying attention to the small details that the employer may overlook, because the creditor wants to be repaid and rather than wait around to be paid from the debtor, creditors are using employer garnishment errors to collect the entire debt from the employer. Employers are commonly not represented by counsel in this process and creditors are represented by counsel, providing the creditor a significant advantage.

Failure by employers to respond within 14 days could cause courts to take action against the employer
If an employer is named as the garnishee in a writ of garnishment, the employer must provide information as to the debtor-employee’s money that the employer controls on the Garnishee Disclosure Form, including a calculation of the amount that is available for garnishment from the employee’s paycheck. The properly completed form must be mailed to the court and the parties within 14 days after the employer receives the writ of garnishment. If the employer fails to disclose within the 14 days, the court can take action against the employer and can order the employer to pay the full amount owed on the judgment as stated in the writ of garnishment. A friendly letter to the creditor stating that the employee is no longer in the employer’s records or other information is unavailable is insufficient. The creditor can go to court and obtain a default judgment for the entire amount of the debt because the employer did not properly respond to the writ.

Employers are responsible for managing the priorities and amounts
Additionally, if an employee has multiple creditor problems and those creditors have all obtained a writ of garnishment, employers are responsible for managing the priorities and amounts of the various writs. This can be challenging for an employer to correctly manage. For a one time, $6.00 fee, employers must calculate, deduct, and remit payments, in addition to accommodating other obligations the employee-debtor may have.

How to lessen your risk of direct employer liability
To lessen the risk of being responsible for an employee’s debt, employers should establish a detailed process of addressing writs of garnishment that begins when the writ arrives in the mail, carries through the calculation process and the final step of properly serving the disclosure. In Michigan, an employer is not required to retain counsel to respond to a writ of garnishment but this creates an interesting scenario where the creditor is represented by counsel and the employer that is at risk for the entire debt of the employee is not necessarily represented by counsel. Retaining an attorney to advise and evaluate your garnishment process is recommended to lessen your risk of direct employer liability.

Additional information:

Garnishee Disclosure Form and Instructions

A Guide to Garnishment and Periodic Payments

Dan A. Penning

Tags: Asset Protection, Employment Law, Know it Now by Dan Penning
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Going, Going, Gone!

U.S. taxpayers are experiencing a “perfect storm” of opportunity to make tax-free transfers (gifts) of assets such as family businesses, real estate and other wealth from one generation to the next. The gift tax was first enacted in 1932 by the federal government. Over the coming months, we all have what may be the best opportunity since 1932 to gift family assets without a gift tax now and to avoid significant estate taxes later.

Two notable exceptions to the gift tax
Some people are not aware that giving away assets to their children or other individuals may create a taxable event. The “gift tax” referenced above applies to anything of value transferred by one individual to another. There are two notable exceptions to the gift tax. One is an “annual exclusion” which is an exception that allows individuals to gift up to $13,000.00 per year per person without any gift tax consequences. A second exception is an overall gift tax exemption which historically has been limited to $1M during an individual’s lifetime.

The above-referenced “perfect storm” of opportunity is almost certainly short-term in nature. Several key elements have transpired to create this opportunity as follows:

• At the conclusion of 2010, Congress changed the estate tax exemption which allows for transfers of gifts up to $5M per individual ($10M per married couple) of assets with no federal gift tax.
• Asset values, particularly for real estate, are still significantly depressed resulting in a greater opportunity to gift value from one generation to the other. In the State of Michigan, a recent Supreme Court decision also provides a unique opportunity for parents to gift ownership of real estate to their children in such a way that a transfer can avoid a significant increase in future real estate taxes.
• Certain widely accepted techniques used by experienced estate planning attorneys may also result in individuals transferring 10 to 20 times the $5M or $10M gift tax exemption limit without incurring gift taxes based on certain “leveraging techniques”. Although these techniques can be complex, they are well established and have withstood attacks in the past by the IRS.
• Most transfers that are made to take advantage of the gift tax exemption also provide significant asset protection for the assets.
• Many of our Cottage Law clients with family cottages will be able to enjoy long-term tax savings as a result of taking advantage of this opportunity to make tax-free transfers (gifts) of these legacy assets. Visit our Cottage-Law website at www.Cottage-Law.com for additional information.

An appropriate gifting strategy can save significant taxes
Why act now? Unless Congress and President Obama take further action to create a new law, the 2010 Tax Act will automatically expire at the end of 2012 (approximately 13 months from now). The current lifetime gift tax exclusion of $5M per person will drop to $1M. The window of opportunity for gifting significant assets from one generation to the next to avoid potential future estate tax is narrowing. Gifting assets removes the asset’s value in the transferors estate for estate tax purposes. As a result, an appropriate gifting strategy can save significant taxes.

Reducing future tax burdens
It is a widely accepted belief among financial advisors and other financial experts that taxpayers should transfer assets that are depressed in value that may be subject to future estate tax liability as soon as possible. As these assets begin to recover and grow in value in the future, so do an individual’s current and future tax burdens.

The possible benefits
Whether you perceive yourself as wealthy or not, given the possible benefits of making gifts of assets and the unique opportunity that currently exists to do so, everyone should at least evaluate their potential future estate tax liability and how current gifts of assets may reduce that liability.

Please contact me if you would like to evaluate your own situation to determine whether gifting assets at this time is right for you.

Dan A. Penning

Tags: Asset Protection, Business Succession, Cottage Law, Estate Planning, Know it Now by Dan Penning
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Judge Rules on Employee and Facebook Post

We have previously provided information regarding social media and how employee postings on various websites may or may not affect the employment status of employees. The Acting General Counsel for the National Labor Relations Board (“NLRB”) recently released a report on August 18, 2011, summarizing the results of 14 employment related cases that center on employees’ use of social media relative to their employment and their employer’s social media policies for employees. The report provides insight into what the NRLB regards as protected speech and also the enforceability of certain social media policies that employers implement. Remember that the NLRB and the National Labor Relations Act apply to most employers, union and non-union alike.

Protected, Concerted Activity

Employers are often surprised to learn that employees can openly discuss their terms and conditions of employment with fellow colleagues on social media sites, such as Facebook, and such activity is largely a “protected concerted activity” according the NLRB, which is behavior protected by section 7 of the National Labor Relations Act (“NLRA”). The medium of expression does not matter if it is “protected, concerted activity.” An employee can openly criticize an employer’s wage and hour policies and employees’ working conditions. Such statements can be very damaging to a company but whether the statements are damaging or not, they are largely protected. Protected speech includes any statements made by the employee that involves wages, hours or working conditions. Concerted is defined as “engaged in with or on the authority of other employees.” Employee statements cross the line, however, when personal attacks are made that meet a high enough threshold of being “so disloyal, reckless or maliciously untrue” that the statements are no longer protected.

Employer Social Media Policies

If you do not have a social media policy.

The NLRB has determined that whether or not an employer has a social media policy in place, the employer cannot take disciplinary action against employees who engage in protected, concerted activity. Such activity can be insulting to the employer, including the use of swear words and sarcastic comments. If you are considering firing an employee, make a careful review of whether the employee was criticizing wages, hours, or working conditions and whether the communication was directed to other employees or whether the employee was communicating on behalf of other employees.

If you have a social media policy.

If your social media policy attempts to control what your employees cannot say about your company, you can run afoul of the NLRA, particularly if the policy is meant to discourage disparaging remarks about the company.

One of the policies that was found to have violated the NLRA absolutely prohibited employees from “making disparaging remarks about the company or its supervisors” and from mentioning the company “in any media without the company’s permission.” This policy is overly broad. Employers should craft its social media policy to protect legitimate business interests such as trade secrets, confidential financial information, and employees’ medical conditions. The intention of protecting business interests, however, cannot impinge upon employees’ rights, such as the right to form a union or engage in protected, concerted activity.

Luxury Car Dealer Terminates Employee for Facebook Postings

In one case the NRLB decided, an employer terminated an employee for posting disparaging remarks and pictures on Facebook about (1) a sales event that the employer held where it served food purchased from a warehouse club and (2) a vehicle that had been accidentally driven into a pond at the dealership across the road that was also owned by the employer. The employer was a luxury car-dealership holding the sales event to draw attention to the launch of a new automobile model introduction. The salespeople were concerned that the choice in food would affect their sales and resulting commissions. The NLRB report summarized the decision in this matter as follows:

“Although the employee posted the photographs on Facebook and wrote the comments himself, we concluded that this type of activity was clearly concerted. We found that he was vocalizing the sentiments of his coworkers and continuing the course of concerted activity that began when the salespeople raised their concerns at the staff meeting. Further, we concluded that this concerted activity clearly was related to the employees’ terms and conditions of employment. Since the employees worked entirely on commission, they were concerned about the impact the Employer’s choice of refreshments would have on sales, and therefore, their commissions. . . . Here, the employee’s postings were neither disparaging of the Employer’s product nor disloyal. The postings merely expressed frustration with the Employer’s choice of food at the sales event. They did not refer to the quality of the cars or the performance of the dealership and did not criticize the Employer’s management. We found it irrelevant that the postings did not clearly indicate that they were related to a labor dispute given that they were neither disparaging nor disloyal.” (Memorandum OM-11-74).

Employers are cautioned to carefully consider how they communicate decisions that may affect employees’ wages, hours, and working conditions because those decisions may be memorialized on an employee’s Facebook page, complete with pictures, that may negatively affect an employer’s reputation in the community.

What the NLRB considers legal and illegal
This remains a developing area of the law and the positions of the NLRB have not been tested in the courts. However, having examples from the NLRB of what it considers to be legal and illegal is very helpful to employers and provides a clearer picture of what may get employers in trouble with the NLRB. The full report is available at here.

Dan A. Penning

Tags: Employment Law, Know it Now by Dan Penning
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Have you ever stood at an automobile rental counter while traveling staring at a rental contract trying to figure out what the insurance options mean? “Should I buy additional coverage through the rental car company or am I paying for coverage I already have based on my insurance coverage for my own vehicle?”

Consider the following information the next time you rent a car while traveling or need a replacement while your vehicle is being repaired.

Your Primary Insurance Coverage

As a general rule, your automobile insurance coverage on the vehicle you own or lease will cover you on the same terms with respect to repairing physical damage (less applicable deductibles) to a vehicle in an accident and liability coverage concerning potential injuries to third parties.

As a result, depending on your insurance coverage and the various deductibles and limits in the policy you carry on a vehicle you own or lease, many of the “supplemental” coverages offered by the rental agencies are unnecessary and probably a waste of money. However, there is on exception.

Auto Rental Collision Damage Waiver

One exception to the general rule that your primary insurance is adequate to cover your risks of loss in automobile rental situations is a program offered by all automobile rental companies known as “Auto Collision Damage Waiver” or sometimes referred to as “Optional Damage Waiver”. This program is not insurance but rather a contractual provision where a rental company, in exchange for a fee usually in the form of a daily charge, agrees to assume all of the risk for any physical damage to a vehicle while in your control as well as waiving or covering payment of other fees usually buried in the rental contract fine print such as administrative fees, loss of use fees and surcharges imposed by a rental company when a vehicle is damaged.

In Summary

Purchasing a damage waiver from the rental company essentially takes away any chance your own insurance company would have to pay any claim for physical vehicle damage and the program insures that you will not have to pay any deductibles, administrative fees, loss of use charges and other surcharges that your own insurance would not cover. The “damage waiver” provision does not apply to liability issues with respect to injuries to third parties but, rather, only the physical damage to the vehicle.

Let’s Consider An Example

If you rent a vehicle on vacation or for business and you are involved in an accident resulting in $5,000.00 damage to the vehicle, your financial responsibility would be as follows:

• Without Physical Damage Waiver – if you opted out of purchasing the “physical damage waiver” program, then your insurance company would receive a claim from the rental company to repair the vehicle. You would then have to pay whatever deductible you have under the terms of your primary insurance policy and you would be responsible to pay administrative fees, loss of use charges and any other contractual charge included in the rental contract which, on average, can total over $1,000.00. In addition, don’t forget that because an accident claim is submitted to your insurance carrier, that the accident will be on your record with the insurance company for a period of three years often resulting in increased premiums of $300.00 – $400.00 per year for three years. All total, the accident could cost you over $3,000.00 out-of-pocket based on your deductible, the contract fees to the rental company and the future increased insurance premiums. Your insurance carrier would pay for the $5,000.00 in damage to your vehicle less your deductible.
• With Physical Damage Waiver – given the same example with $5,000.00 of damage to the vehicle, if you purchased the “physical damage waiver” (usually costing $15.00 per day), you simply return the vehicle to the rental company and walk away. There is no claim filed with your primary insurance carrier and all other contractual costs and deductibles are waived. Based on the fact no claim was filed with your insurance company, there are no increased premiums. Assuming a five (5) day rental period, your out-of-pocket costs given the same accident example would be $75.00 (5 x $15.00/day). Your insurance company would pay $0 for repair to the damage to the vehicle, you would pay $0 in out-of-pocket costs and the rental car company would assume and pay for all costs to repair the rented vehicle.

Check Your Credit Card

If you pay for your car rental with a credit card, many credit card companies offer the physical damage waiver as a benefit of your card membership. This would allow you to decline purchasing the program from the auto rental company while still enjoying the protection from your credit card company.

Dan A. Penning

Tags: Asset Protection, Know it Now by Dan Penning
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Many of us know someone or will possibly be responsible for someone that is affected by mental illness. Yet, many patients have not executed patient advocate designations for psychiatric care. Psychiatric illness may come on quite suddenly and can be traced to metabolic imbalances, drug interactions, and other situations that, initially, may not appear to pose a threat to someone’s mental health. There are numerous stories of patients being erroneously diagnosed and treated for an extended time for a condition that did not exist. This can result in severe depression and anxiety disorders. When treatments fail, the patient can sometimes be persuaded to undergo therapies that may provide relief but have severe side affects. For example, I recently read about a woman who agreed to undertake electric shock therapy after her course of treatment failed to successfully combat a supposed infection. Electric shock therapy is known for wiping out years of memories which can force the patient into losing their career and being unemployable. If the patient is depressed, maybe to the point of suicidal tendencies, can they be competent to consent to treatment and therapy? On the other hand, individuals with severe psychiatric illnesses such as bipolar disorder, post-traumatic stress disorder, and schizophrenia can have time periods where they are stable, lucid, and handle a high-level career.

Everyone should have input, at some point, into the treatment of their medical and psychiatric issues in the event of an emergency. Individuals can make these decisions while they are still competent, and generally, these decisions are addressed in a Patient Advocate document (a power of attorney designation for health care and mental health). We encourage our clients to appoint a trusted surrogate (a “patient advocate”) with a power of attorney to authorize psychiatric care on behalf of the client in the event of mental illness. An individual may prefer to combine the appointment of a patient advocate with an expressed declaration of his or her preferences when the patient advocate encounters certain situations and choices that affect the patient.

There will continue to be legal, moral, and ethical issues related to decisions for the treatment of mental illness. The person you choose to stand in your place to make mental health care and treatment decisions on your behalf should be willing to take the time to understand mental illness, advocate for care that is in your best interest, and persuade mental health providers to undertake the best course of action for you. We have assisted many clients with the designation of a patient advocate in a written and signed document, that can be placed on file with relevant health care providers. We can help you do the same to better protect yourself, or a family member, in the event of an unexpected (or expected) onset of mental illness.

Dan A. Penning

Tags: Asset Protection, Know it Now, Personal Management by Dan Penning
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Every day my in box fills with information from many sources. Some is from mainstream media, trade journals, special reports and various reviews and findings from the legal and wealth advisory community. Often, while reading an article or report, many people come to mind that I think might also share an interest in the information.

For example, earlier this year I read through a Special Survey Report published by WealthCounsel and Trusts & Estates magazine. I read it again this week. Even though the survey was directed to estate planning attorneys about emerging industry trends within our profession, there were some items that were of interest to me because they addressed those of us who are moving in 2011 from the “Baby Boomer” and “Generation Jones” generations to being “Golden Boomers”.

Yes, the truth of the matter is, we are maturing into “Golden Boomers” and as “we” begin to approach and enter into retirement age our spending habits and where and how we spend – or not spend – our money will have an affect on the economy.

Planning as “Golden Boomers”
Another key finding from the survey dealt with the concern that most Americans don’t have an estate plan or even a basic will. It’s believed that most people fail to plan because they aren’t aware of the benefits of creating an estate plan nor are they aware of the negative consequences of not having an estate plan.

Estate planning is not just for the wealthy
Another assumption revealed from the survey is that many people think estate planning is only for the wealthy, and because of that they fail to realize the legal limitations of joint tenancy and beneficiary designations.

Why you should plan
It doesn’t matter how old you are, whether you’re a “Baby Boomer,” “Golden Boomer,” or even a member of “Generation X,” without a trust-oriented estate plan your heirs will undoubtedly find themselves walking through the doors of a probate court system. Even though it’s easy to understand the need to plan, the urgency to plan often gets overlooked.

Life doesn’t wait
Many think they can do their estate planning next quarter, or even next year, but reality has proven many times that life doesn’t wait for your estate plan. There are many benefits to having an estate plan, and many consequences to not having one. If you want to minimize estate taxes, prevent family disharmony after death and avoid having your estate tied up in probate, plan to begin planning now.

Control is prime motivator for planning
With planning you can preserve and manage your wealth effectively and you can make sure your assets are distributed as you direct.

If you have questions about creating your estate plan give me a call so we can begin planning now to care for your financial well being and personal legal health.

Dan A. Penning

Tags: Asset Protection, Estate Planning, Know it Now, Personal Management by Dan Penning
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As we counsel clients during the preparation of their estate plans, one concern is usually very evident – parents are worried that their children will squander the funds and assets that they worked very hard to accumulate. This concern can be addressed in many ways, but usually, parents request specific provisions in their estate planning documents that control an heir’s access to distributions based upon age, accomplishments, and certain life choices. Therefore, the assets are distributed largely because a specific milestone has been reached. The thoughtful nature of the distribution planning, however, leaves a primary problem unaddressed – preparing the heirs for wealth transition from one generation to the next.

Studies conducted by various institutes demonstrate that many estate plans that have been completed and then updated carefully and competently throughout the years, successfully address the issues relevant to the parents’ wishes. The attention to detail, however, cannot necessarily fill the gap of the heirs’ lack of direction and instruction that results in chaotic estate administration, family disharmony, and relationships that remain broken forever.

The “soft” skills that are necessary to develop the maturity and wisdom for the successful transition of family wealth should be given more attention by parents and grandparents. Most of the care and thought given to such considerations as tax-planning, beneficiary designations, and other details are very important to the preservation of family wealth, yet no matter how well those matters are addressed in the estate plan, if the heirs have not been prepared to accept and manage the responsibility that comes with an inheritance, the investment that was made in the estate plan may not provide the return the client was hoping for (after his or her death).

Ask business owners what the most important asset of their business is, and they usually respond with “our employees.” Their answer does not consider the banking account balance of the business. A family’s most important assets are the people- the parents, children, grandchildren, uncles, aunts, grandparents, cousins, etc.- the understanding and knowledge that these individuals have learned and will, ideally, integrate into the family.

During the summer months when families can spend more time together, such as on vacation, the opportunity is provided to work on communicating family values and stories that impart learning experiences, reading excellent books that promote stories of character, and deliberately using intelligence and common sense to tackle problems. Parents can encourage their children to develop the ability to work through problems while dealing with difficult personalities and people, to consider other options to solve seemingly incompatible ideas that siblings may have amongst themselves, and to place the most value on the people that are a part of the family organization rather than on the financial assets that will eventually become theirs.

Parents can begin by encouraging shared values and the enhancement of the individuals and the family as a whole. A family can preserve itself through many, many generations if the proper estate plan is in place and if the attitude toward the family’s assets is that of the assets serving the harmony, growth, and human capital of the family.

Dan A. Penning

Tags: Asset Protection, Business Succession, cottage succession planning, Estate Planning, Know it Now, Personal Management by Dan Penning
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Leelanau Conservancy Annual Picnic and Auction

In Suttons Bay we are supporting and serving as a sponsor of the Leelanau Conservancy’s 2011 Picnic and Auction. The Conservancy’s Annual Picnic and Auction will be held Thursday, August 4, 2011. Over 700 people attended the 2010 auction and over $100,000 was raised to help the Leelanau Conservancy in its mission to conserve the land, water and scenic character of Leelanau County. If your schedule permits, attend the picnic, donate an item, make a bid online or in person and volunteer to make this annual event a success. Visit their website at www.theconservancy.com to get your tickets to support this event too!

Suttons Bay Fireworks Display and Celebration
Another important community event we sponsor is the Suttons Bay Annual Fireworks Display and Celebration held during Labor Day weekend. It’s a way for us to give something back to the families of the local community at the close of the summer season. Held at dusk at the Suttons Bay Marina Park. Grab a blanket and pack a picnic basket full of snacks and beverages and join us after sunset to enjoy the fireworks display as it lights up the night sky over Suttons Bay. It’s a fun night for all who attend.

None of these events would be possible without the tireless efforts of community leaders and countless volunteers. We share our heartfelt thanks with our many friends and neighbors who work hard to celebrate and strengthen our communities. Whether in Farmington or in Suttons Bay, we look forward to seeing you “downtown” and “down by the bay.”

Dan A. Penning

Tags: Know it Now by Dan Penning
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It doesn’t matter what time of day you arrive, everything always looks the same. Granted, the trees are taller and wildflowers seem to be growing everywhere. But your family cottage is the same to you today as it’s always been.

Cubby holes filled with trinkets and treasures
While waving hello to neighboring friends you realize every family cottage and summer home is as different as the memories gathered by families every summer. Each cottage has a special cubby hole filled with trinkets and treasures from sandy beaches and hiking adventures through surrounding woods. Weathered hinges guarantee screen doors will squeak open and slam shut right on cue announcing that this is summer. It’s easy to get caught up in the moment of racing down to the lake and assuming every summer will be just like the last.

My son Casey has been crossing out days on the calendar as the school year winds down into his summer up north. He’s been talking non-stop about everything he wants to do this summer, and spending time with those who are a part of his summer. Without fail, his list includes everything he wants to do each summer. I’ve also been thinking about these excursions and of how to keep our lunch dry during our annual trip down the Crystal River (see photo).

As much as family cottages and memories stay constant, change and different circumstances ultimately visit families over time. Your family cottage is often one of your most valuable legacy assets and attention should be directed to new options and enacted tax laws available to you to protect your family cottage now, and for future generations.

Family goals remain the same
It’s no surprise that in spite of our busy lives some things never change. Family goals remain the same of protecting those you love, the place you love, and protecting the experiences and cottage memories you love.

When your family begins to gather this summer consider talking with them about the future of the family cottage. Now might be the time to begin the discussions about developing a cottage succession plan, if you haven’t already, and looking at short- and long-term strategies and legal structures to avoid the uncapping of your property.

At the minimum, a solid cottage succession plan protects your family cottage from passing outside the family, solves future conflicts between family members about how the family cottage is operated, maintained and improved, and probably most important of all, avoids, through the right to partition governed by real estate laws, the forced sale of your family cottage.

Even a simple plan, which you can easily change and update, is better than the consequence of not having a protective cottage succession plan in place.

Protecting a special place
You know deep in your heart this is where your family memories live, and like a protective mother bear you’ll do whatever you need to do to protect this time, this special place for future generations.

If you have questions or need additional information about planning for your cottage, please call and also visit our Cottage Law website about how to protect the family cottage at www.Cottage-Law.com.

Now if I could just figure out a way to protect my brown-bag lunch during my upcoming water adventures with Casey….

Dan A. Penning

Tags: Cottage Law, cottage succession planning, Estate Planning, Know it Now, Real Estate by Dan Penning
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