If I give my lawyer money to hold for use in a case he is handling for me, is it safe?

Safe is a relative term. Is it as safe as being in a financial institution with the $100,000 FDIC insurance? No. But, the Michigan Supreme Court requires every lawyer in the state if he or she holds clients' money, to place it into his clients trust account. This means it must be in an account separate from the lawyers general business account. The client funds are never co-mingled with the lawyer's money. The lawyer may not borrow from the trust account and later repay it. That trust account is sacrosanct.

Whenever there is a case of a lawyer dipping into that trust account, the lawyer almost always is disbarred, sued civilly for the money and at the same time usually a defendant in a criminal case being charged with embezzlement and theft. It has been my experience that you can put the deposit into your lawyers trust account with confidence; it will still be there when your business deal closes.

Previously published by Michael W. Hutson in the Daily Tribune.

Out of curiosity, if someone dies with no relatives, who can or will bury that person?

Michigan has a law that says if the deceased has no known relatives, a county public administrator can ask the probate court to appoint him as the administrator of the deceased estate. This will give him the authority to bury the person. Now if there are known heirs and they elect to do nothing, the public administrator has to wait 42 days before he can ask the court for the authority. Presumably the body is kept in storage while the 42 days tick down. However, the law also gives a county medical examiner (county coroner) the authority to step in right away to bury the person if the county public administrator does not want to wait 42 days.

Previously published by Michael W. Hutson in the Daily Tribune.

My best friend and I are going to start a business together. My father says we should do it as a partnership. That’s what he used when he started his business. My friend thinks we should use an LLC. What is the difference?

The difference is a limited liability company (LLC) is a hybrid business entity which Michigan adopted about 10 years ago. It combines the best features of a partnership and a corporation. A partnership exposes a partner to unlimited personal liability. This means if a partner creates a liability, you as his partner are also liable for its payment. Your personal assets outside the partnership are at risk.

A corporation will insulate your personal assets from a corporate obligation. The exception is of course, if you personally did an act which created the liability. But, if your fellow shareholder created an obligation only he and the corporation are at risk. Let me give you an example: You and your friend are in a partnership and a corporation. Your friend goofs up and creates a liability of $100,000. In a partnership you are equally liable including your personal assets. In a corporation if the corporation does not have assets of $100,000, that’s too bad for the creditor. Your personal assets can’t be touched.

If you and your friend were in a LLC, his acts can not be attributed to you. This means your personal assets are not reachable. The LLC gives you the tax advantages of a partnership and the limited liability of a corporation.

Since the law creating LLC’s in Michigan, when clients come to me to form a business entity, approximately 98% of the new entities formed were LLC’s. Depending on the facts of each business case, sometimes we form a corporation, but those are unusual cases.

Under the circumstance, I think you would probably be better off forming a LLC.

Previously published by Michael W. Hutson in the Daily Tribune.

Why do some cases have a jury decide the case and others do not?

The answer lies in England when it emerged from the Dark Ages. England then and now did not have a system of law, as we know ours. Its lawgiver was its King. He was also the judge and the court. He solved all disputes. But, as the population of England grew larger, it became difficult for the King to spend all his time deciding disputes. To give him time to do other kingly jobs he appointed a man called the “chancellor” to take care of deciding disputes for him.

The law at that time consisted of two areas: actions at law and Equity. Actions at law were typically routine matters such as the collecting a debt owed by one person to another or someone who trespassed on another person’s land. These matters were covered by “writs”. These were more in the form of a “fill in the blanks “proceeding. However, as there were more people, their legal dealings also became a little more complex. Many of these complex problems were about things that the “writs” were not designed to deal with. An example would be if a person needed the Chancellor to prohibit someone from doing something. Today we would call it a request for an injunction.

These extraordinary problems usually called for some discretion and judgment in fashioning a remedy. Over time, these types of cases were referred to as being in Equity. This meant the Chancellor would usually try to come up with a fair solution which that did not involve an award of money.

When this country adopted its constitution, all of its basic concepts of law were taken from our English heritage and tradition. Many believe that the Magna Carta was the document that provided the English with the right to a trial by jury. When the right to a trial by jury was included in our constitution, it applied only to those cases which had traditionally been cases for actions in law which were covered by “writs".

So, for instance, when a divorce was finally allowed in England, it was only by the permission of the Chancellor. It was not an action at law, which a jury trial was allowed. We have followed that. Even today only, a judge, not a jury, hears cases involving divorces and injunctions.

Previously published by Michael W. Hutson in the Daily Tribune.

I wanted to buy some shares of stock as a graduation gift for my godson on his graduation from high school. When I told the broker I wanted him to send the stock certificates to my godson, he said he would have to charge extra for the stock certificates. He said that unless I paid this fee they would be registered electronically in my godson’s name. What is going on?

Welcome to the electronic age. Until the last 15 years or so, when someone bought shares of stock, after they were paid for, the mail man delivered your stock certificates. With the advent of the computer and the “web”, companies realized they could save money and headaches by registering the stock electronically in their headquarters.

To encourage everyone to have electronic shares they imposed an extra fee if someone wanted the paper certificates. When you think about it, it does make sense. If you have ever lost a stock certificate, you know that before you could sell it, you had to replace it. This meant you had to file an affidavit that it was lost, then sign an indemnity agreement and finally you had to buy an insurance policy for the company whose stock certificate was lost. This is for the protection of the company if the original stock certificate ever turned up. After you have the paperwork, you have to go to a bank or stock broker to have your signature guaranteed and wait an interminable period of time to get the proceeds from the sale of the stock.

If your certificates are registered electronically, you never have to worry about losing a stock certificate or filling out all the paperwork or paying for an insurance premium.

Although, I must admit, the actual certificate with its embossed engraving with colors is more impressive as a gift then a piece of white paper saying there are x number of shares of stock registered in your name somewhere in the electronic world.

Maybe in your case the extra fee is worth it.

Previously published by Michael W. Hutson in the Daily Tribune.

My mother was widowed some years ago and has found a new friend with whom she is now living. Both he and my mother receive pensions and great medical benefits from their former spouse’s employers. Neither one will marry the other because they will lose their benefits. I think if they continue to live together it could be a common law marriage and they will lose their benefits anyway. Is this right?

No. Michigan abolished common law marriages about 40 years ago. Common law marriages derived its legitimacy from the frontier days when homesteaders and settlers did not have the luxury of having ministers or priests handy to preside over a marriage ceremony. Justices of the Peace were sometimes missing too. To avoid branding children illegitimate because their parents considered themselves married but did not have a marriage ceremony, the courts when it came to inheritances and the like, said if a couple held themselves out as a husband and wife, their offspring was considered legitimate.

As the years wore on, the frontier disappeared and the opportunity to have a marriage ceremony was not a problem anymore. So, the reason to recognize common law marriages disappeared. As a result they are not recognized in Michigan unless they were entered into before 1963.

Pension and health care providers must continue to provide benefits to your mom and her friend by contract. All the companies can stop providing benefits when the person is no longer single. That is precisely why it appears that your mom is living in the manner she is. Perhaps you might suggest to your mom to do as a friend of mine did: she arranged to have a ceremony blessing their commitment to each other in lieu of a marriage. While this union of your mom and her friend may not sit well with some people, this is a case where the economics of the situation seemingly over ride some moral concerns.

Previously published by Michael W. Hutson in the Daily Tribune.

My neighbor and his wife are forever arguing and fighting with each other. I am concerned that she does not have enough courage to do something about it. Can I go to court and get an order prohibiting them from fighting with each other?

You have noble intentions, but the law says you do not have “standing” to do what you want to do. Standing is a term of art, which means you do not have a legal interest in their dispute. If you do not have a legal interest in the matter, you may not start a lawsuit.

Can you imagine what would happen in the courts if anyone could start a lawsuit over your personal affairs or interests? Think about a situation where you are a beneficiary in a will. Your neighbor finds out and thinks you should not inherit what the will says you are to receive. So, he starts a lawsuit. He says you are a bad guy and you used undue influence to get the inheritance. If everyone had the right to do this, the courts would be clogged with people who have no interest in the matter except they feel like expressing their own opinion. The courts are busy enough with serious matters without having to contend with more lawsuits that are frivolous.

The courts have said unless the subject of the lawsuit affects you directly, you may not participate.

So, while you may not start a lawsuit for your neighbor, maybe you should have a talk with his wife about some abuse counseling. There are a lot of agencies and people who are able to help. Maybe soft words of encouragement and help will be more useful than the formal, legalistic approach a court would use, if they let you.

Previously published by Michael W. Hutson in the Daily Tribune.

My wife and I took a cruise to Greece last month. While on the cruise she slipped and fell.  The ships doctor gave her an exam and said she just sprained her wrist and gave her an ace bandage. When we got home her wrist was still hurting so we saw our own doctor. He had x- rays taken and determined that she had broken her wrist. Because she was not properly diagnosed, he had to set her wrist to correct the bones that were healing incorrectly. When we called the cruise line they said it was too bad but the doctor was not their employee and we should deal with him. We don’t know where he is. He isn’t employed by the cruise line any more. What can we do?

The simple answer is: find the doctor. The not so simple part of the answer is trying to find him. While one would assume a ships doctor would be an employee of the cruise line that is almost always not the case. They are hired as independent contractors. This means the cruise line ordinarily has no liability for any malpractice the independent contractor may cause.

Further complicating any potential lawsuit against the cruise line is an 1823 ruling stating that ship owners are considered responsible for the medical care of its crew members but not its passengers.

Your only relief may be to track down the doctor in whatever country he is living and hope the law in that country can give you some help.

Previously published by Michael W. Hutson in the Daily Tribune.

Probably the easiest signal to recognize is an even that is going to involve a significant sum of money or a life style change. Many times that event involves both money and a life style change. One of the most common events is the purchase or sale of a home. That event will probably involve more money than you have spent in your entire life. Not only will it involve your financial well being but also a life style change. You will be moving into a new neighborhood and probably adopting a more expensive standard of living.

You might say, "Why should I pay a lawyer when my real estate agent will do every thing for me?" Well, that may not be necessarily true. What if the real estate agent is a "dual agent"? That means he is representing both the buyer and the seller in the transaction. Is he really representing your best interest? What if he is acting as a "transactional agent"? This means he is only doing what is necessary to make the deal work. He is neither representing you nor the other party.

You need someone who will represent only your interests. For instance, if you are a buyer, you want the purchase agreement to read that you are buying the property subject only to those title restrictions that are recorded in the Registrar of Deeds office. Those can be checked before you are obligated to buy the property. If you are a seller, you want the agreement to read the buyer is taking the property subject to any title restrictions on the property, recorded or not. This means if there is an easement, but the easement was never recorded you may discover that it is there only when a utility company is digging up the lawn to make a repair. If the utility winds up sawing down that beautiful tree growing in the easement you will be really upset. But, a lawyer might have been able to save you this grief if he had reviewed the purchase agreement before you signed it.

What if you are buying the home as a rental investment? A lawyer can show you how instead of holding it in your individual name, you can substantially limit any liability you may have and get some tax savings by forming a limited liability company instead of owning it in your name or a corporation. This kind of advice is ordinarily beyond the real estate agent.

A lawyer only has one client in a transaction. He or she will be the first to give you legal advice that represents your interest and the interest of no one else.

Previously published by Michael W. Hutson in the Daily Tribune.

The transfer of wealth is typically such an event. There are a lot of different ways this happens. Some of it is entirely unintentional such as losing your wallet or your shirt at the casino. That sometimes brings you to the bankruptcy lawyer. The transfer that can be done intentionally is where we should devote some time. The largest transfers usually take place upon death.

Too many times this transfer takes place by ignoring the planning process and letting the law do it for you. This typically is done either through property being passed on because it was held jointly with someone or because someone was named as a beneficiary of an insurance policy or a retirement plan.

But, why leave an inheritance to chance? Your odds of doing the right thing by ignoring the planning process are as likely to get the results you want as your chance of winning the big jackpot lottery.

Why not take the time to do a will or a trust? Do you really want your kids to share your estate with your spouse? Isn’t it a better idea to leave it all to your spouse? Surely she can use the money wiser than a couple of pre teens or teenagers. Do you want the Probate court to tell your kids who their guardian will be if you and your spouse are killed? Don't you think you would have a better idea who is more temperamentally and morally suited to be in charge of them, instead of a judge in Pontiac, Michigan?

Wouldn't it be better to delay the distribution of your estate to your kids when they are in their 20's and more mature instead of when they turn 18 and can buy a Corvette? A trust could do this. Most likely you spend more time planning and shopping for a new car than you do planning who and when your beneficiaries will receive your estate after you die. But, don't you think a visit to a lawyer to discuss some of these things would save your family a lot of complications after you are gone?

A lawyer can make the transition of your estate to those you want to have it without a lot of the confusion and problems that could go with it if you ignore some planning. As the advertisement for changing oil on TV said while looking at a gummed up motor, "you can pay me now, or you can pay me later." Why don't you do it now, it will probably be cheaper both financially and emotionally.

Previously published by Michael W. Hutson in the Daily Tribune.