Month: January 2011

You Pay For What You Get

January 30, 2011 /

“You get what you pay for,” is a phrase that we’ve all heard so much it is has become almost a cliche.  What I’ve come to realize is that, although “you get what you pay for” may not be true in all cases, “you pay for what you get” seems to be true in all cases.  Whether the “cost” is money, like we typically think, or something intangible such as lost time, lost opportunity, worry, regret or pain.

You may have read my post about the Honda, the big screen and estate planning.  The idea being that we “pay” (money, time, emotions, etc.) for something based on the perceived value it has to us.  I was reminded of this when I talked recently with a nice gentleman.  At one point he said, “that’s more than I’m willing to pay.”  It doesn’t matter the context – estate planning or business planning – there’s a lot going on behind the scenes in that statement.

It could be a reflection of lack of concern, lack of understanding how things work (estate planning or business planning), not fully understanding the situation, or valuing other things higher than the estate planning or business planning being considered.  Ultimately, I think it is a combination of all of these (and more), although I see the value comparison being the deciding factor in most situations.

I’m not saying any decision is good, bad or indifferent.  I think it is good for us to understand how we make purchase decisions and to not forget all the non-monetary considerations that come into play and how they, ultimately, lead us to the decision we make.

How do you make a decision between two or more “purchases”?  Maybe it’s getting an iPad versus purchasing more life insurance, maybe it’s leasing a new car versus purchasing a new one, or getting a “discount” haircut versus going to a salon.  When you stop and think about the monetary and non-monetary considerations, how do YOU make your choices?  I would love to hear what you think of this!

Michael Lichterman is an estate planning and business planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on estate and asset protection planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses and pet planning.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Intangible Assets and Your Burning House

January 23, 2011 /

As a Grand Rapids, Mi estate planning lawyer who focuses on helping you plan for your Whole Family Wealth™, I consider it my calling to determine what my clients truly care about and then, and only then, move forward with helping them plan to make sure their wishes are followed if something happened to them.

The tragedy of several West Michigan homes burning down (or partially down) over the past month has provided a prime example of what this Whole Family Wealth™ is.  I think most would agree that having your home burn down is a horrible tragedy, only made better if nobody is injured.  So what does a home burning down without any human injury have to do with estate planning?

Ask yourself this question: if your home was on fire, would you reach for the money you may have hidden in a drawer  or would you try to save the photo album that has the only pictures of your children as babies?  If you answered the way I expect you did, ask yourself if “traditional” estate planning is right for you or if you need something more.  Traditional estate planning focuses on money and assets . . . who you are and what is important to you is not a consideration.

Give it some serious thought because your answer (and more importantly your action or inaction) is what will shape your legacy.  Don’t make the mistake of thinking a “legacy” is something you have to wait until the end of your life to create. Call us at 616-827-7596 to schedule a Peace of Mind Planning Session to discover how you can share your values, insights, stories and experiences . . . not just your “stuff.”  Mention this blog post and we’ll waive the planning session fee (a $750 value!).

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on estate and asset protection planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses and pet planning.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

What Is A Michigan Operating Agreement?

January 16, 2011 /

As a Grand Rapids, MI business lawyer, I have helped many Michigan entrepreneur business owners start their businesses.  Many of them want to form their business as a Limited Liability Company (LLC).  This leads us to a conversation about the LLC Operating Agreement.  To my initial surprise, many of the business owners I meet with ask, “what is an operating agreement?”

A LLC operating agreement is like Bylaws for a corporation.  Don’t worry – if you don’t know what Bylaws are, I will cover them in a future post.  According to wikipedia, an operating agreement is “an agreement among [LLC] Members governing the LLC’s business, and Member’s financial and managerial rights and duties.”

LLCs are a “creature” of state law, so it is important to note that you can find Michigan’s Limited Liability Company Act here.  Michigan law defines an operating agreement as “a written agreement by the member of a limited liability company that has 1 member, or between all of the members of a limited liability company that has more than 1 member, pertaining to the affairs of the limited liability company and the conduct of its business.” (MCL 450.4102(2)(r)).  Pretty close to the wikipedia definition.

Although not required, an operating agreement is a very important tool for two key reasons: (1) it forces the Members (owners) to determine how they want the LLC internally governed, and (2) it puts those directions down on paper so it’s not left up to “he said, she said” if there is a disagreement among Members down the road.  If you don’t have one, you will be at the mercy of the LLC statute’s default provisions.  It’s your business, don’t YOU want to decide how it’s governed or do you want the State of Michigan to tell you?!

And in case you are thinking “I’m the only owner, an operating agreement isn’t even valid with only one owner,” think again.  Michigan law specifically authorizes operating agreements for single-member LLCs and having one is a great idea for the #1 reason mentioned above and as additional support for the “limited liability” provided by the LLC in the first place.

Thinking about starting a business and want to form an LLC?  Already have an LLC but not an operating agreement?  Or do you have an operating agreement and not understand why or what it means to your situation?  Call us today at 616-827-7596 to schedule a comprehensive Small Business Strategy Session.  And if you mention this blog post we’ll waive the session fee (a $1,250 value!)

Michael Lichterman is a relationship-based business attorney who leverages his business, marketing and legal knowledge to help business owners and entrepreneurs create a Foundation for Business Success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends and trusted confidants.

What is a Michigan Limited Liability Company (LLC)?

January 9, 2011 /

As a Grand Rapids business lawyer, great folks routinely call our office and say “I need to form an LLC.”  When I ask them why, the answers range from “because I want to start a business,” to “my buddy started one and said it was the best way,” to “my CPA suggested I form one.”  This lets me know that there is some confusion among business owners and entrepreneurs about what, exactly, a LLC is.

As you can tell by the title of this post, LLC is the abbreviation for Limited Liability Company.  The law on Michigan LLC’s can be found here.  In short, a LLC is a form of legal business structure under which you can operate your business.  Some other well-known forms of business structure are corporations and partnerships.

Michigan LLCs are typically more flexible in their formation and operation than corporations and typically provide a greater level of liability protection than a partnership.  The “owners” of a LLC are called “Members.”  There can be as little as one Member (referred to as a single-member LLC or SMLLC) and up to as many Members as you want (collectively referred to as multi-member LLCs or MMLLCs).

LLCs, like corporations, offer a certain level of liability protection for the owner’s personal assets if certain legal and practical steps are taken.  This, combined with the flexibility mentioned above, is why many business owners choose to formally operate as a LLC.

This brief explanation would not be complete without mentioning everyone’s favorite topic…taxes.  By default, LLCs are taxed as a “pass through entity.”  That means that the profits and losses “pass through” the entity down to the owner(s) personal tax return…the LLC does not pay the taxes, the owner(s) does.  Although that is the default, there are elections that can be made to be treated differently for tax purposes.

It is important to keep in mind that a LLC is not always the best way to form your Michigan business.  The considerations mentioned above are just the “tip of the iceberg.”  Starting a Michigan business without talking with a relationship-based Michigan business attorney could cost you (and your business) dearly down the road.

Looking to start a business or want to make sure your business has the correct foundation for continued success?  Call us at 616-827-7596 for a comprehensive Small Business Strategy Session.  Mention this blog post and we’ll waive the strategy session fee (a $1,250 value!).

Michael Lichterman is a relationship-based business attorney who leverages his business and legal knowledge to help business owners and entrepreneurs create a foundation for success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends and trusted confidants.

Inheritance Protection and Why Your Family Will Thank You

January 4, 2011 /

Inheritance Protection . . . what does that mean?  Well, some recent conversations I’ve had and reading this article have brought to light how unknown this very important estate planning strategy is.  What if you could ensure that your beneficiaries (children, grandchildren, or other friends and family) would receive your the inheritance you provide for them in a way that could benefit them, yet not be open to creditors, predators, divorce, financial immaturity and lawsuits.  Would you do it?

Unless your “estate” is quite small (including life insurance), I generally recommend that you do just that.  Why?  Read the article linked above.  Although there is no sure thing, I think it is quite likely that Mr. Martin’s story would be very different had he received his inheritance in an inheritance protection trust.  The trust could have provided for his general needs (in the Trustee’s discretion) and still not be accessible by creditors, financial predators, divorce or lawsuits.

I’ll leave you with one last example.  I met with a couple some time back and when I mentioned inheritance protection, the husband said, “that must have been what my grandma did for my aunt.”  Obviously, I wanted to know more and he was kind enough to share the story.  It turns out that his grandma had set up inheritance protection trusts for her children.  His aunt had approximately $500,000 in the trust for her benefit.  And guess what?  She went bankrupt!

I know you are probably thinking, “great, what a waste of $500,000!”  Not at all.  Because Grandma had set them up as inheritance protection trusts, the trust assets were not part of the bankruptcy.  Now if Grandma had set it up like the vast majority of people and attorneys do, that money would have gone outright to the aunt and she would have lost it!  Is that what you want for your family?

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned business succession and pet planning – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.