Employer Wins: Non-Compete Enforced. No Geographic Limitation.

     Nice when employer wins. Here, the Michigan Court of Appeals determined that Employers may place reasonable restrictions on employee’s use of Employer’s customer information and relationships. The Court ruled that a former employee (office manager) must not contact customers of the Employer for 12 months regardless of geographical location.

The Employer won because the employee signed:

 1. Non-Competition and No Solicitation Agreement; and

2. Employer Handbook that contained these restrictions.

     Employers requiring employees to sign non-compete agreements and employee handbooks containing restrictions on competition and the using of Employer’s confidential and proprietary information permit valid enforcement when these restrictions are violated. Nice when our Employer wins! Case: Mid Mich Med. Billing Serv. v. Williams, _____ Mich. App. _____, (2/18/2016); unpublished; Docket #323890; Genesee County Circuit Court Case LC No. 13-101000 CK.

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4TH BIGGEST MISTAKE IN ESTATE PLANNING (Part 2) – HAZARDS OF JOINTLY OWNED REAL ESTATE

     It is much easier to add a child’s name, or your girlfriend (boyfriend’s) name on the title to real estate, than it is to remove that name on a real estate document.

Consent Required. If you need to remove a joint tenant’s name from title to real estate, you have to get that person to sign a quit claim deed that ends their ownership of that piece of real estate. For example, a joint tenant must sign the quit claim deed in front of a notary conveying the real estate back to the original owner. Children can be one set of problems, but ex-girlfriends and ex-boyfriends may hold grudges and may want money or something else to bargain for the release their interest in real estate.

Gift Tax and Income Tax Issues. Gift Tax Issues: Adding child’s name or a girl/boyfriend’s name on the title to real estate legally is a gift of 1/2 Fair Market Value of the property. If, for example, Mom owns a house worth $50,000 and adds daughter’s name on the deed. That is an immediate gift of $25,000 to the daughter. Since that $25,000 is greater than the $14,000 annual gift exclusion for the current year, a Gift Tax Return should be filed for the $11,000 that exceeds this annual gift tax exclusion amount. There is a legal obligation to file a US Gift Tax Return, but that discussion is beyond the scope of this short blog.

Donor’s Tax Basis: Making a gift of real or personal property, the law says that the donee – receiver of the gift – receives the same tax basis as the donor – the person who gives the gift. That means that – using the same example – Mom bought a house in 1970 for $50,000. In 2010, Mom adds the daughter’s name on the deed. Mom dies and daughter sells the house in 2020 for $125,000. The daughter will have to pay capital gains tax for amounts over the 1970 value of the home of $50,000 – Mom’s tax basis. So, the daughter owes tax on the capital gains of $75,000 ($125,000 – $50,000 = 75,000). Daughter did not plan for that – normally. Bad result.

Solution. A better result is to either go through the Probate process with a Will, or to title the home into the homeowner’s revocable living trust. In both cases capital gains taxes are completed and legally avoided, because the beneficiaries legally get a “step up” in tax basis as of the date of death of the other joint owner – so that no taxes are due at all when the property is sold at present date fair market value.

 

            Call (248) 643-9530 or email info@zeiglerlaw.com for a consultation.

For more information visit our website http://www.zeiglerlaw.com/how-to-avoid-probate.html

4TH BIGGEST MISTAKE IN ESTATE PLANNING (Part 1) – HAZARDS OF JOINT OWNERSHIP OF BANK ACCOUNTS

 

  1. Each joint owner owns 100% of the entire account.

               One of the biggest hazards of joint ownership is the right of each owner to withdraw all of the money from the joint account. Joint ownership means each joint tenant possesses 100% ownership of the account. So you can open a bank account and deposit all of your own money into it, but as soon as you add another person’s name to the account the money becomes just as much theirs as it is yours. Unfortunately, withdrawal from jointly owned accounts is not dependent upon who the money truly belongs to – each joint tenant has the ability to withdraw what they please. Consequently, 100% of the assets of the joint account are liable for debts of the joint tenants. For example, suppose Mom has a bank account that has $5,000.00 in it. Suppose her son has a judgment against him for car repairs totaling $4,500.00. Mom adds son’s name to her account. Now, son’s creditor can withdraw $4,500.00 satisfy the debt – regardless of the fact that Mom is not the one in debt. Of course, these issues are difficult to sort out and can lead to litigation between joint tenants, which can be very costly for both parties involved.

               Call (248) 643-9530 or email info@zeiglerlaw.com for a consultation.

For more information visit our website http://www.zeiglerlaw.com/how-to- avoid-probate.html