Author: DAR Law

Administering Your Family’s Estate: A Blessing Or A Curse?

Posted on by DAR Law

You struggle to keep your composure as you arrive at the attorney’s office. You remember being seated in a dark conference room, lined with books – lots of books.

You remember the attorney’s strong handshake and his empathetic gaze. You remember sipping on a cup of mediocre coffee.

You remember being sent on your way with a list of tasks. A list of tasks which you can no longer decipher. “Contact beneficiaries – 63 days.” “Publish Notice to Creditors.” “Possible probate.” “Apply for Tax ID.”

It is during this moment that you feel both burdened and privileged. Privileged to carry out your mother’s wishes and burdened by the weight of being thrust into completely unfamiliar territory full of legal and financial minefields.

The fiduciary duty of administering your mother’s estate lies in your hands. The never ending stream of questions from family members has begun and you have no idea where to start, let alone what your job really entails.

Death should be simple, but it’s not. It’s messy, complicated and emotional. Families and finances are complex and deeply personal. Upon death, the intersection of greed and grief can breed distrust and quickly destroy family relationships. When family members and friends are appointed to administer estates, the decedent is comforted by the notion the family member will “know” what their wishes are, and will do what’s “right.” While the decedent takes comfort knowing their affairs will be taken care of, the personal representative or successor trustee they appoint is rarely (if ever) educated or adequately prepared for what is expected of them after death.

Like religion and politics, death is usually a topic we steer clear of at family gatherings. Everyone has an opinion about it, we whisper about it, but no one wants to openly discuss it – perhaps out of fear it will eventually happen. So, if bringing up a family member’s eventual demise at Thanksgiving dinner is not a viable option, how do you prepare yourself if you are asked to serve as a personal representative or successor trustee?

Start the conversation before death. If a family member or friend appoints you to serve as a personal representative or successor trustee, ask questions while that person is still living. Are they willing to share a copy of the documents with you? Where are the original documents located? Can they introduce you to their attorney, accountant and financial advisor? Help them understand that in order for you to carry out their wishes you need to be part of the conversation now.

Understand your right to decline. While it may be an honor to be appointed to serve, you are not required to do so. You always retain the right to decline the appointment, and the ability to later resign, even if you accept.

Give yourself time to breathe. Stop and breathe. When a family member or friend passes, you have just lost someone you care deeply about. Yes, there will be timelines and deadlines, but most things can wait. Your emotions are running wild and rushed decisions, especially emotional ones, are never good.

Surround yourself with professionals. You have the authority to hire professionals (estate attorneys, accountants and financial advisors) on behalf of the estate to assist you with the estate administration. This does not have to be the decedent’s attorney or tax preparer. They are professionals of your choice who represent you. Take advantage of this. You will thank yourself later.

Cut yourself some slack. You have never been through this process before. No one expects you to know exactly what to do. Every decision has legal and financial implications. Choose an attorney and accountant that you are comfortable with to guide, advise and reassure you throughout the process.

Read the documents. Wills and trusts tell you what to do. Simple, I know. They grant you certain powers, control your actions, direct distribution and provide critical instructions for income, estate and gift taxes. These documents are packed full of legal jargon and can be lengthy for good reason. If you don’t understand the language – ask.

Abide by the terms of the documents. The provisions of the documents express the decedent’s intent. These are not merely “guidelines.” You are bound by a fiduciary duty to abide by the terms of the document. If there is a question as to interpretation, do not infer – ask.

Understand your fiduciary role. You serve in a fiduciary capacity, entrusted with the management and care of estate assets. Review your fiduciary duties. Know what it is expected of you and when; understanding that breaching one of your fiduciary duties can expose you to personal liability.

Recognize your right to be compensated. Serving as a personal representative or successor trustee takes time away from your job and your family. Exercise your right to be compensated for this time and seek reimbursement for any out of pocket expenses you incur. Keep detailed records; you will be surprised at the amount of time and expenses.

Protect yourself. You can be subject to civil and criminal liability for your actions. Document your actions and seek the advice of legal and financial counsel before taking any action you are uncertain about.

Be transparent. Little to no communication with the estate beneficiaries raises suspicion. Be transparent about your actions. You have a duty to keep the beneficiaries reasonably informed and doing so will help keep peace within the family.

Seek court approval. If the terms of the documents are unclear or there is a potential for conflict, seek instruction from the probate court.

We rely on family and friends to carry us through life, so it is not surprising we also rely on them upon death. Serving as a personal representative or successor trustee is an honor. You have been entrusted to carry out of the legacy, memory and final wishes of a loved one. Take your role seriously, ask for help and recognize that you were chosen to serve in that role for a reason.

_

Cortney Danbrook provides specialized counsel to individuals, families in the areas of estate planning and administration. She can be reached at (231) 714-0163 or cdanbrook@darlawyers.com.

This article was featured in the April 2018 issue of the Traverse City Business News.

Alcohol Delivered to Your Door…Say It Isn’t So!

Posted on by DAR Law

We have become a society of instant gratification and convenience, fueled by technological innovation. Not too long ago if you were craving pizza, you actually had to go pick it up. Then there were those awful, dreaded trips to the grocery store to stock up on food for the week. Enter the Smartphone and the world of mobile apps, and the way retailers reach consumers has been completely transformed.

Today, within minutes you can order your specialty pizza and it is delivered to door with a few swipes across your Smartphone. As you wait for your pizza to arrive, you can send your grocery list to your virtual ‘personal shopper’ who arrives at your doorstep within hours with everything from paper towels to coffee, to fresh fruits and vegetables. While you’re at it, why not sift through dozens of potential suitors within minutes and get a date for Friday night. With all of this newly found convenience at our fingertips, it was only a matter of time before we would ask, “Why can’t I have beer, wine and liquor delivered to my door?”

For years, Michigan entrepreneurs have been eager to pursue alcohol delivery opportunities through partnerships with web-based and mobile app companies such as Saucey, Drizly and Klink, who have operated in other states for several years. Take the alcohol delivery service DrinkDrivers for example. While DrinkDrivers was operating legally under Florida law in 2014, the Michigan Liquor Control Commission halted DrinkDrivers’ operations for noncompliance with Michigan law when the concept was brought to Ann Arbor. At that time, with a few very specific exceptions, delivery of alcohol directly to a consumer was prohibited in Michigan. While you could get just about everything you could think of delivered to you in the comfort of your home, beer, wine and liquor were the holdouts, which meant you actually had to walk or drive yourself to the store to pick up your alcohol – a strange concept, I know.

Last year, the world of alcohol delivery in Michigan changed with the amendment of MCL 436.1203 and the creation of a new Third Party Facilitator License. Welcome to the world of total retail convenience. Now, when you are craving pizza and a nice local craft beer but don’t feel like going out, your favorite pizza joint (if properly licensed) can bring your hot pizza and cold beer directly to you, before you even have time to chill your pint glass.

With a Third Party Facilitator License, the gap between the retailer’s physical location and the consumer’s home can now be filled. A retailer with a Specially Designed Merchant (SDM) or Specially Designated Distributor (SDD) license can now utilize web-based or mobile apps to facilitate home delivery of beer, wine or liquor to their customers through their own employees or a partnership with a Third Party Facilitator. The benefit is two-fold; an opportunity for restaurants, convenience stores and entrepreneurs alike to boost sales, and an avenue to improve public safety by keeping individuals from drinking and driving.

New applicants seeking a Third Party Facilitator License must comply with all statutory and administrative requirements typical of a retail liquor license applicant with the Michigan Liquor Control Commission. This includes submission of inspection, application and license fees, as well as successful completion of a background check. A Third Party Facilitator applicant is also subject to investigation by the Enforcement Division, including review of the applicant’s background and financial information. Since the Third Party Facilitator License has been classified as part of Michigan’s retail liquor license tier, an existing licensee who holds a manufacturer or wholesaler license cannot have a direct or indirect interest in a Third Party Facilitator License. Once approved, the Third Party Facilitator must continue to pay their annual renewal license fee, maintain accurate books and records, and submit quarterly reports to the Michigan Liquor Control Commission - detailing the name and address of the originator and recipient of the beer, wine or liquor, date of delivery and weight of delivery. The retail licensee or the consumer must pay the fees associated with the delivery, and the Third Party Facilitator must offer services for all brands available at the retail location. A bonus for retail licensees
partnering with Third Party Facilitators, the Michigan Liquor Control Code does not hold the retail licensee liable for a violation made by the Third Party Facilitator - a departure from the liquor laws in other states. Of course, you still must be at least 21 years old to receive the delivery and the retailer or Third Party Facilitator must utilize an identification verification provider or procedures to ensure they remain compliant with the Michigan Liquor Control Code.

So, as you sink into your couch, basking in the warmth of your fireplace and watching the snow fall outside, rest assured that delivery of your favorite craft beer, handcrafted wine or distilled liquor from northern Michigan’s finest is now just a swipe away.

_

Cortney Danbrook advises business clients on liquor licensing and regulatory compliance and provides specialized counsel to individuals, families and businesses in the areas of estate planning and administration. She can be reached at (231) 714-0163 or cdanbrook@darlawyers.com.

‘Delete’ Will Not Save You in Court

Posted on by DAR Law

Employers Have A Duty To Preserve Email Evidence

A salesperson filed a sexual harassment lawsuit against her former employer in violation of Michigan’s Elliott-Larsen Civil Rights Act. She alleged that her supervisor was demanding sexual favors and that he terminated her after she refused. The employer denied the allegations and asserted that she was terminated as a result of her own misconduct.

In discovery, the salesperson requested that the company produce all emails between her and the supervisor. Afraid that the supervisor’s communications with the salesperson could be taken out of context, they deleted all of the requested emails and said they no longer had them. The salesperson filed a motion requesting sanctions for the company’s failure to preserve relevant evidence or spoliation.

In an instant, the employer’s attempt to divert attention away from the supervisor’s emails actually elevated them into the spotlight, making them a central issue in the case. If only they had understood their duty to preserve evidence, the focus could have been on defending the underlying claim instead of using its resources to avoid sanctions related to its failure to preserve evidence.

The Duty

The law does not require employers to preserve every single employment-related document or communication ever created, sent, or received. However, when an employer becomes a party to litigation or should reasonably foresee litigation in the future, the employer has a duty to preserve all evidence in existence at that time that it knows or reasonably should know is relevant to the anticipated action.

The duty to preserve evidence applies to legal disputes under federal and Michigan law. While the Federal Rules of Evidence specifically address this duty and its requirements, the Michigan rules are more general. Further, Michigan courts have not been clear regarding exactly when litigation becomes “reasonably foreseeable.” However, there is no dispute that employers are under a duty to preserve evidence by the time they are served with a complaint initiating a lawsuit, receive correspondence threatening litigation, or get notice of an administrative charge filed by an employee.

In the example above, the employer had a duty to preserve existing evidence as soon as it was served with the lawsuit. In fact, the duty may have applied before then if, for instance, the salesperson, when leaving her termination meeting, said that she was going to sue for harassment.

The Sanctions

Spoliation of evidence refers to the destruction or material alteration of evidence, or the failure to preserve evidence for another’s use in pending or reasonably foreseeable litigation. Spoliation can be intentional or unintentional, ranging from mere negligence in failing to turn off auto-delete to smashing a computer hard-drive with a hammer. When spoliation of relevant evidence occurs, a trial court has the inherent authority to sanction the culpable party to preserve the fairness and integrity of the judicial system.

In Michigan, with respect to spoliation by an employer, sanctions can range from fines to adverse inference or presumptions, dismissal or summary judgment when the spoliation is willful and intentional. The Federal Rules of Evidence expressly limit the court’s ability to impose sanctions only to the extent necessary to correct any prejudice, with more severe sanctions being awarded only upon a finding of the intent to deprive the other party of the evidence.

As the company intentionally deleted the emails to keep them from the salesperson, a court could instruct the jury to presume that the missing emails were adverse to the employer. Even though the emails might be benign, the jury would have to presume that the missing emails established the sexual harassment alleged by the salesperson. Accordingly, the company’s deletion of the emails effectively proved the salesperson’s case and guaranteed its own defeat.

The Preservation

To avoid sanctions, employers should take action to identify the universe of potentially relevant documents that need to be preserved as soon as litigation becomes reasonably foreseeable. First, employers should identify the key individuals or custodians who would have created/have access to relevant hard copy or electronic documents. Next, employers should determine where the documents are located, including whether they are on a server, in a shared network folder or drive, on the custodian’s device, in a mailbox, or elsewhere. Finally, employers should use that information to notify employees of their duty to preserve, institute a litigation hold that would remove relevant information from the automatic overwriting or deletion processes, and collect and preserve relevant data for future use and analysis, if appropriate.

Given the potential impact of spoliation, employers should consult employment counsel regarding the preservation of relevant evidence as soon as litigation becomes reasonably foreseeable. Employers and their counsel can work together to ensure that the process is sufficiently executed and documented on the front end in order to reduce the risk of any subsequent spoliation-related issues. Further, counsel can prepare data retention procedures and work with electronic discovery vendors as needed. Indeed, the company mentioned above surely would have benefited from such counsel and advice.

Lindsay Raymond specializes in employment law, represents employers in all aspects of employment-related matters, and defends employers in employment litigation matters. She can be reached at (231) 714-0161 or lraymond@darlawyers.com.

This article was featured in the December 2017 issue of the Traverse City Business News.

Resume Ruse:

Posted on by DAR Law

The Use Of False Academic Credentials In Employment

As an employer, have you ever questioned whether an applicant’s educational degrees are authentic? If you discovered that a current employee had used a fake degree to obtain employment or advance his or her career with your company, what actions could you take? How would you know whether a degree was, in fact, fake?

DIPLOMA MILLS

As technology and industry advances, employers are increasingly requiring applicants and employees to possess college degrees in order to obtain employment, promotions, or higher compensation in employment. As a result, more and more individuals are using false academic credentials to get ahead. False academic credentials from fake educational institutions are obtained through diploma (or degree) mills. In exchange for a fee, diploma mills award degrees without requiring their so-called students to meet legitimate educational standards for such degrees. The ruse runs deep. Diploma mills might have websites and materials that appear to be legitimate, including course catalogs, faculty bios, and student testimonials. However, diploma mills do not have real classes, faculty, classrooms, or true academic requirements.

In addition to providing tangible diplomas, diploma mills also provide customers with fake transcripts and other falsified documents, such as a “certification” from the fake educational institution verifying the authenticity of the records.

When ordering a fake degree from a diploma mill, a customer is quoted an initial price for a diploma with his or her desired degree, which is negotiable. Customers may also be offered the opportunity to add a second degree, such as an MBA, for a negotiated two-for-one offer. It is not uncommon for the final agreed-upon price to represent less than 25 percent of the original quoted price. The reason being, the only “products” that diploma mills produce are printed papers containing false academic credentials. If a customer pays $500 for a bachelor’s degree and MBA, the diploma mill’s only costs are the paper and printing. Diplomas ordered from mills also can be made to order. For example, in addition to choosing a desired degree, customers also can pick from a list of (fake) school names and elect their desired GPA and year of graduation.

BILLION-DOLLAR INDUSTRY

Surely, fake degrees obtained from diploma mills are few and far between, right? Not so, according to retired FBI Special Agent Allen Ezell, who co-authored with Dr. John Bear the 2005 book, “Degree Mills – The Billion-Dollar Industry That Has Sold Over a Million Fake Diplomas.” Updated in 2012, “Degree Mills” cites sobering statistics regarding the prevalence of fake degrees:

  • There are more than 3,300 unrecognized universities worldwide, many of which are outright fakes, selling bachelor’s, master’s, doctorates, law and medical degrees to anyone willing to pay the price.
  • An international diploma mill run by Americans, with offices in Europe and the Middle East, has sold more than 450,000 degrees to clients worldwide who did nothing more than write a check; its revenues exceeded $450,000,000.
  • The number of earned PhD degrees in the U.S. is around 40,000 to 45,000 each year, while the number of fake PhD degrees bought each year from diploma mills exceeds 50,000; in other words, more than 50 percent of all people claiming a new PhD have a fake degree.
  • The Government Accountability Office looked for fake degrees among employees of less than 5 percent of federal agencies and found enough to suggest that more than 100,000 federal employees have at least one fake degree, many paid for by taxpayers.

MICHIGAN’S FALSE ACADEMIC CREDENTIAL ACT

Given the cheap access to fake degrees, how can employers protect themselves from this fraud? In 2005, the Michigan legislature enacted the Authentic Credentials in Education Act (ACEA, MCL 390.601) “to prohibit the issuance or manufacture of false academic credentials; and to provide remedies.”

The ACEA also prohibits the use of a false academic credential to obtain employment, obtain a promotion or higher compensation in employment, obtain admission to a qualified institution, or in connection with any loan, business, trade, profession, or occupation. It further prohibits individuals who do not have a false academic credential from claiming to have an academic credential for the same purposes.

Importantly, the ACEA also provides a significant remedy for employers who fall victim to the use of false academic credentials by applicants and employees. Employers “damaged by a violation of the ACEA may bring a civil action and may recover costs, reasonable attorney fees, and the greater of either the person’s actual damages, or $100,000.” The ACEA is notable in that proof of the violation compels an award of at least $100,000; proof of actual damages is not required.

IDENTIFYING FAKE DEGREES

Employers suspecting use of false academic credentials by an applicant or employee should review the U.S. Department of Education (www.ed.gov/accreditation) and the Council for Higher Education Accreditation (www.chea.org) websites to identify whether the suspect school is recognized as an accredited post-secondary institution. Employers can further protect their companies by performing a mandatory background check, with a detailed educational component, on all candidates receiving offers of employment for positions that require a college degree.

THE COST OF FAKE DEGREES

The cost to employers who unwittingly employ individuals with false academic credentials is high. Positions requiring college degrees typically command higher salaries and benefits such as employer matching contributions to retirement accounts. An employee who uses false academic records to obtain a position that requires a college degree is unqualified and could expose the employer to lawsuits for negligent hiring, or otherwise harm the employer’s reputation in the community.

-

Janis L. Adams of Danbrook Adams Raymond PLC is an experienced employment law attorney and business owner. You can reach her at jadams@darlawyers.com

This article was featured in the August 2017 issue of the Traverse City Business News.