Second Marriages and Estates: Protection for the Widow or Widower “Left Out” of Older Wills

By Richard Rooney

Today many people are living longer than ever. At the same time cultural norms seem to have become more accepting of divorce. Consequently, knowing seniors in a second marriage is somewhat commonplace.

Love knows no seasons, and it’s great that people can find love in the later years of their life—but second marriages can lead to legal complications without proper planning. Seniors with second marriages often have children on both sides with a major stake in the old estate plan. Costly probate litigation can result from the conflicts of financial interests if wills or trusts and beneficiary designations haven’t been revised.

The best course of action for any couple, regardless of age, is to update their estate plan when major changes in their life, such as a second marriage, occur. But if that wasn’t done, the widow or widower still has options.

Fortunately, Michigan’s probate code allows for a number of overlapping protections for surviving spouses who are mistakenly left out of an estate plan.

Some of those protections are limited to just the deceased spouse’s probatable assets, meaning only the assets held solely in the deceased spouse’s name at the time he/she passed.

Some of the other protections are able to reach revocable trust assets.

And, in some circumstances the protections are subject to an “offset.” This means amounts the surviving spouse may have received outside of probate–such as a life insurance policy or jointly held property– factor into the final amount the spouse can get from probate assets.

Spousal Election

The first major statutory protection for surviving spouses “missed” in a will is the spousal election. Every surviving spouse, unless that spouse has waived the right in writing, has the option to abide by the terms of the will or take an “elective share.” An elective share is half the “intestate share” reduced by half the value of assets the surviving spouse received outside of the probate estate.

The intestate share, which is the amount a spouse would receive if his/her spouse died with no will, can range from the whole probate estate to $145,000 (2014 inflation adjusted numbers) plus half of the remainder of the probate estate, depending upon what other heirs the deceased spouse left.

As a spousal election example, Spouse A dies, leaving a $400,000 probate estate and adult children. New Spouse B was never added to the estate plan or mentioned in the will but did receive $100,000 from a “pay on death” bank account or a “joint” bank account. Spouse B’s intestate share would be $272,500 ($145,000 plus half the remaining $255,000 of the probate estate). That means Spouse B can elect half of that amount ($136,250) reduced by half of the non-probate bank account payout ($50,000). Spouse B is entitled to $86,250 as a spousal elective share. This elective share is available to a widow or a widower.

Take note that a deadline is involved in making the spousal election and the election cannot reach trust assets.

Pretermitted Spouse

The second protection surviving second spouses may use is the pretermitted spouse provision. The pretermitted spouse provision allows the surviving spouse whose deceased spouse has a will executed prior to the marriage to claim the full intestate share of the probate estate.

Unlike an elective share situation, the estate “pool” is reduced by anything devised to children of the deceased spouse who are not also children of the surviving spouse, whether devised directly or through a trust. Furthermore, if there is evidence that the surviving spouse was provided for outside of probatable assets, the probate court may disallow the provision’s applicability entirely.

A surviving spouse can both make a spousal election and make a claim as a pretermitted spouse. The probate court will grant the greater of the two amounts if the spouse qualifies for both.

Exemptions/Allowances

The final set of protections for surviving spouses are known as allowances or exemptions and there are three of these. The purpose of these exemptions is to allow the surviving family some financial stability and security during the period of readjustment to losing a family member.

The three exemptions are known as the “Homestead Allowance,” the “Exempt Personal Property,” and the “Family Allowance.”

The homestead allowance, which is $22,000 for 2014, is an amount granted to surviving spouses to insure that they don’t end up out in the cold, so to speak. Despite the name there does not have to be a homestead involved, the amount is just a cash amount to which any surviving spouse is entitled.

The surviving spouse is also entitled to claim up to $14,000 (2014 numbers) worth of personal property of the estate that is “exempt” from other claims. The spouse may claim specific assets and may even claim cash if there is not sufficient personal property to satisfy the exemption amount. All surviving spouses are entitled to this exemption.

The family allowance is another allowance, for the surviving family to help support the possible loss of income for up to a year. The amount allowable, without probate court approval, is $26,000 (2014 numbers). However, this allowance is at the discretion of the personal representative and the surviving spouse would typically have to show a financial need in order to for a family allowance to be granted.

All three of the exemptions and allowances can be taken in addition to any elective share or pretermitted intestate share. The exemptions are taken before other claims and while they do not reduce the elective share directly, they will reduce the size of the estate. Additionally, Michigan’s Estate and Protected Individuals Code (EPIC, also known as the probate code) allows a surviving spouse to draw these claims from non-probate assets including revocable trusts–if the probate estate is not able to fully pay them.

Conclusion

This group of overlapping protections are available to surviving spouses under Michigan’s probate code, but there are important time frames for claiming them. Ideally preventing election situations in the first place with an accurate estate plan is the best approach.

If you find yourself heading into a second marriage later in life, consider revising your estate plans right away—be proactive. But if you have been omitted, and your spouse dies before they ever updated their documents, you may want to consult an attorney for assistance. Bradley A. Vauter and Associates, P.C.,  deals with probate and estates cases and would be glad to assist you.

在密歇根新成立的企业吗?您需要考虑的法律问题

在密歇根成立或者重组小型企业既有点可怕或者说没有头绪,但同时又会很刺激。密歇根州政府在自己的网站上提供了很多与此相关的信息,例如:http://www.michiganbusiness.org/cm/files/brochures/non-medc_produced/guide-to-starting-and-operating-a-small-business(1).pdf;以及http://www.michigan.gov/business

很多小型企业都设立为个体企业 (Sole Proprietorship)的形式,这主要是因为该形式不需要繁杂的注册手续,而且仅需一名“员工”——即企业所有人。但即使是个体企业的设立,这其中也涉及申请商业名称 (assume name application)、满足当地区域规划以及许可法律法规要求等事项,

由于在运行中可能遇到各种财务及法律风险,现在很多企业均倾向于设立为小型公司或者某种类型的有限责任公司。一个合理设立并正常运营的公司或有限责任公司可以在遭遇某些风险的时候保护企业创始人和企业主,使其免于承担一些法律责任。在遭遇风险的时候,也许企业本身会缩小规模甚至倒闭,但企业主一般没有法律义务动用个人资产帮助企业走出困境,这一点和个体企业不同。

密歇根州政府网站提供了一些关于在密歇根成立公司或者有限责任公司(LLC)的信息:http://www.michigan.gov/lara/0,4601,7-154-35299_61343_35413—,00.html

Michigan Department of Licensing and Regulatory Affairs在上述网站上还提供了公司最初注册所需的一些表格。此外,网站上还列出了注册所需费用。

由于可以通过政府网站上提供的信息和表格注册一个非常简单的公司或者有限责任公司,有些小企业主会选择DIY,而不是聘请律师或律所来帮助注册。当然,在有些情况下,这是完全O.K.的。

如果你有多位投资人,或者还有其他人在公司运营中扮演重要角色,那么你最好还是聘请一位律师来帮忙,因为那些最简单的注册表格并不涉及小型企业具体运营的任何方面。此外,对于一些可能出现的法律问题,例如一位投资人是否可以购买另一位投资人的权益,最好在企业成立之初在运营或管理规定(operating or managing agreement)中就约定好,而不是等到出现争议时再去考虑。基于以上原因,聘请律师就显得尤为重要。

如果您想了解关于公司设立的更多信息,请随时联系我们。

 

以下是成立公司之前您需要考虑的一些事项:

您的商业目标

责任

公司所有权模式,包括股份额

公司法定代理人

公司控股和投票要求

公司章程

董事责任及免责条款

Michigan Law-Starting a New Small Business

Starting or reorganizing a small business in Michigan is always exciting, if not just a bit scary or confusing  too.  The state of Michigan itself has a lot of decent information available on their websites, such as here:  http://www.michiganbusiness.org/cm/files/brochures/non-medc_produced/guide-to-starting-and-operating-a-small-business(1).pdf  and also here: http://www.michigan.gov/business

Many very small businesses are set up as sole proprietorships, with virtually nothing needed in the way of filings and so on, particularly if there is only one “employee”—the business owner.  But even those setting up as sole proprietorships may need to file an assumed name application, and check with local zoning laws, or even state licensing laws, to make sure they are in compliance with the law.

Because of possible financial and legal liabilities that may crop up in business, there is a strong tendency these days to set up a small corporation or limited liability company of some sort instead. A properly established and maintained corporation or limited liability company may help the business founders and owners shield themselves from some liabilities, if things go badly for the business.  Perhaps the business itself might shrink or close, if things go badly, but the individual owners typically will not be required to use their personal assets to get the company out of the difficulty.  And that is different from a sole proprietorship.

Some additional information about forming a Michigan corporation or LLC can be found here:   http://www.michigan.gov/lara/0,4601,7-154-35299_61343_35413—,00.html .

The Michigan Department of Licensing and Regulatory affairs, through the website above, provides the initial forms one might need to file a corporation. State fees required for filing are also listed on the website.

Since it is not impossible to create a very simple corporation or limited liability company just by using the state website and forms, some small business owners don’t use an attorney or law firm to help.  And that may be perfectly “O.K.” in some instances.

But if you have more than one investor, or others who are playing a critical role in your business, it is often smart to meet with a lawyer then, since the operational aspects of a small business, are usually NOT covered by such simple filings.  And other complications — such as whether or not one investor can buy out another, for instance – are much better talked about and incorporated in some form of operating or management agreement UP FRONT and not after difficulties arise.  That’s where a lawyer can be of real help to you.

Here are some items to consider before you form or as you get started:

Your business purpose.

Liability.

Ownership indications–including shares of stock.

Company Agent.

Company control and voting requirements.

Bylaws.

Director Liability and Indemnification.

Officers and their Authority.

Dispute Arrangements.

Operating Agreement.

Corporate Records.

Employee/Employment Arrangements.

If you would like to know more, please contact our firm.

Grandparent Visitation Rights in Michigan?

Michigan has a law that allows for grandparent visitation rights, and the law has been around since 2005, in an amended form. The law is a bit limited though, at least compared to what many grandparents hope. Still it can be a useful law for those with concerns about seeing their grandchildren.  And if you are already serving, or could serve as guardians of your grandchildren, other laws might apply.

But let’s just look at the Michigan law on grandparent visitation which is really part of Michigan’s larger child custody act.  (The mention of grandparents shows up especially in MCL 722.27, for instance, but that is just one section of a larger act surrounding child custody and visitation issues.)

The law in Michigan requires a two step analysis.

First, do the grandparents (or does a grandparent)  have standing to make the request in the first place?  Standing is important because it essentially means whether or not a court will even hear your request or consider your case.

Michigan, and many other states, have pretty limited rules regarding standing.  In Michigan, if you want to make a grandparent visitation request, you should be in one of the following situations:

–you have children of your own (a  parent of the grandchild) who are divorced or in the process of a divorce (or legal separation or annulment).

–the grandchild’s parent is deceased, but you are the parent to the dead grandchild’s mom or dad.

–your child never married and is not in the same household as the other parent of the grandchild but paternity is clear or established.

–your grandchild is being or is already placed outside their home and someone now has custody (such as foster care placement or the like).

–you have taken care of the grandchild so long, within the last year in your own place, so much so that a court might agree the real “established custodial environment” for the grandchild is with you anyway.

Second, if  you have standing, is it in the grandchild’s best interest that you have visitation?  To get that ball rolling   as described above, you petition the court for grandparent visitation and give notice to the interested other parties.

Michigan statutes and case law outline a number of factors, so that judges can decide whether such requests are in “the best interest of the child” or in this case, your  grandchild.

One part of Michigan law, (MCL 722.27b (6)) outlines those factors in this way:

(6) If the court finds that a grandparent has met the standard for rebutting the presumption described in subsection (4), the court shall consider whether it is in the best interests of the child to enter an order for grandparenting time. If the court finds by a preponderance of the evidence that it is in the best interests of the child to enter a grandparenting time order, the court shall enter an order providing for reasonable grandparenting time of the child by the grandparent by general or specific terms and conditions. In determining the best interests of the child under this subsection, the court shall consider all of the following:

(a) The love, affection, and other emotional ties existing between the grandparent and the child.

(b) The length and quality of the prior relationship between the child and the grandparent, the role performed by the grandparent, and the existing emotional ties of the child to the grandparent.

(c) The grandparent’s moral fitness.

(d) The grandparent’s mental and physical health.

(e) The child’s reasonable preference, if the court considers the child to be of sufficient age to express a preference.

(f) The effect on the child of hostility between the grandparent and the parent of the child.

(g) The willingness of the grandparent, except in the case of abuse or neglect, to encourage a close relationship between the child and the parent or parents of the child.

(h) Any history of physical, emotional, or sexual abuse or neglect of any child by the grandparent.

(i) Whether the parent’s decision to deny, or lack of an offer of, grandparenting time is related to the child’s well-being or is for some other unrelated reason.

(j) Any other factor relevant to the physical and psychological well-being of the child.

If you want to find out more about grandparenting time, feel free to call our office.  Next week will will have a blog entry about guardianship of grandchildren.

Legal Audits for Business and Non-Profit Organizations

Most people in business and industry, and those leading non-profit operations, are acquainted with financial audits.  They may know more than they care to in regards to the standards and practices involved with such audits.  The American Institute of CPA’s for instance, and the Public Company Accounting Oversight Board have issued guidelines and in fact the Accounting and Review Services Committee of the AICPA just recently issued new standard and review guidelines.

Fewer people are familiar with legal audits, we find.  But almost every company and non-profit organization operate in a milieu where regulations and standards and statutes create obligations.  Some companies and non-profits are finding that–despite sometimes tighter government budgets–greater scrutiny by government employees is the order of the day.

Of course, many non-profits and businesses try hard to keep up with various contractual and regulatory obligations–and most do a decent job. But an independent outside audit will review actual or potential violations and because of the distance or independence of the audit team they can often find shortcomings management has overlooked.

Given the drive and passion of most entrepreneurs and non-profit managers, compliance and regulatory issues can take a back seat.  But ignoring these operational aspects and requirements can create real problems as well as a “black-eye” for an organization.  For one such example, see this news item about a facility in Muskegon: http://www.mlive.com/news/muskegon/index.ssf/2014/10/federal_review_finds_muskegon.html#incart_river

Regularly conducting independent, confidential compliance audits is the best way to assess possible compliance risks–and because our firm does it, the work can most always be done in a confidential fashion.  Your business or non-profit, with our help, can then fix things as a result of an audit.  And if you operate in an environment where there are reporting requirements as a result of an audit, we can help you prepare the report.

Legal audits are typically shaped to your specific business and obligations.  They may also be arranged so that, over the course of time, different “parts” of your operations get the scrutiny. The best practice is to make  legal audits pay.  That is, since legal audits will take some time and energy from the business, and since our firm or other firms will most likely be charging you for the audit–you might want to pick out key or core areas or contracts and regulations to focus on for the first audit.  Then a few years down the road, pick other areas for audit.

And despite the costs involved an audit can also “pay” in another way.  This is because, by being proactive, one can often forestall larger problems of which a company or organization is not aware.  It is cheaper and smarter to find and fix problems, rather than by responding to a whistle blower complaint of one kind or another, or dealing with a complaint by a disgruntled employee or  contractor. In that light, legal audits are a smart investment for most companies and non-profits.

Bradley Vauter & Associates, P.C. stands willing to help with a legal audit tailored to your business or organization needs.  Feel free to contact us for our simple handout that outlines some of the areas you should be thinking about in regards to audits–we’ll mail that out free, with no obligation on your part.

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