Hazards of joint ownership bank accounts

What not to do:

  1. Do not put a neighbor or a friend on your Joint Account. The new joint owner can withdraw 100% of the money in the bank account without your knowledge and approval.
  2. Banks and other creditors can garnish all money in the account for the debt of any of the joint owners, even if the money in the account does not belong to the joint owner. And the garnishment from the creditor can be done without the owner knowing first.
  3. Transfers out of a joint account could be construed as a gift and then, unintentionally, make you ineligible for Medicaid benefits.

What to do: See: . http://www.zeiglerlaw.com/how-to-avoid-probate.html.

  1. Make sure that you unquestionably trust the friend/child/relative whose name you add to the bank account or investment account.
  2. Make sure that you know that the friend/child/relative to be your new joint owner does not have any judgments against them, is current in their own mortgage payments, does not owe any State or Federal income taxes, or is not liable for unpaid income or payroll withholding taxes, and is current in their child support and/or alimony obligations.
  3. Make appropriate use of a power of attorney. A power of attorney can be withdrawn at anytime.   That keeps control of your assets within your control.
  4. Best solution? Prepare and fund a revocable living trust. See more: http://www.zeiglerlaw.com/estate-planning-.html

Call  248.643.9530 or email info@zeiglerlaw.com for a consultation.

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How do you avoid probate?

  1. Be sure to have all of your assets in a revocable living trust. This means that your bank accounts, your brokerage accounts and CD monthly statement registration statements read as follows: “Mrs. XYZ Revocable Living Trust dated 01/01/2016”. This includes stocks, tax exempt bonds, US savings bonds, and membership interests in LLCs and stock in privately held small corporations. See zeiglerlaw.com/how-to-avoid-probate  Most of the time, this does not happen, but titling assets in this correct manner is what a properly funded trust looks like.  zeiglerlaw.com/estate-planning
  1. Have every asset you own in joint ownership with the right of survivorship (JTWROS) with another highly trusted person. This works to avoid probate, but creates a lot of other (avoidable) problems. For example, joint ownership does allow all of the other joint owners complete power over all of the values in the joint accounts – even though the one joint owner did not contribute one nickel to creation of the values in the joint accounts.

Hazards of Joint Ownership: True story: Our Michigan elderly widow added her adult daughter to her own bank account, JTWROS, on a Friday. The plan was to avoid probate. When the widow went to withdraw her money the next Tuesday to pay for a needed medical treatment, her money was gone. Seems daughter had a Florida judgment against her from a Florida bank, and the Florida bank successfully garnished all of the Mom’s Michigan bank account to satisfy daughter’s debt, and Mom was unable to get her medical treatment.

There are other ways to avoid probate that can be explored more thoroughly in a consultation with one of our experienced lawyers.

Call  248.643.9530 or email info@zeiglerlaw.com for a consultation.

Overtime Violations; New O/T Salary $913 Effective 12/1/2016

Overtime Violation Found: The Wage and Hour division of the US Department of Labor fines Citibank Group $1,967,689.00 for misapplying the overtime exemption rules for administrative employees. It is a result of the audit of the internet and security technology subsidiary of Citibank. This affected several hundred workers.

The FLSA provides an exemption from both minimum wage and overtime pay requirements for individuals employed in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status.

Employers Beware: “Employers must understand that simply paying an employee a salary does not necessarily mean the employee is not eligible for overtime,” said Wage and Hour Division. “The back wages and penalties paid in this case should cause other employers to take note, and to examine their pay practices. The Wage and Hour division will continue its vigorous enforcement of the law, including the overtime regulations, to ensure that workers take home every penny they have rightfully earned.”

Effective 12/1/2016, the weekly O/T salary requirement will be increased to $913.00 from $455.00. See DOL news release: https://www.dol.gov/newsroom/releases/whd/whd20160804

Should Attorneys Ever Sue Clients?

We have all been there—the client you spent an extraordinary amount of time, attention and devotion to, and then fails to pay the final bill. You can keep sending the invoice or making phone calls, but it becomes apparent they are not going to pay. Do you start a suit?

We have been involved in numerous suits representing attorneys collecting their fees, and clients being sued for fees. Here are a few tips:

  1. Wait until two years after the very last activity, and then wait one month more before starting suit. To determine the date of last activity, we use either the final order (Withdrawing as counsel, or Final order of the case) OR the very last billed date. Whichever is later–It is imperative to wait this period.

The Statute of Limitations for Breach of Contract (see the second point below) is six years. The Statute of Limitations for Malpractice is two years. If you start a suit for collection within that two-year period, the client will counter-sue for malpractice. We have heard countless times, “But I didn’t do anything wrong” or “They would never counter-sue for malpractice.”

Doesn’t matter—the counter-suit alone will be sufficient to chill your collection activities. Additionally, you will have to report it to your Malpractice Insurance Carrier, and they may step in to take over the matter!

Recently, the Court of Appeals addressed this issue in Bishop & Heintz, PC v Finch, where the Law Firm initiated collection after the two years, and the client counter-sued (for $3 Million Dollars!) alleging malpractice. The Court threw out the counter-suit, as it was filed more than 2 years after the last activity, and the Statute of Limitations barred the action.

Wait the two years. The client will be barred from filing a counter-complaint for malpractice.

  1. Always have a signed written engagement letter. Always. While oral contracts are enforceable, they only create problems and will make collection much more difficult. Within the agreement include at least:
  • What are you doing, and more importantly, what you aren’t If filing a suit for damages, does the representation include collection, or just getting the judgment? What if a counter-complaint is filed? If a criminal matter, does representation include a bond hearing (should the client violate bond), or probation violation hearing, or subsequent appeal? What if the other side files bankruptcy, or an Estate is needed? It is more important to list what legal actions are not covered by the retainer, as compared to what is.
  • Is the agreement a contingency, hourly or fixed fee? If contingent, include an hourly rate in the event the client discharges you. If a fixed fee, again it is very important to clarify what is not included, in the event additional legal matters arise. List out the hourly rates of the persons working on the file.
  • When will the client be billed?
  • Is there interest on the outstanding amount? If so, limit it to the 7% per annum allowed by statute.
  • Are costs extra, and what do costs include?
  • How will you communicate? Will it include E-mail?
  • What is the policy for destroying the file?

This way the collection activity becomes a simple breach of contact action on a written agreement.

  1. Continue to send the invoices for two (2) years. Don’t stop, simply because the payments stopped. There are two reasons for this–one legal, one practical. As you continue to send the invoices, it becomes an Action on Account Stated. The client has not objected to the bills and it is presumed they have no objection to it. Further, in the (unlikely) event the matter goes to trial, we have found it a very effective and powerful point of persuasion to bring out the invoices, one-by-one, and point out how the client never objected to them month, after month, after month.
  1. If you do start suit, start it in the venue where the Defendant resides. Many lawyers think it is appropriate to initiate suit in the same venue where the action “occurred” (either the court action, or the lawyer’s office), however the correct venue is actually where the Defendant resides. (Interestingly enough, if you initiate a Small Claim, then you can start it in your local District Court and it will remain there if removed to the General Court.)
  1. Start suit as an Action on Account Stated with the appropriate affidavit.

However, before you even start suit, or pursue this course of action, there are a few things to consider.

  • Is your client collectible? If not, what good will a Judgment do?
  • Will this person retain you in the future? While not likely, it is always possible.
  • Will they write a bad review if you start an action? (The bad review may cost you more in new clientele than you could gain on the fee itself.)
  • Your malpractice insurance application may ask if you have started suit against clients. If the carrier sees too many suits for collection, this can raise concerns and cause your rates to increase.

In short, you must weigh the benefits and the detriments before considering whether to start suit to collect an outstanding fee. Taking a few careful steps will reduce the aggravation and ease the litigation process.