Tag: Grand Rapids Mi business lawyer

What is a Michigan Registered Agent?

October 30, 2011 / Michael

As a Grand Rapids, MI business lawyer, this is a question I’ve been asked quite a bit. Due to the large number of corporations and limited liability companies (LLCs) formed in Michigan every year, it is important to know the requirements of a registered agent. Why? Because whether you form a Michigan corporation or a Michigan LLC, you are required to appoint a registered agent. The law for requiring one for Michigan corporations is here, and the law for requiring one for Michigan limited liability companies is here.

A registered agent can be an individual Michigan resident, or a domestic or foreign corporation (or LLC) authorized to transact business in Michigan. The registered agent of a Michigan corporation or LLC (I’ll refer to it as the “Company”) is the Company’s agent for the purpose of service of process. Service of process is the procedure used to give legal notice to the Company of a court or administrative proceeding against it. In other words, it’s how a Company is notified that it is being sued or that someone is bringing an administrative action against it.

Of course, to “serve process” on a Company, the Company is also required to have a registered office. Both the name of the registered agent and the street address (and mailing address if different than the street address) of the registered office must be included in the Articles of Organization (if the Company is a LLC) or Articles of Incorporation (if the Company is a Corporation).

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.

What Are Michigan Articles of Organization?

September 4, 2011 / Michael

You may have read my previous post on LLC Operating Agreements and thought, “that’s not the first step, is it?” Well, no, it’s not. The first step in legally forming a business should be to meet with a Michigan business lawyer to get the critical advice and help you need to make sure you get the full, legal benefits of forming the business.

The first documentation step in forming a Michigan Limited Liability Company (LLC) is to draft and file Articles of Organization (the “Articles”). Filing the Articles means that the business entity officially “exists.” Although the Michigan Limited Liability Company Act (the “Act”) doesn’t require a particular form for the Articles, it does set out what information is required in the Articles. For example:

The name of the LLC,
The purpose(s) for which it is formed,
The street and mailing address for the LLC’s registered agent,
Whether the LLC will be managed by a manager or by the members, and
How long the LLC will last.

Generally, I favor using the form from the State of Michigan Department of Licensing and Regulatory Affairs (click here for the form). Don’t let the simplicity of the form fool you. There are many important decisions that need to be discussed and decided with a Michigan business lawyer before knowing whether or not the state form is sufficient for your particular business. And in certain cases it is better to use custom-drafted Articles rather than the form, to make sure your goals and objectives for the business are accurately represented.

Have questions about getting your business “off the ground?” Want to make sure that your existing business was set up to give you the maximum protection and help reach your full potential? Call us at 616-827-7596 and schedule your business needs analysis meeting to have added peace of mind.

Business Membership Plans and How It Can Protect Your Business

July 10, 2011 / Michael

As many of my readers and business clients know, I bring a very unique background to being a Michigan Business Attorney. A degree in Finance, Vice President of a commercial equipment leasing company, small business owner and entrepreneur. This background and my own personal view on true client service caused me to step back and look at the way Michigan small businesses worked with their business lawyer.

Guess what? I didn’t like it. The most common model is based on the “billable hour.” I’ve experienced that both as a client (at the leasing company) and as an attorney. Yes, it’s true, I billed by the hour when I first opened my firm . . . it was all I was taught and all I knew. I quickly realized that billing by the hour is a lose – lose situation. When you’re billed by the hour you don’t want to talk with your attorney. Trust me, I know because I didn’t want to when I was a client. And it felt a little bit like giving the attorney a “blank check” because the bill would be for however much time it took. Sure there were estimates, but it wasn’t set in stone. I wanted to have a relationship with my clients, and I knew I couldn’t do that billing by the hour.

Then there was the flat-fee model. A specific dollar amount for a specific transaction. It still felt cold and impersonal. The reason was that it was “just a transaction.” Again, I wanted to have an ongoing relationship with my clients and many of them expressed an interest in something more than the “one off” transaction. Why? Because we’ve seen first hand the incredible value provided by ongoing counsel from a business lawyer (thankfully it was at a time that I wasn’t paying the bill!). Even with a flat fee for the services, once the transaction was over it was a case of “well, if you need anything else, just give me a call.” That was it!

I can tell you from personal experience that the followup call was rarely made. Why? Well, the simplest reason was the owner was busy running the company and it didn’t come to mind. Another common reason was fear of the cost involved for making that call. I knew there had to be a better way. So I thought about what I would have wanted as a business owner who wanted to help ensure the longevity of my business: ongoing guidance, value and a reasonable fee.

The result? The Lichterman Law Business Membership Program. Sounds awfully official doesn’t it? The aim of the business membership program is to provide small business owners and entrepreneurs with the ongoing legal guidance they need and want at a monthly flat rate they can afford. Membership levels range from our base Counsel Plan all the way up to our Pinnacle Plan. Each membership level is designed to provide small business owners with the most commonly needed business legal services. The best part (according to current business members) is the as needed phone and email access included in every plan level . . . and the kicker is that the phone/email access is not limited in any way.

The best part about our Business Membership Program is that it is the result of years of research, talking with dozens of business owners and business advisers about what they need and value most. It’s no surprise that many of those owners have or are current business membership participants. It truly is created for business owners, by business owners.

Despite offering business membership plans for the past few years, you probably haven’t heard much about it. That’s because we are very selective in who we offer business membership plans to so that we can provide the unsurpassed level of client service for which we are known. We’ve had so many business owners tell us to spread the word, that we finally decided to unveil it more publicly (starting with this and future blog posts).

You can get started by reading more about our philosophy by clicking here. Then call at 616-827-7596 to find out if you qualify for a business membership plan. Remember, we take a limited number of monthly membership clients and it is first come, first served, so call quick. We’ll even provide a 2 hour small business needs analysis meeting at no charge if you mention this blog post. Why wait?

A Small Business Horror Story

June 19, 2011 / Michael

From time to time I will reference the blog posts of some of my colleagues. In this case, the story was so typical of similar ones I’ve experienced and the post was so well written, I’m reproducing it here with permission. The author is Business Lawyer Gina Bongiovi of the Bongiovi Law Firm in Las Vegas, NV. If you or someone you know owns or plans to start a business in Las Vegas, I strongly recommend contacting Gina. As a Grand Rapids, MI business lawyer I assure you that these same situations crop up here in West Michigan. Enjoy the post and please share your thoughts with a comment.

When I sign a new monthly retainer client, I always conduct what I call a “legal checkup” on the business. I review the company’s formation, licensing, employee or contractor agreements, lease agreements, service agreements, etc. to find ways I can better protect the company and its owners.

Wait, let me clarify. I *request* these documents in order to review them. Often, it takes the owners a while to gather all the information to give me and sometimes they simply ignore my requests, preferring that I instead put out fires. While I’m great at putting out fires, my real value lies in working proactively – modifying these documents to better protect the company before a fire breaks out.

One particular client was in an LLC with another person. We’ll call them Jack and Bill.* Jack requested the initial meeting with me, apparently without telling Bill. Bill walked in during our meeting, demanded to know “who the hell” I was, and threw a fit, yelling at the top of his lungs that “we don’t need no &*%$ attorney!” Following that outburst, I gently asked Jack to send me a copy of the company’s operating agreement. He said it was the one that came with the corporate binder he got when he formed the company and he had no idea where the binder even was. Seeing the writing on the wall, that this partnership was going to crumble sooner rather than later, I made a more urgent request to see the operating agreement. And I requested the operating agreement every few days for the next two months with no response.

A month ago, Jack called to say Bill was leaving the company. I again asked for the operating agreement to make sure Bill’s exit was in compliance with its terms. I also suggested that Bill be removed as a signer on all company bank accounts as soon as humanly possible. No response.

Last week Jack called in a panic. While he was at the bank removing Bill as a signer on the account, Bill was at a different branch, withdrawing $21,000 in cash from the company’s checking account.

Because Bill was still a signer on the account, the bank had no choice but to give him the money.

Because the operating agreement didn’t restrict an LLC member’s ability to take money out of the account, Bill didn’t breach any agreement.

And because Bill pulled the money out in cash, there was no way to stop payment.

Jack’s only option would be to file a lawsuit against Bill, hope that he wins, and then hope that he could collect the money. Of course, a lawsuit would drag on for months and more likely years, tying up company resources in what is probably a losing battle. Plus, even if Bill lost, he could file bankruptcy and then the company would have lost the original $21,000, plus attorney fees, plus time lost while embroiled in a lawsuit.

Lessons learned:

1) make sure your operating agreement is thorough and addresses issues like when a member can take money out of the account,

2) if someone leaves the company, remove them from the bank account IMMEDIATELY. Unless you notify the bank that someone is no longer an owner, the banker has no way of knowing not to give an owner access to company funds.

* Names have been changed to protect the innocent.

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.

Is Life Insurance Asset Protected in Michigan?

March 27, 2011 / Michael

As a Grand Rapids, Michigan estate planning and asset protection attorney I’ve been asked several times, “Is life insurance protected from my creditors?” And sometimes it’s more specific, “is the cash value of life insurance protected from my creditors.”

Well, the answer is maybe yes, maybe no. You see, there is a seeming incompatibility between the statutory law and the case law (court-based law) in Michigan. In MCL 500.2207(1) it says that the proceeds of any life insurance policy payable to the wife, husband or children of the insured or to a trust for their benefit, including the cash value thereof, is exempt from claims of the insured’s creditors (read it by clicking here).

Seems to be pretty clear, right? Wrong. There are a couple of cases in Michigan where creditors were allowed to garnish the cash value of the insured’s (debtor’s) life insurance policy. The cases are:

Chrysler First Business Credit Corporation v. Rotenberg v John Hancock Mutual Life Insurance Co., 789 F. Supp 870 (1992) – read it by clicking here.
Schenck Boncher & Prasher v. Vanderlaan, 2003 Mich. App. Lexis 2082 (2003) – read it by clicking here

Well that sort of muddies the water, doesn’t it? And if you go back to MCL 500.2207(1) and read it in the context of 500.2207(2), you could read “cash value” to reference not the cash value during the insured’s lifetime, but rather only the cash value component of the proceeds after the insured’s death.

Here’s the kicker . . . there IS a way to fully protect life insurance cash value from creditors. That is the topic of a future blog post, so make sure to check back regularly.

And if you (or your client/customer) can’t wait that long. Call us at 616-827-7596 to schedule a Peace of Mind Planning Session to discover how to asset protect and tax-proof your life insurance and create a lasting legacy for generations to come.

You Pay For What You Get

January 30, 2011 / Michael

“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!

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