Month: February 2013

Minor Challenges: Estate Planning With Young Children

As parents, the last thing we want to consider is not being there for our children. It’s understandable, then, that when asked to consider that “what if” we try and avoid it. But it’s critical to confront the “what ifs” when estate planning to make sure your minor children are supported and cared for. Two of the biggest issues to address are: who manages their inheritance and how they’ll receive it.

A traditional will poses unique problems when minors are involved. While the probate court will probably agree to the guardian you name for your children in the will, that guardian won’t have any control over the children’s inheritance. Your children’s expenses are paid out of their inheritance and must be approved by the court, which has limited flexibility to consider individual needs. Then, when your children come of age, they get the remaining inheritance in one lump sum (no matter what!).

A better approach is setting up a revocable living trust (RLT) for your children.  The guardian you appoint as trustee manages the children’s inheritance. You can give them the flexibility to spend more or less of the inheritance depending on each child’s needs.  You can also provide for your children to receive their inheritance only when they’re older (for example, 25 rather than 18) or over time (instead of one lump sum). An extra advantage is that property in the trust can be protected from creditors.

Hopefully, the only guardian your children ever need is you. But thoughtful estate planning now ensures that your children will be taken care of if the unexpected happens. A properly set up RLT can meet your children’s needs and give you peace of mind.

Paid in Full

A customer who owes you money sends you a check for part of the amount due with the words like “paid in full” written on the check. The big question: what should you do with it? Do you have to accept? Can you accept the partial payment and try to collect the rest?

Technically, if the amount owed is undisputed, then the words “paid in full” won’t prevent you from cashing that check and pursuing the remaining balance. But if the amount is disputed, then accepting a check marked “paid in full” completely discharges the entire debt. The distinction sounds simple, but it’s difficult to apply in reality.

If you’re willing to accept the amount on the check as full payment, you can cash the check either way. That might be best if the debt is old or unlikely to be paid entirely. But if you aren’t willing to accept a lesser amount, it’s a good idea to return any “paid in full” checks with a letter explaining why you’ve returned it and inviting the debtor to send another check without the “paid in full” language. You don’t have to accept a check marked “paid in full” if it’s for an amount less than what you’re owed.

Perhaps the best thing to do is develop a policy regarding “paid in full” checks. Work with a collections attorney to decide how to track the checks, when you’ll accept them (for example, if the debt is over 5 years old or under $1,000), and how you’ll handle rejected ones. You can also address how you’ll negotiate settlements or payment plans.

Some debtors use “paid in full” checks to trick you. Others may honestly think they’ve paid the full amount. Knowing your options and being prepared can help you maximize your payment.

Hostile Work Environments: Uncomfortable for You and Your Employees

As an employer, you probably already know you can’t discriminate in hiring or firing people based on protected characteristics (race, gender, religion, disability, etc.). But you also can’t harass an employee based on those characteristics. If harassment creates a “hostile work environment” you could be legally responsible.

What is a hostile work environment?
A hostile work environment is when the harassment becomes so severe as to interfere with an employee’s ability to do their job. Isolated incidents usually aren’t enough to create a hostile environment. Having a “crappy job” isn’t enough, either, so it can be difficult to make a hostile environment claim.

I would never harass an employee, so I’m clear, right?
Unfortunately no. The Wisconsin Department of Workforce Development (DWD) notes that an employer might be liable for actions of their employees or even customers if the employer knows or should have known of the harassment and didn’t take appropriate action.

If it’s hard to make a successful claim, do I really need to worry?
Yes! Even if you don’t end up being sued, harassment can lead to low employee morale and productivity. It can even affect your reputation in the community (and we know people in the Fox Valley care about a business’ reputation).

So what can I do to protect my business?
Talk with an experienced employment attorney to create fair and workable policies. Then, make sure your employees know the policies and enforce them! Take all claims seriously and address them before they create a hostile work environment. You’ll avoid many problems and have something to fall back on if you do get sued.

You started your business because you enjoy what you do and hopefully your employees feel the same. Setting down some ground rules can protect you and help all employees feel comfortable at work.

Property Exemptions

If you have a judgment against a debtor, there are several options you have to try and collect it. One of those options is execution, or seeking to collect assets of the debtor to satisfy the debt. Unfortunately, Wisconsin has a long list of exemptions—certain assets that you can’t reach as a creditor.

Some of the more common exemptions are:
•The value of the debtor’s home up to $75,000;
•Child support or alimony payments;
•Social security or disability benefits;
•Some business and farm property, some household goods and some savings accounts;
•Retirement benefits; and
•75%, 80% or even 100% of the debtors’ wages (depending on the circumstances).

For some debtors, all of these exemptions might make them “judgment proof”—in other words, there’s nothing left to go after. But for others, it might just take some investigation. For example, the home exemption might mean a debtor’s Appleton house is off-limits but their cottage up near Green Bay is still fair game.

Because execution is complicated and full of these exemptions, it’s never a good idea to tackle it on your own. Always consult an attorney who can help you identify if execution is the best approach for you. This is especially true if the debtor is married—their spouse can claim all of those exemptions as well, making execution even trickier. Your attorney can help you identify what property you can actually reach and how to navigate the process.