News & Information

Many of us have now worked our way through the complaint/bewilderment/grief stage of the Patient Protection and Affordable Care Act (PPACA). We are now beginning to evaluate the impact of PPACA as we approach the insurance renewal season for the next plan years. Many questions remain. However, we have enough information to take a few cautious steps forward. .. Read full article.

In the March edition of Business Counselor, we highlighted the importance of understanding the value of trademarks and service marks in your business. Copyright materials also likely play an important role in your business. “Copyright” is the bundle of exclusive rights granted to an author or creator of an original work, including the right to copy, distribute and adapt the work. These rights can be licensed, transferred and/or assigned. There are several types of works that may be subject to a copyright, including books, maps, charts, prints, photographs, painting, drawings, sculptures, motion pictures, computer programs, sound recordings and architectural works. .. Read full article.

A recent Michigan Court of Appeals case resolved an ambiguity under the Molder’s Lien Act in favor of the “molder” and against a secured creditor. In Delta Engineered Plastics LLC v Autolign Manufacturing Group Inc, 286 Mich App 115 (2009), the “molder,” defined under the Act as any person who uses a die or mold to make plastic parts, produced plastic parts using molds owned by the defendant. When the defendant failed to pay, the plaintiff asserted a statutory lien on the molds in its possession. .. Read full article.

Does your business use and rely on a trademark or service mark? If your answer was yes, how do you know when there are issues with your trademark or service mark that require legal advice? If your answer was no, are you absolutely sure your business is not using a trademark or service mark? .. Read full article.

Somewhere along the line, every business finds itself in a contract that is unprofitable or undesirable. When that happens, the party to the agreement may find that it is much more difficult to get out of the contract than it was to form the contract to begin with, hence the old adage: “a bargain is a bargain.” Indeed, once a contract has been formed, there are generally only two ways to get out of the contract: (1) renegotiate the contract, or (2) break the contract.
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Until recently, there was little guidance from the Internal Revenue Service as to whether a vacation home could meet the requirements of Section 1031 of the Internal Revenue Code regarding exchanges of real estate. Revenue Procedure 2008-16 provides a safe harbor for exchanges of vacation homes. With the adoption of Rev Proc 2008-16, the IRS affirmed that it will not challenge the exchange of a vacation home (either the relinquished or replacement property) if: (1) the vacation home is held for investment purposes; (2) the taxpayer owns the vacation home for at least two-years prior to and the replacement home at least two-years after the exchange, (3) during the two year holding period (a) the taxpayer rents the vacation home at a fair rental rate for at least 14 days each year during the two-year holding period and (b) the taxpayer’s personal use of the vacation home does not exceed the greater of 14 days per year or 10% of the days that it is rented at fair-market value in a year during each of the two years of the holding period.
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Many businesses and individuals have found that their works (such as photographs, graphics, videos, articles, etc.) have been used without permission on third party websites. Creators of works and entities hosting content should become familiar with their rights and obligations under the Digital Millenium Copyright Act... Read full article.

The Internet Corporation for Assigned Names and Numbers (“ICANN”) continues to move forward with its plan to create new general Top-Level Domains. Although this program can be a great benefit to businesses and consumers, the program also creates substantial threats to trademark owners.

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On July 1, 2009, U.S. Immigration and Customs Enforcement ("ICE") issued 652 notices of inspection ("NOI") to businesses in order to audit I-9 records that contain information regarding an employee's right to work legally in the U.S. This announcement was a substantial departure from previous enforcement mechanisms. In the entire fiscal year 2008, ICE issued 503 similar notices throughout the entire year. A large percentage of the businesses targeted involved companies with fewer than 100 employees, and fell into a wide range of categories, including manufacturing, restaurants, construction, farming and trucking... Read full article.

A seller of goods and products often feels legally compelled to ship goods to a buyer, even though information in the public domain suggests that the buyer is insolvent or near bankruptcy. It should not. A provision in the Uniform Commercial Code, as enacted in Michigan and most other states, empowers the seller to stop delivery unless the buyer pays cash for that delivery and all prior shipments under the same contract. .. Read full article.

Many individuals, typically parents, desire to convey certain real property to their children during the parents’ lifetime because they want to make certain that the property does not pass through probate proceedings at their death or because they want the children to have the use of the property during their parents’ lifetime. However, one important tax consideration is often not taken into account. If the parents deed the property to a child during the parents’ lifetime and the parents do not stay on title as a joint owner, then the children receive the property with the same tax basis that the parents had in the property. The tax basis is essentially what the parents paid for the property plus any capital improvements to the property (such as additions to buildings or other improvements on the property). Typically the parents’ tax basis is very low in relation to the property’s fair market value. Then if the child eventually sells the property, the child will pay capital gains on the difference between the fair market value at the time of sale over the amount of the parents’ tax basis. This can result in a substantial tax bill to the child.
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I was contacted by a client recently in a panic because a woman kept calling her and telling her that she needed a revocable living trust and that if she did not have one, then she would lose a large portion of her estate to legal and probate fees. When I asked who this woman was, my client said that she was with some “law firm.” The mystery woman said that my client had returned a post card asking for such services. Even though my client knew that she had not returned any card, the calls kept coming with greater pressure being applied with each call. .. Read full article.

It often does not occur to parents that when their children turn age 18, they are no longer minors under Michigan law. Once a child reaches 18, he or she has legal independence from parents and the ability to enter into contracts and execute other documents including estate planning documents. Although most 18 year olds have not yet accumulated substantial assets, they should execute certain basic estate planning documents. .. Read full article.

A living Trust is an estate planning vehicle that allows you to transfer assets to the Trust during your lifetime typically to be managed for your benefit by you as the initial Trustee during your lifetime. Upon your death, the Trust would typically provide for distributions to children or other beneficiaries. If you transfer assets to the Trust during your lifetime, those assets will avoid probate proceedings at your death. Trusts can also avoid or minimize estate taxes for married couples who have larger estates. .. Read full article.

This article is intended to provide some insight into the factors to consider in selecting successor trustees of your trust. It is intended as a general guide for informational purposes. It is not a substitute for specific legal advice pertaining to your particular trust.

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The following is a list of some of the typical tasks that a trustee or successor trustee will need to perform. The list is not necessarily in chronological order and is not intended to cover every task that may arise since each trust is different... Read full article.

As a general rule, you should own your car in your own name alone. The primary reason for this is to limit your liability exposure. If your car is involved in an accident, most likely you will be the one driving at the time. If someone is injured as a result and they bring a claim for negligence that exceeds your liability insurance coverage, then only your individually-owned assets will be exposed to that claim. If you are married, your spouse’s assets and many of the assets you own jointly with your spouse will be protected because your spouse is not responsible for your negligent acts. However, if you own your vehicle jointly with your spouse, almost all of your assets, your spouse’s assets, and your joint assets will be exposed to the liability (there are exceptions for certain retirement assets). As an owner of a vehicle, your spouse is responsible for the acts of those operating the vehicle. Therefore, the way to best limit your liability exposure is to have the vehicle titled solely in the name of the person who operates the vehicle most often... Read full article.

Many adult children today find themselves caring not only for their own children but also for their parent. This is a difficult transition for the adult child who has always thought of their parent as strong and independent. It is also difficult for the parent because they need to accept that they are losing some of their faculties and are now vulnerable and in need of assistance. The challenge for the adult child is to know when to move from the traditional role of a child to that of a caretaker for a parent. .. Read full article.

Many clients believe that their Will or Trust will govern the distribution of all of their assets upon their death. If you read those documents, they typically sound all-encompassing. However, in reality, assets such as life insurance and retirement plans are contractual arrangements between the owner of the asset and the company administering the insurance policy or retirement plan. .. Read full article.

Did you know that the burden is upon you to prove that you have repaid your student loans, and that the government is not subject to any statute of limitations in its efforts to recover payments it believes are due?.. Read full article.

A March 29, 2010 Opinion of the Attorney General has provided guidance on a key provision of the Downtown Development Authority Act, Act 197 of the Public Acts of Michigan of 1975, as amended (“Act 197”), relating to the ability of “affected taxing jurisdictions” to “opt out” of an established downtown development authority’s district and tax increment capture. .. Read full article.

As part of the President’s and the U.S. Congress’s 2009 economic stimulus efforts, Congress passed and the President signed into law the American Recovery and Reinvestment Act of 2009 (the “ARRA”). Part of the ARRA included provisions to assist state and local governments across the country by authorizing the issuance of new federally-taxable bonds by state and local governments. .. Read full article.

Collection of an Unlawful Millage is Not a “Mutual Mistake of Fact” for Purposes of Extending the Period Within Which a Taxpayer May File a Claim for a Refund. In the case of Briggs Tax Service LLC v Detroit Public Schools (March 30, 2010), the Michigan Supreme Court reversed the Court of Appeals and reinstated the decision of the Tax Tribunal dismissing the petitioner’s refund claim on the ground that the claim was not filed within the applicable limitations period.

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Section 29 of the Headlee Amendment to the Michigan Constitution expressly prohibits the State from imposing unfunded mandates on local units of government. However, a recent report by the Legislative Commission on Statutory Mandates (the “Commission”) makes clear that the State has often ignored this constitutional prohibition when implementing new legislation. The Commission’s report is the culmination of a two year investigation initiated by the State to determine the costs incurred by local units of government in complying with the numerous mandates that have been imposed on them by the State. The findings are staggering. In 2009 alone, the State imposed unfunded mandates that cost local units of government in excess of $2.2 billion dollars. .. Read full article.

Private Emails of Public Employees Not Subject to Disclosure under FOIA. In the case of Howell Education Association MEA/NEA v Howell Board of Education (January 26, 2010), the Michigan Court of Appeals held that personal emails of public employees that are stored in the public employer’s computers are not public records subject to disclosure under the Freedom of Information Act (FOIA). .. Read full article.

Reducing the Salary of an Elected Township Official. In Opinion No. 7258, issued December 1, 2009, the Attorney General concluded that elected officials in a charter township may not lawfully consent to a reduction in a salary that has been established under Section 6a of the Charter Township Act, MCL 42.6a, unless the consent is in writing and there is a corresponding reduction in the officer’s responsibilities and requirements... Read full article.

In the case of Hughes v Almena Township (2009), the Court of Appeals clarified several statutory zoning requirements, as they pertain to Planned Unit Developments (“PUDs”) and the governmental bodies having authority to review and approve PUDs. The Hughes case was decided under the now-repealed Township Zoning Act (“TZA”), rather than under the Michigan Zoning Enabling Act (“MZEA”), but due to the similar language of the two Acts, the principal rules announced in Hughes remain applicable under the MZEA. .. Read full article.

Section 332 of the Federal Telecommunications Act preserves the authority of local governments to impose zoning regulations on cell phone towers and other personal wireless service facilities. The local government’s zoning authority is limited by several restrictions, including a requirement that the local government must act within a reasonable period of time... Read full article.

Township-Wide Vote Not Required for Annexation of Charter Township Parcel. In the case of Charter Township of Meridian v Ingham County Clerk (September 22, 2009), the Court of Appeals upheld East Lansing’s annexation of a portion of the Charter Township of Meridian. The township challenged the annexation referendum on the grounds that it violated the township residents’ constitutional right to vote and equal protection guarantees because only those qualified electors who resided in the portion of the township to be annexed were permitted to vote on the annexation referendum, as opposed to the entire township electorate.

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The U. S. Department of Agriculture (“USDA”) offers a loan program to communities with fewer than 25,000 people. Under the program, the USDA loans money to a community agency, requiring repayment of the principal plus 1% interest. The community may then re-lend the funds to people, companies or even other units of government, as a method for encouraging and assisting businesses to expand in that local area... Read full article.

While the $789 Billion American Reinvestment and Recovery Act of 2009 is predominately a “jobs bill,” it contains a number of housing-related incentives for homeowners and home buyers. .. Read full article.

Foreclosure consulting businesses are proliferating due to the high residential foreclosure rates brought on by rate increases in adjustable mortgages and by the challenging economy. While there are variations of the foreclosure consulting business, in most cases the consultant looks for homes that are in foreclosure but on which the redemption period has not yet expired... Read full article.

Fewer transactions involving the sale of real estate will escape the State Transfer Tax now that House Bill 6122 has become law. The primary purpose of House Bill 6122 (Public Act 473 of 2008) is to amend the State Real Estate Transfer Tax Act (“Act”) to include the sale of a controlling interest in an entity if real estate comprises 90% or more of the fair market value of the assets of the entity being transferred... Read full article.

The Housing and Economic Recovery Act of 2008 (“The Housing Act”) may change the amount of capital gain that a homeowner may exclude after the sale of a principal residence. The use of a home as anything other than a principal residence is considered a “non-qualifying use” that prevents the homeowner from excluding any gain upon sale from his or her income. Under previous rules, after the owner of a non-qualifying use home used the home as a principal residence for two years, the owner could sell the home and exclude up to $250,000 in gain from his or her income or up to $500,000 for married couples filing taxes jointly. The Housing Act now requires the owner to prorate the amount of gain that can be excluded based on the amount of time the home is used as a principal residence compared to the total length of ownership. .. Read full article.

Bankruptcy of a tenant significantly alters the rights and obligations of tenants and landlords under a lease of real property. The complex workings of the Bankruptcy Code as applied to real estate leases necessitates careful analysis of the unique circumstances of each specific situation to determine the effects of a tenant’s bankruptcy. This article is intended to provide a general overview of the consequences of a tenant’s bankruptcy filing... Read full article.

Recent changes to the Michigan brownfield tax credit program provide real estate developers and owners increased incentive to redevelop brownfield properties. The State of Michigan provides tax credits against the Michigan Business Tax for redevelopment of contaminated, blighted or obsolete properties. For years, the brownfield tax credit program has provided a valuable incentive for real estate owners and developers to redevelop brownfield properties which otherwise might not have been developed due to the high cost of environmental cleanup or rehabilitation of an obsolete building. In April, revised brownfield credit legislation was enacted which raises the amount of the tax credits available and increases the flexibility in realizing the financial benefits of the tax credits... Read full article.

A relatively unusual form of deed is becoming more commonplace and you may want to know what it is and why people are using them. The deed is referred to as a “Ladybird Deed.” Lyndon Johnson reportedly used this type of deed to convey property to his wife upon his death. Essentially, a ladybird deed indicates that if the person signing the deed (the “grantor”) still owns the property at his or her death, then the property is conveyed to one or more people or entities (the “grantees”). The grantor of the deed reserves a “life estate” in the property and the right to sell the property during their lifetime and to retain the sale proceeds. As a result of this retained right to sell, the execution of the deed does not result in a completed transfer of the property because the grantor retains the right to revoke or “undo” the conveyance. If the grantor does not sell the property during their lifetime, then the property passes to the grantees without probate proceedings at the grantor’s death. The grantees record the grantor’s death certificate with the register of deeds office in the county where the property is located to show that they are the new owners of the property. .. Read full article.

Sooner or later, most people involved in the real estate business find themselves in a dispute of some kind. It may involve a buyer and seller, a competitor, a current or former employee, a co-owner, an investor, or worst of all, a customer. Disagreements can range from breach of a purchase agreement, non-payment of a commission, earnest money deposits, undisclosed environmental issues or other problems concerning the condition of the property. .. Read full article.

Using a “drop-down LLC” to sell real property has become popular in Michigan’s commercial real estate industry. This popularity is driven by the seller’s desire to escape substantial transfer taxes imposed by the State of Michigan on a traditional sale. So how does a “drop-down LLC” transaction work?.. Read full article.

Licensing requirements for residential builders and maintenance and alterations contractors, as well as penalties for failure to comply with the licensing requirements, have increased significantly due to new legislation that was signed into law on December 20, 2007. .. Read full article.