Suttons Bay Law

We are pleased to announce that Dan A. Penning has been named a FIVE STAR Wealth Manager by HOUR Detroit magazine in its June, 2010 issue.

As detailed below, more than 11,000 wealth managers practice accounting, business planning, estate planning, financial planning, insurance and investments in the metropolitan Detroit area. Out of the 11,000 wealth managers, only 686 of the top-scoring wealth managers were named a FIVE STAR Wealth Manager for 2010. Out of the 686 wealth managers, only 50 attorneys were included in the list and Penning was named as 1 of the 50 attorneys.

The following is an excerpt from the article accompanying the naming of the FIVE STAR Wealth Managers in HOUR Detroit magazine and reprinted with permission:

” . . . Well over half of the consumer responses in the Detroit area indicated it is difficult to find a wealth manager they trust and rely on. Wealth managers, broadly defined, are those individuals who help you manage your financial world and/or implement aspects of your financial strategies. Common examples of wealth managers are financial advisers, life insurance agents, accountants, tax advisors, attorneys, etc. With more than 11,000 wealth managers in the Detroit area, how do you find someone who listens to you, represents your interests and operates with an emphasis on integrity and service? HOUR Detroit magazine can help. The magazine formed a partnership with Crescendo Business Services to find out which wealth managers scored highest in overall satisfaction.

The Selection Process

Crescendo administered a survey, by mail and phone, to approximately 1 in 5 high-net-worth households within the Detroit area. An additional 4,200 surveys were sent to financial services industry professionals.

On the surveys, recipients were asked to evaluate only wealth managers whom they knew through personal experience, and to evaluate them based upon nine criteria: customer service, integrity, knowledge/ expertise, communication, value for fee charged, meeting of financial objectives, post-sale service, quality of recommendations and overall satisfaction.

Both positive and negative evaluations were included in the scoring. Only wealth managers with five years of experience in the financial services industry were considered. . .

Then, before finalizing the list, wealth managers were reviewed by a blue ribbon panel. The blue ribbon panel was comprised of individuals from within the financial services industry. Although panelist comments were incorporated into the final score, safeguards were built into the review process to reduce the ability of panel members to influence the composition of the final list on the basis of company affiliation.

An Elite Award

The resulting list of 2010 FIVE STAR Wealth Managers is an elite group, representing less than 7 percent of the wealth managers in the Detroit area. Only 686 of the top-scoring wealth managers made this year’s list. . . . ”

Penning offers his experience and expertise in estate, business and cottage law planning to The Penning Group’s northern Michigan clients through our offices located in the historic “Train Depot” in Suttons Bay, Michigan.

Tags: Asset Protection, Business Management/Law, Business Succession, Commercial Real Estate, Cottage Law, Estate Planning, Personal Management, Real Estate by Dan Penning
1 Comment »

We were doubly blessed in January, 1995 with twin boys. Both weighed in at 40 pounds. One was blond and one was dark-haired. There it was – our family complete – three boys under 2 1/2 years of age. Do you remember the poem, what are little boys made of? “Snails, tails and puppy dog tails.” Our lives were busy with diapers, bottles, and watching in amazement how our world went from one to three. When our oldest son asked the very next week, after they were home from the hospital, “When can they go back?” I looked at him blurried from little sleep and said lovingly, “No, sweetheart, they are here to stay.”

I knew something was not right about the dark-haired precious little boy we named Casey, after a great uncle. When the twins were developing, the devastating news at 3 1/2 years of age – autism. What is this? Our precious preschooler – this could not be. So, the doctor visits began, and school therapists, along with out-of-pocket expenses.

The most difficult issue with this diagnosis is that every doctor and every therapist has a different treatment. We tried medications, supplements, diets, listening therapies, a moving bed, light therapy, occupational therapy, speech and language psychologists and psychiatrists. The list went on and on. Most of these were not covered by insurance. It really is hard to put a price tag on love. I really understand how parents, when given a diagnosis of autism, will try anything, but every child with autism is different. This is hard for friends and family to understand. My passion and prayer for all families that have this burden to care for, is that one day there will be a cure for autism.

I found that I had to lean on faith. It is not easy. They estimated in 2006 that a child with autism with medical costs alone can run $35,000 per year for the first five years of life. So, you learn to make sacrifices and choices. Even today, now that Casey is 15 1/2, I pray for peace and that Casey’s talents come shining through. I pray this child can leave a mark on this world. I pray for God’s mercy and grace. I hope on in faith.

Twenty states now mandate some insurance coverage for autism screening and/or treatment. Michigan is pushing for this along with some lawmakers. It would be a great benefit for these families if this passes. (See article from Detroit Free Press appended below.) One thing for certain, autism is a very costly diagnosis and goes way beyond the means of caring, loving parents.

Dan A. Penning specializes in helping families with wills, trust for autism and other mental health issues. Please visit this very dedicated father who has first-hand experience with autism.

Dori Penning

An article about autism insurance from the Detroit Free Press which appeared on June 6th, 2010: Lack of health coverage for autism divides Michiganders

Lack of health coverage for autism divides Michiganders

BY ROBIN ERB
FREE PRESS MEDICAL WRITER

Posted June 6, 2010

What she really wants is to be just Mom, but that’s nearly impossible when your child’s diagnosis is autism.

It means Rita Douglas is like so many other Michigan parents who have taken on roles as occupational and physical therapist, speech pathologist, behavioral therapist and psychologist, professionals whose expertise can make critical differences in the lives of their autistic children, but whose costs can top $100 an hour.

And in Michigan, insurers generally don’t cover treatment costs.

“There are all kinds of sad stories about parents who mortgaged homes to get treatment for their children,” says Marn Myers, president and CEO of the Judson Center in Royal Oak, which offers services to families with autistic children. “It’s just devastating for families.”

A proposed change in state law would require insurance companies to cover diagnosis and treatment for autism spectrum disorder. Opponents warn that the mandate could increase insurance premiums; supporters say the increase would be less than 1%, and would make a world of difference for families affected by autism.

State Sen. Randy Richardville, R-Monroe, vice-chairman of the Economic Development and Regulatory Reform Committee, has scheduled informational hearings, partly in response to two bills that have passed the state House but must be considered by the Senate.

Meanwhile, the fight over costs has wound through the courts, too. Blue Cross Blue Shield of Michigan has settled two cases — one as recently as last week — with families who asked the courts to force the insurer to pay for at least part of the costs for past behavioral therapy for their autistic children.

It’s not that Blue Cross didn’t want to cover the costs for autism treatments; in fact, it offers an option to employers to buy that coverage, said Helen Stojic, spokeswoman for Michigan’s largest insurer. To keep plans affordable, insurers need to offer flexibility rather than meet state mandates, she argued.

The debate brings into focus the exorbitant costs for treatment and the lengths to which families will go to pay them — draining retirement plans and college funds, selling homes and moving out-of-state to find insurers who routinely cover such costs.

A 2006 study that attempted to calculate societal costs for an autistic person estimated that medical costs alone are about $35,000 a year for the first five years of life.

For the Douglas family in Westland, their son Jacob’s diagnosis when he was 2 1/2 meant immediate and profound changes.

Rita Douglas, a sports medicine therapist, gave up a $40,000-plus a year job to make sure appointments were met and Jacob had round-the-clock care. Therapy at the Hope Center at Beaumont Children’s Hospital eventually helped him speak, but it also wiped out the family’s savings.

“There have been years we’ve spent over $20,000 from out of pocket,” she said.

As for the prospect of relaxing on a beach somewhere this summer with a brainless bit of reading?

Douglas laughed: “Riiight.”

Rather, she’ll spend the days slogging through therapy manuals and providing what care she can for Jacob, now 11 years old, even though she knows it’s experts who can make the most difference.

In an otherwise upbeat conversation recently, her voice abruptly caught. She and her husband Scott, a warranty analyst who recently found a new job after being out of work for most of last year, will have to forgo a trip for their 20th anniversary next year.

“And we think ahead to retirement,” she added. “Both of us are in the 40-and-up club, and when does that come? We don’t know whether we’ll ever be able to afford to even retire.”
Changing behavior

Autism is little understood; its cause and cure have been evasive.

It’s estimated that 1 in 110 children have autism — most of them boys — but it’s unclear whether the prevalence is on the rise or if its rise is because it’s being better identified in children who would have gone undiagnosed years ago.

One of the most widely accepted therapies is applied behavior analysis. It rewards performance for what might seem like the most tedious tasks for most children. But the clock is ticking; this kind of therapy is most effective when children are young. It means understanding what is happening, or rather not happening, inside an autistic mind.

Typically, developing kids are like sponges, soaking up what’s around them and instinctively learning, in part, by mimicking what they see. Even infants search for faces, reacting to the smiles and coos.

An autistic child doesn’t have that same social learning instinct.

Jim and Amy Youngblood of Highland knew something was wrong when their son, Ben, was just an infant. He didn’t respond to people in the room: “He’d literally look through people,” Jim Youngblood recalled. He banged the doors on cupboards relentlessly. Rather than playing with a toy car, he was fixated on its spinning wheels so much so that he went into an inconsolable rage if his parents tried to distract him.

At 1 1/2, Ben was diagnosed with autism.

As the Youngbloods struggled with how to help their son, they were stunned once again: Behavioral therapy — the best and possibly only hope that Ben would one day be able to speak and, they were told, maybe even be semi-independent — would not be covered by their medical insurance.

“You’re being told in one breath that … there’s hope and, even if things aren’t going to be perfect, they can be manageable. But then it’s, ‘By the way, it’s going to be extraordinarily expensive so it might be out of your reach,’ ” Youngblood said.

These days, Youngblood refers to his family’s “burn rate” when he talks of the family income.

“My daughter’s college fund is gone. We went from being responsible and well-prepared, and now we’re just living on the edge,” he said.

He wants to be clear: Therapy was critical; his son can talk these days, though there’s much more to do. The family is still meeting its bills, and so what if there hasn’t been a lot of money for new clothes and such?

“We’re … going to be OK,” he said. “But we have given up a lot, and we’ve burned through a couple of hundred thousand dollars.”

Insurers and opponents of the legislation have noted that there’s no sure-shot therapy. Autistic children can range from high- to low-functioning, and what therapies work for some — whether behavioral, music and art, or even horse-back riding — won’t for others.

But the unknown is precisely why it’s so maddening and overwhelming, said Peggy Meador, of Troy, whose 9-year-old daughter, Maribel, is autistic.

“You think, ‘Maybe if you get though this, this will be all she needs’ or ‘If we get through that, this will be all she needs.’ But it’s never ending,” she said.
Making sacrifices

In Lambertville, 9-year-old Jarret Breznai must go without expensive occupational and speech and language therapy.

His parents long ago burned through their savings, and Ann Breznai gave up her full-time job as a travel agent to be with her son. They don’t have cell phones and cable TV, and she has been driving the same car for more than a decade.

She spends the days devouring anything she can find on autism, comparing therapies, and checking free and low-price community programs to see what might help meet Jarret’s needs for occupational and speech and language therapy.

The Breznais are placing their hopes in inexpensive programs through the local YMCA — sculpture, swimming, rock-climbing — and a therapy horse named Lexi who — at just $20 an hour — is about as cheap as it comes.

Like many children with autism, Jarret is hyper-sensitive to certain senses like touch and sound. But after a year, he can place his face underwater, and he can put on the rock-climbing helmet that used to send him into a panic.

“It’s amazing,” Breznai said.

Such stories don’t surprise Pamela Lemerand, project director at the Autism Collaborative Center at Eastern Michigan University, where she knows that even the center’s low-cost services — just $65 an hour compared with some that top $100 — are still out of reach for some families.

“Even poor people can go into an emergency room and get service, but in this instance, your child is out of luck.”

Contact ROBIN ERB: 313-222-2708 or rerb@freepress.com

Tags: Asset Protection, Personal Management, Special Needs Children by Dori Penning
1 Comment »

Oil and Gas Leases: What Northern Michigan Landowners Should Know

Recently, many of my firm’s clients who own multiple acres of land in northern Michigan have been contacted by petroleum company representatives and offered oil and gas rights leases for their land. While many of these companies are reputable and offer fairly standard terms in their leases, they are generally trying to secure leases that are most favorable to them. The landowner should be aware of provisions that can be included to protect their investment and maximize the owner’s financial return.

Know What Your Oil and Gas Rights are Worth

Most oil and gas leases propose two financial benefits. The first is the oil and gas lease price per acre. Recently, one major oil and gas company paid up to $5,000.00 per acre for what they had determined to be land located strategically close to what the company believed would be a very fertile and productive natural gas field. While not all landowners will be fortunate enough to garner that type of lease price, it is not unusual for companies to make initial offers at a fraction of the amount they are willing to pay to lease a landowners oil and gas rights. Rarely is the first offer the best offer they are willing to make.

The second financial benefit is the “royalty” to be paid by the oil and gas company in the event their exploration results in the installation of an active well to extract oil or gas. Recently, oil and gas companies negotiated oil and gas leases for thousands of acres of state lands and agreed to pay the state royalties at a rate of 1/6th of the gross revenue resulting from an active well. As a result, landowners should not agree to anything less than the State of Michigan was able to negotiate for its royalty rate. I recently reviewed an oil and gas lease for a client that proposed a 1/10th royalty rate which we easily negotiated to the more favorable 1/6th rate being paid to the State.

Avoid Deduction of “Post Production Costs” From Royalties

Many proposed oil and gas leases will include provisions allowing an oil and gas company to deduct a portion of the company’s “post production costs” (PPCs) which essentially is simply a practice of the companies lowering their overhead and increasing their profits by passing overhead costs on to the landowner to be deducted from royalties. Landowners should be careful to make sure their royalties are to be paid off the gross revenue from a well with nothing other than a proportionate share of applicable government taxes being deducted from the royalty payment.

Require the Inclusion of a “Pugh Clause” in the Lease

A “Pugh Clause” protects the landowner by requiring the oil and gas company to release certain land subject to the lease after termination of the lease term that has not been pooled into the land subject to the royalty payment in the event an active well results from the lease and exploration. For example, an oil and gas company may only pool an apportion of the leased land for royalty purposes and without a Pugh Clause, the companies in some instances can tie up the entire parcel subject to the lease even though they are only paying royalties on a portion of the land.

There are other concerns that also should be addressed and included in the lease to protect the landowner including where the placement of well will be allowed, where facilities can be constructed on the landowners property and provisions specifying that the companies must restore the land to its original condition after completing various activities on the land.

Be Prepared

There has been a significant increase in the oil and gas activity in northern Michigan in the last six months. Oftentimes the oil and gas leases are presented in a fast and furious fashion. Don’t be afraid to take your time and carefully consider any proposed lease and determine whether there are other companies also interested in the oil and gas rights to your land. A little competition never hurts the process. Also, seeking the advice and input of a qualified attorney to protect your rights as the landowner is also recommended.

Dan A. Penning

Tags: Agribusiness, Asset Protection, Business Management/Law, Know it Now, Personal Management, Real Estate by Dan Penning
1 Comment »

Minors, alcohol and underage drinking
As we approach the season of high-school proms, graduations and graduation open houses and parties, it is important to remember the basics concerning alcohol, minors and underage drinking. What may seem like a harmless or innocent circumstance in providing a minor with an alcoholic beverage can result in negative consequences lasting a lifetime to both the adult and the minor child.

Zero tolerance by police officers
The laws are simple. First, it is against the law for a person under the age of 21 to consume any alcoholic beverage or have any bodily alcohol content period. If a minor child is determined to have consumed an alcoholic beverage or have any bodily alcohol content, they can be charged with a misdemeanor leading to fines, court-ordered substance abuse counseling, and in the case of multiple violations or offenses, up to 90 days in jail. You may have heard that many police agencies have made enforcement of the “minor in possession laws” (“MIP”) a top priority. There is typically a zero tolerance by police officers who have reason to believe a minor has consumed or is in possession of alcohol.

Civil cause of action for damages
Next, it is against the law to sell or furnish alcohol to a minor. What some individuals don’t realize is that someone who furnishes alcohol to a minor, who is then involved in an accident causing bodily injury or death to another individual, is guilty of a felony punishable with imprisonment of up to 10 years. Finally, in addition to criminal penalties, Michigan law provides the ability for an individual who is injured by a person under 21 years of age who is under the influence of alcohol in an automobile accident or any other occurrence to pursue a civil cause of action for damages against a “social host” who provided the alcohol to that individual. It is also important to note that several homeowner insurance policies have, over the past few years, become much more stringent in excluding such occurrences from insurance coverage in the event a civil cause of action is filed and pursued against a social host who provided alcohol to a person under the age of 21.

Think twice before you pour
The rules are simple. The consequences are clear. Underage individuals who drink alcohol, and the persons who provide them with the alcohol, will face severe consequences. It is important to keep these important facts in mind when planning your upcoming graduation celebrations.

Dan A. Penning

Tags: Asset Protection, Know it Now, Personal Management by Dan Penning
No Comments »

Launching a boat in Michigan waters during the month of April is not very common. Boat insurance policies, however, generally begin to provide coverage on April 15. If you’ve not given much thought to your boat insurance policy, this spring might be a good time to review your policy and determine if you need more protection as you navigate the Great Lakes or Michigan’s inland lakes.

Although many homeowner and automobile companies offer boat insurance, the coverage your existing policy provides may not be adequate. Many policies provide a list of “named perils” outlining situations the policy covers, such as fire, vandalism and malicious mischief. If you need more coverage, look for an “all risks” policy that covers more predicaments in which you might find yourself.

The valuation clause in the policy is what determines the calculation the insurance company uses to arrive at the amount to pay in the event of a loss. Actual cash value policies take into account depreciation, where other policies are written on the basis of “agreed value.” If the boat is a total loss, the policy holder of an “agreed value” policy receives the amount as provided in the policy, rather than the actual cash value. This coverage is not available from every insurance company.

Do you travel throughout the state, towing your boat to various lakes? Review your policy for any navigation limits. Some policies are only effective within 100 miles of your home.

Towing, salvage, and wreck removal are other important considerations and they are defined differently. Some policies cover only towage, which is usually determined by the state of the vessel. Distinguishing between whether a distressed boat is in a tow situation or a salvage situation is often difficult. If the situation was not reported timely or weather conditions worsened over time, these can affect whether your policy will cover your situation. Some broader policies cover salvage and wreck removal up to the full amount, but most insurers limit this coverage and some omit it all together.

Consider liability and bodily injury coverage that provides you with liability insurance coverage when there is damage to something owned by someone else or injury to someone else. Medical payments coverage pays for bills that may arise from an accident on a boat. Additional coverages may be available: uninsured boater’s insurance, roadside assistance (when towing your boat), trailer insurance, and coverage if you travel to Canada.

Boat insurance policies are available from many insurance companies; however, a real maritime insurance policy will likely offer you the best protection.

Dan A. Penning

Tags: Asset Protection, Cottage Law, Know it Now, Personal Management by Dan Penning
No Comments »

In 2008, the Michigan Court of Appeals held that a child’s ability to sue for a personal injury is not impaired despite any pre-injury waivers signed by the child’s parent. The case of Woodman v. Kera, L.L.C., 280 Mich. App. 125 (2008), involved a 5-year-old boy who was injured at an indoor recreation facility. The boy’s father had signed a pre-injury waiver, purporting to hold the recreation facility harmless if any injuries occurred to the child. According to the Court, the waiver could not prevent the child from pursuing a lawsuit against the facility. This conclusion was based on the common law rule that a parent lacks authority to waive, release, or compromise his or her child’s claims merely by virtue of the parental-child relationship. A parent, absent a specific exception created by the Michigan Legislature, cannot authorize an act that is detrimental to the child.

This case, which has far-reaching effects on commercial recreation establishments, churches, and schools, is currently under review by the Michigan Supreme Court. Oral argument on the case was heard by the Supreme Court in October of 2009, and an opinion is expected sometime later this year. It is also possible for the State Legislature to enact an exception to the general rule cited in Woodman, either before or after a decision is reached.

In the meantime, Woodman remains the rule in Michigan, and therefore establishments are best served by acting prudently and maintaining adequate insurance. While it is not recommended to discontinue the use of pre-injury waivers, awareness of the limited protection afforded by the waivers is important. For more information about this matter, please contact us.

Tags: Asset Protection, Disputes & Litigation, Know it Now, Personal Management by Dan Penning
No Comments »

I’m pleased to announce that one of Michigan’s premier business journals, DBUSINESS, recently announced its 2010 “Top Lawyers” in metropolitan Detroit – and three of the principals with Wright Penning & Beamer made the list.

DBUSINESS compiles its list as a resource and reference guide for its readers. Selection criteria include:

• legal knowledge
• analytical capabilities
• judgment
• communication ability, and,
• legal experience.

The list was published in the journal’s November/December 2009 edition.

According to the publication, selected lawyers “possess the highest professional ability and ethical standards.”

Dirk Beamer, Lee Flaherty and I were selected this year. Beamer for his expertise in business and commercial litigation; Flaherty for her work with non-profits and charitable organizations, and I was recognized for business and estate planning.

As a founding shareholder of the firm I’ve focused my practice areas primarily in planning for business entities including family businesses, estate planning for business owners, individuals, families with special needs children, and succession planning for family cottages and farms. Through these practice areas our firm has become a leading resource for individual and business clients.

Beamer oversees our firm’s diverse litigation practice, focusing primarily on business and commercial litigation. He spearheads the firm’s efforts in insurance law, unfair competition, trademark infringement, employment matters and contract disputes. Dirk has litigated in state and federal courts across the country. He also counsels business owners and managers concerning employment practices and management.

In addition to her work with non-profits, Lee Flaherty is well versed in real estate, business law, estate planning and probate. Lee’s business expertise encompasses the support of ongoing businesses, business purchases and sales, and representation in commercial real estate transactions. Her estate planning practice focuses on the preparation of a wide variety of trusts and other documents to assist clients in avoiding probate, preserving assets and minimizing taxes.

I take pride in my colleagues’ accomplishments and wanted to share this good news with you. As a firm we continue to strive daily to deliver the highest quality legal services to our clients throughout Michigan and beyond.

Dan A. Penning

Tags: Agribusiness, Business Management/Law, Business Succession, Cottage Law, Employment Law, Estate Planning, Know it Now, Personal Management, Special Needs Children, Suttons Bay Depot by Dan Penning
No Comments »

If you’re like me, you received any number of gift cards this past holiday season. Looking at the handful of gift cards I received, it occurred to me that I might just hold onto them until I needed something from a particular store. But, having heard that the sales reports for this past holiday season didn’t quite meet projections, I quickly asked myself, “What happens to my card if a store goes out of business or files bankruptcy?” Doing some quick research, I learned that consumers lost an estimated $8-10 billion in gift cards due to stores going out of business in 2008. How does this happen?

I discovered that the purchaser of a gift card is essentially loaning the issuing store money in the amount of the card. The issuing store, however, is not required to give the purchaser collateral as security for the loan in the amount of the gift card or do anything else for that matter to insure that the card continues to have value. As a result, the holder of the gift card is nothing more than an unsecured creditor. If the store goes out of business by filing for bankruptcy or by simply shutting its doors, the holder of the gift card will likely receive nothing for the gift card, or, at most, a few cents for each dollar of value (and then only years down the road at the end of the bankruptcy proceeding).

There are stores that have continued to accept gift cards while in bankruptcy proceedings, but there is no law that requires them to do so. For example, when Sharper Image declared bankruptcy in 2008, it had approximately $20 million in outstanding gift cards. Sharper Image stores continued to accept the gift cards but only on one condition: the shopper had to spend double the amount of the gift card to redeem it.

While bankruptcy courts should be able to provide some protection, that protection is often illusory. In one bankruptcy case, a Chicago law firm was successful in gaining class certification from the bankruptcy court for gift card holders, treating the entire group as a single creditor with combined claims of approximately $19 million. But the process takes a long time, and the secured creditors get paid before general unsecured creditors. There is no guarantee that any money will remain to pay the unsecured creditors like the card holders.

Consider also the positive effect that unredeemed gift cards have on the financial reports of the merchants. Fewer than 30 percent of store gift cards are redeemed within a month of purchase. The amount of each gift card may seem small, but in total, unredeemed gift card balances can add up to millions of dollars per retailer. Best Buy (BBY), which had approximately $471 million in unspent balances shown on its books in one recent year, added $135 million in unspent gift cards to its total operating income of $3.6 billion.

According to First Data, a website that compiles gift card statistics, through the 2009 holiday season, merchant branded (“closed loop”) gift card sales increased 2.1 percent compared to 2008. Most closed loop cards don’t have charges and fees in connection with the purchase because retailers can more than recoup their money from gift card sales. According to the National Retail Federation, shoppers spend 15 to 40 percent more than the gift card value.

Open loop gift cards, on the other hand, are not tied to specific merchants but are sold by banks or credit card companies (Visa, American Express, etc.). Recipients may use them at any business that accepts that particular card. However, hidden fees and expiration dates are common with open loop cards. Earlier in 2009, Congress passed reforms relative to the credit card industry that included regulations for open loop gift cards. The rules, which take effect in August of this year, prohibit dormancy fees unless the card has not been used for at least a year. The rules also require at minimum, a five-year expiration date.

If you have unspent gift cards in your pocket, consider spending them right away. Otherwise, keep informed about the retailers’ financial strengths (and weaknesses) if you choose to keep them for later use.

Dan A. Penninng

Tags: Know it Now, Personal Management by Dan Penning
No Comments »

The following article reports on an increasingly used strategy by individuals representing homeowners whose homes are in danger of foreclosure. In summary, the article addresses situations where a homeowner’s mortgage may have been sold or reassigned between several different companies and, therefore, the original mortgage note and mortgage executed by the homeowner cannot be located. If there is no evidence of a mortgage note or mortgage having been executed by the homeowner, then the bank or lending facility may have a challenge to actually prove indebtedness. The article below does provide useful information and should be considered by any homeowner facing a foreclosure action by their lender.

Dan Penning

——————————————————
From an article which originally appeared on the Consumer Warning Network website:

Homeowners’ Rallying Cry: Produce the Note

by MITCH STACY Associated Press Correspondent

ZEPHYRHILLS, Fla. (AP) — Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.

And just like that, the foreclosure proceedings came to a standstill.

Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.

During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.

Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.

“I’m going to hang on for dear life until they can prove to me it belongs to them,” said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. “I’ll try everything I can because it’s all I have left.”

In interviews with The Associated Press, lawyers, homeowners and advocates outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it has been; some judges are more sympathetic than others.

More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. On Wednesday, President Obama will unveil a plan to spend at least $50 billion to help homeowners fend off foreclosure.

Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers the free court documents Lovelace used to file her request, has played a major role in promoting the produce-the-note strategy.

“We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.”

Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.”

Deutsch said the original note is almost always electronically retained and can eventually be found.

Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. Still, assembling such documents to a judge’s satisfaction takes time, which to homeowners is the point.

Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure — no letters from the lender, no court filings.

The law firm handling the foreclosure for the lender refused to comment.

A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.

The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.

Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost their home. Still, he considers that a success.

“From the perspective of the person who’s in the home, you may have kept them in the house another 10 or 12 months,” he said. “If I can get a result with economic benefits to a client, then I think I won.”

Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.

“Don’t leave your home,” she said. “Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don’t have that mortgage, and you are going to find they can’t find the paper up there on Wall Street.”

April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.

“This is an army of lawyers getting out there to stop foreclosures so we can get to the serious business of creating solutions,” Charney said. “Nothing good is going to happen as long as we continue to bleed homeowners.”
—————————————————-
Visit Consumer Warning Network for balance of article and reader comments and additional information about foreclosures and this issue.

Dan Penning
—————————————————–

Tags: Asset Protection, Disputes & Litigation, Personal Management, Suttons Bay Depot by Dan Penning
No Comments »

At The Penning Group, 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 Penning Group corporate client, you probably have seen this checklist in a different format before. If you are not a Penning Group 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 The Penning Group.

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 where we have additional checklists for your business.

Dan A. Penning
———————————————-

Tags: Asset Protection, Business Management/Law, Personal Management by Dan Penning
No Comments »