It is not a very fun discussion to have with your loved ones, but it is essential.  It is particularly important if you want to make sure things are done the way that you want them.  A checklist for your  “talk” should include:

• Last Will and Testament: (that you have one, and where to find it) – If you don’t have one, make one.  It is required in order to pass what is in your estate to the people that you want, with as little expense as possible.

• Medical Power of Attorney: (make sure that your Agents have a copy) – If you don’t have one, make one.  It is required in order to allow someone to make medical decisions for you when you can’t make them yourself, and usually avoids the need for an expensive Guardianship of your Person.

• Statutory Durable Power of Attorney for financial matters: (make sure that your Agents have a copy) – If you don’t have one, make one.  It is required in order to allow someone to handle your financial matters for you, and usually avoids the need for an expensive Guardianship of your Estate.

• Directive to Physicians, also known as a Living Will:  (if you have one, make sure they know where to find it) – This allows you to decide whether you do, or do not, want life support in the event that you have a terminal or irreversible condition.  Often times, spouses are comfortable making that decision for one another, but do you want your adult child or children to have to make that decision for you?  If not, you should prepare one, and discuss with loved ones what you would like in that situation.

• Disposition of Remains: (if you have one, make sure they know where to find it) – This allows you to choose if you want to be buried or cremated so that you do not need permission from a surviving spouse or children.

• Organ Donation: Just signing the back of your driver’s license is not enough.  If you are in that rare 1% situation where you are brain dead and your organs are intact, the hospital is legally obligated to ask your family about donating your organs.  Your license may not be available for family to look at.  Also, your family can override your wishes to donate when you sign the back of your license, so please have that discussion with them while you are healthy, so that they fully understand how you feel, one way or the other.

• Pre-Arranged Funeral Plans: (if you have one, make sure they know where to find it) – This is the contract with the funeral home, and usually requires that you provide the original, especially if it is an older funeral plan.  They usually will not provide a refund, so if you do not use the plan that has been paid for, it will be wasted.  This is also a very good way to make sure that your wishes are followed, and that your family will not feel pressured into doing more than you wanted.

If you need assistance with preparing your documents, please give us a call.  We can help.

If you back up your data by some type of external hard drive, tape drive, or mirror drive, and your backup is in the office with you, it will probably not do you much good if your office burns, floods, gets blown to bits, or someone comes in and steals your external hard drive, etc., when they take your other equipment. If you are only backing up one data set, then you might overwrite good data with data that has been infected by a computer virus.

Offsite data backup has become much more reasonably priced, and often will store multiple encrypted data sets going back several weeks, and also may store your data remotely at multiple locations.  Redundancy is helpful in case one of their offsite backup location burns, floods, or gets blown to bits, and it is always nice to go back to the last data set before you downloaded the computer virus.

It is well worth your while to make sure that you automatically backup your data, such as setting it to back up automatically every evening, so that you don’t forget to run your backup.

If your business data is important to you, take the time to make sure that your data is securely backed up offsite.

When is the last time that you backed up?

The first document that should be prepared or updated is the Last Will and Testament. If a couple no longer wants to be married to each other, they probably do not want to leave their property to each other either.

If there is no Will, and you die before the divorce is final, your spouse may wind up owning all of your property.  If you have minor children that may inherit under your estate, your spouse may wind up being the Trustee of the minor children’s trust and be in control of their money.  If you already have a Will, you will likely want to change the beneficiaries, and may wish to name a non-spouse trustee for any minor children.

You should also update or prepare new medical and financial powers of attorney. This way you can name a non-spouse agent to make medical and financial decisions for you if you become incapable of making them yourself while the divorce is pending.  Chances are that if they no longer wanted to be married to you, or you no longer want to be married to them, you probably do not want them making your medical or financial decisions either.

This leads us to the final and perhaps most important document you should consider preparing in the event you are going through a divorce. It is called a Declaration in Event of Guardianship.

Even if you have powers of attorney, your spouse could file a Guardianship to override any of your powers of attorney if you become incapacitated. Normally, your spouse would be the first person that the judge would name as your guardian. By preparing the Declaration in the Event of Guardianship, you can make sure that person that you are divorcing, or that is divorcing you, will never be named Guardian of your Person or Guardian of your Estate.

If you or a loved one is going through a divorce and has questions about their Will or other estate planning documents, please give our office a call.

In that entity book, you should maintain the bylaws or company agreement, buy-sell agreements, shares or unit certificates, member ledger, and minutes of annual meetings.  We also recommend that you keep any documentation received from the Secretary of State’s Office, State Comptroller’s Office, or Internal Revenue Service (IRS) that relates to the entity.  That way, you are keeping all of the imported entity documents together in one place.

Since it is so important to maintain all of the proper entity documents in one location, it is pretty safe to assume that it is also very important to know where you are keeping the entity book.

When is the last time that you saw your entity book?

Commercial collections have gotten quite a bit more difficult lately with debtor business failing or filing bankruptcy and courts not willing to grant things, such as Receiverships, as much to assist with collections on judgments.

Firms like ours have to look at much more closely at which files we would be willing to handle on a contingency fee basis. That also means that our clients have to look much more closely at which files they would be willing to pay an attorney on a straight time basis to pursue.

I have been encouraging our clients to look at the amount of the claim.  If it is under $10,000, they may consider handling it themselves in Small Claims Court if collection is questionable.

While the court may grant attorney’s fees as part of the judgment if you are represented by an attorney, if the debt is uncollectible, then you won’t be able to recover your expenses and costs.  Also, judges often cut the attorney’s fees awarded in a judgment so that the other side has “gotten something”, and is less likely to appeal the case.  In other words, if you get a judgment, it may not cover the full amount of attorney’s fees that you actually paid your attorney.

If the case is not very strong, or there may be a defense or counterclaim filed, then litigation could get expensive.  However, an attorney is more likely to better prosecute your case or defense if it is more complicated.

Also, if the case is filed in Justice Court, rather than Small Claims Court (even though it is the same Judge on the bench), then the Rules of Evidence and Procedure apply, just like in County and District Court. You are at a distinct disadvantage in Justice Court if you are not represented by an attorney, even though the law now allows corporations to represent themselves in Justice Court without an attorney.

Basically, you need to look at how collectible the debt is likely to be.  If it is a fairly straight forward case and very collectible, it may be something that could be handled on a contingency fee basis. If the debt is under $10,000, you have the option of handling it yourself in Small Claims Court.  If you do not have the time or desire to handle it, the obligation owed is over $10,000, or it may be complex, involve a defense or counterclaim, then you need to weigh if it would be worth hiring an attorney on a straight time basis.

• Husband names wife as his beneficiary on his 401(k). Husband and wife divorce and the wife gives up any claim she has to the husband’s 401(k) in the divorce settlement.  Husband never gets around to updating his beneficiary designation on the 401(k).  Husband dies.  Who takes?  [The ex-wife!]

• Husband and wife divorce and husband then changes his beneficiary designation on his 401(k) to his adult children.  Husband marries wife 2, then dies a few years later.  Who takes?  [New wife 2!]

Why?  Federal law governs 401(k) plans, so under Employee Retirement Income Security Act, or Erisa, if you are married, your spouse is presumed to be your beneficiary, regardless of whom you have listed on your beneficiary designation form.  That means that if you are married, unless your spouse signs a waiver, or has consented to someone else being named as your beneficiary, they are presumed to be the beneficiary.

Under Erisa, if you are single, your beneficiary of your 401(k) on your death is presumed to be the person or persons named on your beneficiary designation form.  So if you have named a prior spouse (now ex-spouse) as a beneficiary on your 401(k), and don’t get around to updating your beneficiary designations, they may receive a nice windfall upon your death, even if they waived the right to the money in a divorce.

How do you get around those problems with 401(k)s?  Well, the most obvious thing would be to make sure that you properly update your beneficiary designations if you are single.  If you are married and do not wish to leave your 401(k) to your spouse, see if they will sign a waiver or execute the consent to name someone else as a beneficiary.

Alternatively, you might consider cashing out or rolling over your 401(k) into an IRA when you change jobs or retire.  State law controls IRAs; not federal law.  If you are married and live in a community property state, you may not be able to gift your spouse’s community property interest in the IRA to your named beneficiary without their consent, but you may gift your share of the community estate.  Also, with an IRA, if you later divorce, the law usually treats ex-spouses as if they have predeceased you, so your IRA will usually pass to your alternate beneficiaries or to your estate by default if no other beneficiaries are named.

That is why it is always important to review your beneficiary designations on your accounts at the same time as you periodically review your Will to see if everything is up to date.

The new rule requires employers to post the notice in “conspicuous places where they are readily seen by employees.” That notice also tells employees how to complain to the NLRB if they feel their NLRA rights have been violated.

This is a dramatic step to increase union involvement, and all employers need to be aware of the new requirements.

Planning ahead to make sure that employees and vendors can still be paid, that receivables can still be collected, and that work can still be done may mean the difference between the business staying in business, or closing the doors for good.

Who has access to the business checking account is just one part of business succession planning.

You may be able to set up personal accounts as “Payable on Death” accounts, or “Right of Survivorship” accounts, so that on your death you can make sure that someone has access to the funds on those accounts.  But when you have a business conducted under a legal entity, like a Limited Liability Company (LLC) or a Corporation, just because a Member, Shareholder, Officer, or Director dies, doesn’t mean the entity dies.  You cannot have a “Payable on Death” account for an LLC or a Corporation. That means that if you want to make sure that someone can access the funds in the account, they need to already be a signer on the account.

If you are incapacitated, you may have Powers of Attorney (medical and financial) that allow you to name an Agent to make medical and financial decisions for you, personally.  However, those Powers of Attorney will not usually allow your Agent to act for you in your role as an officer or director of a business entity.  Again, that means that if you want to make sure that someone can access the funds in the account when you are incapacitated, they need to already be a signer on the business account.

Take some time to think about and prepare a succession plan if you have a business.

If you have any questions, please give us a call.