Archive for July, 2011

My business is an LLC…that means I’m protected…right?

Sunday, July 31st, 2011

I had a client come in recently that had a small construction company that he had set up as an LLC.  That part was fine, and a lot of people use an LLC as a business structure.  This client thought that as long as there was an LLC, all of his personal assets were protected in case there was any legal action against the company.  He had started the company with $100.00 and he had been told that his personal liability would be limited to the amount of his initial investment.

The problem is that even though he had set up the LLC, he did not really treat the LLC as a separate legal entity.  He used the company checking account to pay all of his personal expenses.  Since the income from the LLC flowed through his personal income tax return, that made sense to him.  After all, it was really his money.  So when the house payments were made using checks from the company checking account, it never dawned on him that the house might be considered as belonging to the company and might be attached if someone got a judgement against the company.

He had used an online service to create the LLC and he had filed the ‘Articles of Organization’ just as required.  He had also paid the fees to the service to get the name of his LLC approved and to get a new tax ID for his company (as an aside, you really don’t need to pay for these services).  When he went to the bank to open his checking account, the bank required that he have a business license for the area, so he did that too.  He was all set.  And since the company was his only source of income, he thought it would be easier to just use the one account for all of his banking needs.  That way, he didn’t need to pay any service fees for a different checking account.

He didn’t create an ‘Operating Agreement’ because it wasn’t required by the state and nobody at the internet site told him it might be a good idea.  He didn’t keep track of any changes to how he was managing the company or how he spent the money, because nobody told him he should.

Let’s suppose that one of his customers didn’t like something he had done and the customer sued the company.  The owner thinks his house and cars are safe because they were titled in his personal name and the customer had sued the company. The customer will probably argue that the house and vehicles really belonged to the company because all of the payments had been made by the company directly from the company checking account.  What would happen?

As with most legal situations, the answer is ‘it depends’.  The one thing that we can be sure of is that there will be legal fees to try to sort it all out.

It would be much easier to separate the business assets from the client’s personal assets if the client had created an ‘Operating Agreement’ and established a set amount each month to be paid to himself as a salary which was then put into a separate checking account out of which he paid his personal expenses.  The ‘Operating Agreement’ can also make provisions for the payment of a bonus if there is a month where the income is more than usual.  The ‘Operating Agreement’ might also make provisions for the company use of a personal asset like a truck.

In fact, the ‘Operating Agreement’ can outline a lot of different things that can happen with a company and tells everyone how the company will be managed and operated.  As long as you act according to the terms of the ‘Operating Agreement’, it is much easier to establish whether something is an asset of the company or a personal asset.

I know it seems cheaper to set up your company using an internet service instead of going to an attorney, but you should consider the possibility of future costs as well as the costs today.  Even if all you do is get an initial consultation, what you learn in that consultation might save you a lot more in the long run.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

What is a court appointed attorney?

Sunday, July 24th, 2011

If you are charged with an offense that could possibly result in you being sent to jail, and you can’t afford an attorney, you have the right to have an attorney appointed to represent you.

In order to qualify for an appointed attorney, you need to meet some low income guidelines.  If you don’t meet these guidelines, the court determines that you can afford to hire an attorney on your own, and you are not eligible to have an attorney appointed to represent you.

In some courts in this area, there is a public defender’s office that handles most of these cases.  In other courts, there is no public defender and so the court needs to find other attorneys that will accept the appointments.  There might also be a situation where there is a conflict in the public defender’s office, so sometimes the court needs to find another attorney to accept this particular appointment even though most of the time the public defender’s office is used.

Who pays for these attorneys?  The Commonwealth of Virginia, which means the taxpayers of Virginia.

But the attorney does not get paid at their ‘normal’ retained rate.   Instead, the court appointed attorney gets paid a very reduced rate.

The court does not just go out on the street to find the first attorney walking by.  All of the court appointed attorneys need to meet training standards to be allowed on the list in the first place, and they then need to continue to get additional training in order to remain on the list.

Most of the court appointed attorneys also handle privately retained clients, and they agree to take court appointed cases as a way of helping the community.

What does this mean to you?  If you happen to have a court appointed attorney, you can rest comfortably in the knowledge that your attorney is well qualified.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

Can my criminal record be expunged?

Sunday, July 17th, 2011

I’ve had a couple of phone calls in the past few weeks from people who want to have their criminal records expunged.  One of these was for a petty larceny conviction which started as a dare to shoplift.  The person took the advice of her friends and pled guilty, got a small fine, and thought she was off the hook.

Fast forward 8  years, and this same person now wants to rent an apartment.  Surprise! The apartment manager did a criminal background check and found the petty larceny charge.

I had another call from someone who had a brush with the police over 40 years ago, when he was a teenager, and that charge is now keeping him from getting a gun permit.

And just last week I had an inquiry from someone who was found guilty of grand larceny about 12 years ago and she can’t get a job today because of her criminal record.

Bad credit stays on your credit report for 7 years.  Even a financial judgment or bankruptcy falls off eventually.  In Virginia, criminal convictions stay on your record forever!

But what about an expungement?  An expungement is a civil process by which a record of criminal conviction is destroyed or sealed, generally after the expiration of time.  Each state has its own process and time frame.  In Virginia the time frame for sealing or destroying record of a criminal conviction is NEVER.  That’s right.  In Virginia, if you are found guilty of a crime, or if you plead guilty to a crime, that criminal record will remain forever and cannot be expunged automatically.

Is there a process in Virginia to have a record expunged?  The answer to that is Yes.  If you have a criminal record you can petition the court to have the record expunged.  But the only way a criminal record can be expunged in Virginia is if the criminal arrest was not finalized by a guilty verdict in any form, or if the court finds that the dissemination of information relating to the arrest of the petitioner causes or may cause circumstances which constitute a manifest injustice to the petitioner.

And most of the time, the court does not find that a manifest injustice exists where there was sufficient evidence to find the person guilty in the first place.  Your definition of a manifest injustice is not usually the same definition that the court uses!

As an example, people often argue that they just can’t be found guilty of reckless driving because it will affect their security clearance.  At least one Commonwealth Attorney I talked with said that they should have thought of that before they were caught going so fast!  Very different viewpoints on whether this is a manifest injustice!

So, if you were arrested but never tried; or if you were arrested and tried but found not guilty, then the expungement process might help you get that arrest off of your records.

Otherwise, there is a very, very, slim chance that the record might be expunged.

The ‘take away’ from this?  Don’t do the crime in the first place, otherwise it may follow you forever.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

Have You Checked Your Beneficiary Designation Lately?

Sunday, July 10th, 2011

I encourage my clients to review their estate planning documents on a regular basis, and an annual checkup seems like something that can be scheduled and easy to remember.

But what about things that aren’t part of the documents that I help to create?  What about your individual IRA?  or your life insurance policy?  or your company retirement plan? or your investment portfolio?

These types of plans are contractual in nature and the contract is between you and the insurance carrier or the plan administrator, or….whomever.

It is also important to make sure that these beneficiaries are up to date.  If the beneficiary is a minor child, do you have the person you want today as the trustee of these funds?  Have the children now become adults and you want them to have access to the funds immediately?  Have you created a trust and just never got around to changing the beneficiary of your insurance so that the funds will go into the trust to be distributed the way you wanted?

One of the biggest problems is selecting a beneficiary and just forgetting about it.  What happens if that person has died before you?  What happens if that person is no longer the one that you want to have access to the funds?  Maybe they got married to someone you hate.  Maybe they ran off to join a commune.  Maybe receiving the funds will make them ineligible (for just a little while) for medicaid benefits they are receiving now?  Maybe…. (fill in the blank).

I had a very personal example of this.  My mother had a life insurance policy that she got when she was working.  Her plan was that we could use her life insurance proceeds to pay for the funeral and then there would be a little left over for each of us (I’m the oldest of 7 children).  We all knew she had the life insurance and we all knew what she wanted us to do with the proceeds, but what we didn’t know was that she hadn’t really named a beneficiary at all.  I know she meant to have the beneficiary set to ‘all of my children equally’, but it never got recorded at the life insurance company.  The funeral home would have taken an assignment of the insurance proceeds, but that assignment had to be signed by all of the named beneficiaries and there were no named beneficiaries!

That meant that we needed to get a certified copy of her divorce papers, and all 7 of us had to sign affidavits that we were indeed her children before we could get access to the funds.  Of course we needed to have this done on the forms provided by the insurance company, which took time.  And somebody had to pay the funeral home right away.  So mom’s plan to use the insurance proceeds to pay for the funeral only ‘kinda’ worked.  One of us had to pay the funeral home and then each of the other 6 had to reimburse the one that paid when they got their one-seventh of the proceeds.

I have a great family and it worked out fine, but I’ve heard lots of examples of where one child has been ‘stuck’ with the entire funeral bill and the others refused to reimburse the sibling that paid the funeral home itself.

Please, take a few minutes and double check your beneficiary designations on all of those ‘contractual’ assets.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

July is Sandwich Generation Month!

Monday, July 4th, 2011

When I hear the word ‘Sandwich’ I tend to think of Peanut-Butter and Jelly, which always brings a smile to my face.

But there is a new way of viewing ‘Sandwich’ that is not so much fun.  That’s the role more of us are playing by being the caregivers of both our parents and our children.

In the grand scheme, this is not really anything new.  Families used to always take care of the generations, often in a single home.  Grandma and Grandpa shared the same home with their children and grandchildren providing wisdom and assistance as the new generation came along, and receiving the attention and care of those in the family as they slowed down in their elder years.

But things changed, especially here in the United States, and families tended to live in their own separate homes with Grandma and Grandpa often living across town or even across the country.  Most of us today can’t imagine even sharing a room with a sister or brother, let alone imagine sharing a home with Grandma or Grandpa.

None of us would consider leaving a two-year old home alone.  After all, the two-year old can’t really get food to eat or make sure they make it to the bathroom on time.  And there are things in the home that could injure the child if they are not used correctly.  The two-year old is also just learning about freedom and self-reliance and if the two-year old refuses to do what we tell them to do for their own good, we can pick them up and put them in their bedroom for a ‘time out’.  The parents get to set the ground rules because a two-year old doesn’t know that it is even possible to stay up past 8:00.

It’s a different story with our aging parents.  They DO know that they can stay up past 8:00, and they’ve done it for years!  Why, they even taught US!  And most of the time, they are too large to pick up and physically move to the bedroom for a ‘time out’ when they get cantankerous.  Unfortunately, our aging parents might also be in the position of not being able to get food for themselves or eating correctly, or making it to the bathroom on time, or using things in the home that can cause injury if not used correctly.

Our parents are living longer and having more health issues, both physical and mental, then previous generations.  I know there was nobody in my family that ever got cancer until my uncle was diagnosed a few years ago.  But nobody in the family had ever lived to be 85 before either.   On my dad’s side of the family, there wasn’t a history of dementia until the family members starting living into their 90’s.

Luckily, there are more and more services available to help us take care of our parents.  These services can take away some of the stress involved in day-to-day chores such as making sure that our parents are eating correctly and being kept clean and safe.  There was a time when babysitters and day-care centers for children were a new concept, even though today we see them as an established institution in our lifestyle.  It appears that there will come a day when adult care givers and adult day-care centers will also become established in our lifestyle.

These services cost money.  But unlike children who have no resources of their own, often our parents will have some resources available to them to help pay for the services needed for their care.

Also, as parents of minor children you have the legal authority to make decisions for your children.  This is not so for your parents.  It is important to have the correct documents in place so that you have the authority to make important and day-to-day decisions for your aging parents.  These include Powers of Attorney and Medical Directives.  You might also want to consider establishing a Trust so that your parent’s assets can be transferred with a minimum of hassle and used for their benefit.

What should you do?  Read…there are a lot of resources available on the web.  Talk to your parents…find out what they want while they are able to tell you.  Talk to people you trust…your doctor, your pastor, your lawyer.  Ask them to recommend services or service providers that they trust.  Unfortunately there are some scams out there that sound good but don’t really offer the right services for your needs.  And most of all, have patience. Remember that these are the people that spent their time raising you, dealing with you when you made mistakes and who helped mold you into who you are today.  Be patient with them, knowing that they are also having difficulty dealing with this role reversal.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.