Q&A Business

What is a corporation?

A corporation, according to Black’s Law Dictionary, is a legal entity created by or under the authority of the laws of a state. It is an association of persons created by statute as a legal entity. The law treats the corporation itself as a person who can sue and be sued.

The corporation is distinct from the individuals (shareholders) who comprise it. The corporation survives the death of its investors, as the shares can usually be transferred.

When does a corporation begin living?

To bring a corporation to life, a person (an incorporator), must file the articles of incorporation. The articles of incorporation represent the official documents for starting up a new company.

Unless a delayed effective date is specified within the articles of incorporation, the corporate existence begins when the articles of incorporation are filed with the secretary of state.

Who are incorporators?

In Michigan, one or more individuals age eighteen or older may be incorporators by executing the articles of incorporation (or with the assistance of an attorney) to the Secretary of State.

How can you name a corporation?

To incorporate in Michigan, you must file the articles with the State, along with the corporate name, which must have in the name the word “Corporation”, “Incorporated”, “Limited” or “Company” or the abbreviations “Corp.”, “Ltd.”, “Co.”, or “Inc.”.

What is a Limited Liability Company?

A Limited Liability Company is a cross between a sole proprietorship/partnership and a corporation. Which means that if offers limited personal liability like a corporation and less formality, like a partnership or sole proprietorship.

How is a Limited Liability Company formed?

In most states, including Michigan, a Limited Liability Company is formed by filing a form of articles of organization with the state.

How does a Limited Liability Company work?

A Limited Liability Company works in that the people who form the L.L.C. are known as Members. The Members usually enter into an operating agreement to govern the company’s internal affairs and operations. This agreement remains confidential and does not get filed with the state.

Pre-divorce financial planning

Pre-divorce financial planning for the secondary or non wage earner

It is common to ignore the danger signs in a marital relationship. Nobody likes to think that their marriage is in danger of dissolving. Facing reality and planning ahead, however, can avoid unnecessary stress.

The following are some financial planning recommendations which, although not pertinent to every situation, generally have proven helpful to the secondary or non-wage earner.

  1. Review all mail which comes into the marital residence and make a list of all the senders and their return address. It is particularly important to obtain the addresses of brokerage houses, insurance companies, credit card issuers, banks, etc. Make and keep copies of all bank and brokerage statements.
  2. Review all tax returns and seek complete explanations as to any item which may be questioned before signing. Make copies of the tax returns including any and all schedules.
  3. Inventory and periodically review the safe-deposit box. List the contents (including cash and jewelry) and make sure that the safe-deposit box is in joint names.
  4. Do not make major purchases (such as a boat or expensive car) for your spouse, or allow your spouse to make major purchases on your behalf. Keep the assets of your marriage liquid and unencumbered.
  5. Do not transfer, assign, alienate or make a gift (even to the children) of any marital asset. Maintain all assets in joint names (or your name alone, if possible).
  6. If your spouse has a pension plan with his/her employer, determine when the pension vests. It may be important to be married at the time the pension vests to ensure that you will be entitled to a share of that asset. Obtain copies of the pension and/or profit sharing plan and any yearly statements.
  7. Obtain copies of any will or trust documents. Go with your spouse to the attorney and participate in any estate planning.
  8. Gather loan documents, mortgage applications, and financial statements.
  9. Do not sign any documents or financial instruments that are blank. Keep copies for yourself and do not rely on your spouse to fill-in the blanks.
  10. Have a complete medical and dental checkup. Familiarize yourself with your spouse’s medical and dental plans. Make certain that you have done any needed medical and dental treatment prior to separation and that you are covered with medical insurance in the event of separation.
  11. For purposes of receiving any social security benefits to which you may be entitled when your spouse retires, make certain that you are married for at least ten years. Do not separate prior to this time (or at least avoid being divorced prior to this time) if at all possible.
  12. Open your own safe-deposit box at a bank to store any important papers and valuables. You also may wish to open up a post-office box to receive personal letters from your attorney, etc.
  13. Separation generally causes immediate economic hardship. Therefore, put away as much cash as you can. You will need to retain an attorney and will also have particular personal, financial needs which your spouse may not want to pay for. Therefore, from weekly monies which you receive from your spouse to buy groceries or from your employment, “separate and stash” as much as you can.
  14. Make certain your automobile is in good working condition and that it is titled in your name or jointly (not in your spouse’s name alone). You will need to be mobile in order to see your attorney, go to the supermarket, or go to work.
  15. Review and make copies of any and all insurance policies relating to the marital residence, furnishings or other assets, including any riders for jewelry, silverware or other valuables. Make copies of any appraisals which may be available.
  16. Don’t create any additional indebtedness and don’t allow your spouse to do so either.
  17. Develop your own lines of credit. Obtain in your own name: gasoline credit cards, credit cards from larger department stores and national credit cards (Visa, MasterCard, and American Express).
  18. Keep all inheritances separate from your spouse. If an inheritance is received, don’t place it in joint names.
  19. Make certain that all taxes owed to the Federal Government and any other taxing authorities have been paid.
  20. Obtain the most recent financial statements given by you and/or your spouse to a lending institution for the purpose of obtaining a loan or line of credit. (This usually lists all assets and liabilities).
  21. DO NOT move out of the marital residence.

Each particular situation is unique. If you are unsure what action or inaction is appropriate or prudent in your situation, you may want to consult with an attorney.

Q&A Wills & Trusts

Q & A about your Last Will & Testament?

What is a Will?
A Will is a document containing your instructions about what to do with your property after you die. By leaving a Will, you exercise your right under the law to determine who receives what share of your assets.

Who needs a Will?
Anyone age 18 or over who owns a car, keeps cash in a checking or savings account, owns an interest in a home or has much furniture or other personal possessions. A Will is the only place where you can name a Guardian and Conservator for you minor children.

Won’t joint ownership take care of it?
Not really. In joint ownership of property (called “joint tenancy”), after one owner dies, the other owns it all. Seems simple, and it can be a useful tool. But it’s not right for all situations; sometimes it can create problems instead of solving them. And even where joint tenancy is the right way, a joint tenant owner should have a Will to dispose of the property when he or she becomes the sole owner, and to toke care of matters other than jointly-owned property.

Can I change my Will?
Yes. A Will is not effective until after death. Changes or amendments in your Will may be made at any time. In fact, you should make an “Annual Financial Check Up” of your property and adjust your Will to reflect present assets.

What happens to my assets when I die?
If you leave a valid Will, they are divided according to your instructions.

And if I don’t leave a Will?
Then your property is distributed by the probate court as directed by the Laws of Intestacy. The Laws of Intestacy is a state law which tells what to do with your property if you die without leaving a Will. It distributes your estate according to a formula based on people’s family relationship to you.

Is a “Do-it yourself Will” valid?
Yes, if they comply with all legal requirements. But here’s the catch. An average person is not totally familiar with the laws designed to protect heirs. Furthermore, Lawyers are familiar with the many factors which ought to be considered when preparing your Last Will & Testament.

Who should prepare my Will?
Your attorney should draft your Will. Lawyers have experience to draft a properly designed Will, which can prevent misunderstandings after your death and eliminate disputes among your survivors. An attorney is trained to understand the law and may actually help reduce expenses to your estate.

Call Sumner & Associates, P.C. about your Will. Remember: If you die tomorrow, would your property and effects be given to the people you want to have them? Would the person you want act as your personal representative? Who will be the Guardian and Conservator for your minor children?


Will or Trust



I avoid probate?




I reduce/ avoid federal estate taxes?




I keep inheritance from my heirs until they reach age 30 or older?




I arrange to have funds managed for the benefit of an heir who is
handicapped or otherwise unable to handle funds?




I make sure my grandchildren will receive my estate after my children die,
excluding spouses of my children?




I leave assets to children from an earlier marriage, cutting out my present




long after my death until all assets are distributed and the estate is
closed (assuming all goes well)?

mos. to 2 yrs

mos. to 2 years

– 9 mos.

I retain control over my assets while I’m alive?




I change/revoke the plan?




the plan provide for someone to handle my finances if I become disabled?




All About Living Trust

Understanding Living Trusts-Avoiding Probate and Saving on Taxes

If something happens to me, who has control?

If you and your spouse are co-trustees, either can automatically act if the other becomes disabled or dies. If something happens to both of you, your hand picked successor trustee steps into your shoes and acts pursuant to your directives set forth in the trust.

At disability, the successor trustee manages your financial affairs for as long as necessary. Upon your death, the successor trustee pays your debts and distributes your property according to your instructions. Remember, this can all be done without any probate court intervention whatsoever.

Who can be the successor trustee?

Successor trustees can be individuals such as adult children, other relatives or trusted friends. You can also have a corporate trustee such as a bank.

Advantages of a Living Trust:

  • Avoids all probate and related costs – both financial and emotional
  • Allows quick distribution of assets to beneficiaries
  • Can reduce or eliminate taxes
  • Preserves privacy – completely confidential
  • Very hard to contest
  • Provides effective prenuptial protection
  • Inexpensive, easy to setup and maintain

Reasons for having a Living Trust:

A living trust is used to avoid the expense, time and anguish of probate court proceedings. Property transferred by will is subject to administration through probate court. Also, if you become disabled, your assets will come under the control of the probate court.

A living trust avoids all probate and makes sure that your estate plan is carried out with as little effort and expense as possible, while still allowing you to maintain complete control of your assets. It can be amended or revoked at any time prior to your death.

Doesn’t joint-ownership avoid probate?

This method of owning property can avoid probate, but often results in unintended legal results and tax disadvantages. There can be significant tax disadvantages especially when property that has appreciated in value over the years is transferred by his method. Further, there may be an undesirable gift tax imposed at the time the property is transferred. When you add someone as a co-owner of your property, you lose control. You are exposed to creditors of the other owner, including their spouses during a divorce proceeding.

What is a Living Trust?

A living trust is similar to a will. It is a written expression as to how and to whom your assets will pass to upon your death and provides for management of your assets during your lifetime should you become disabled – all without the necessity of probate court involvement. It can reduce/eliminate estate taxes, is extremely hard to contest, and makes an effective prenuptial agreement.

How does a Living Trust work?

A living trust is created during your lifetime, usually for your own benefit for as long as you live, and after that, for the benefit of your family. When you set up a living trust, you transfer all of your property from your individual name to the name of your trust, which you control; such as John and Mary Smith to John and Mary Smith, trustees of The Smith Family Trust.

Legally, you no longer directly own anything (everything is owned by the trust) so there is nothing that goes to probate when you die or if you become disabled.

Is it hard to transfer my assets into my trust?

No, funding the trust is simply a matter of re-titling your bank accounts, bonds, stocks and real estate. Your real estate is transferred by a simple Quit Claim Deed. Your banker and other financial advisors will take care of transferring other assets such as stocks, accounts and bonds. As trusts are becoming so common, they are quite familiar with the procedures to do so.

Do I lose control of the property in my trust?

No, not at all; you keep full control of your assets while you are alive. You are the initial trustee of the trust and as such, you can do everything you could do before. You can sell the assets, mortgage the assets, make changes to the trust or even cancel your trust at any time. Nothing changes except the name on the titles.

No Will or Trust

Will Only

Living Trust

Can I avoid probate?




Can I reduce/ avoid federal estate taxes?




Can I keep inheritance from my heirs until they reach age 30
or older?




Can I arrange to have funds managed for the benefit of an
heir who is handicapped or otherwise unable to handle funds?




Can I make sure my grandchildren will receive my estate
after my children die, excluding spouses of my children?




Can I leave assets to children from an earlier marriage,
cutting out my present spouse?




How long after my death until all assets are distributed and
the estate is closed (assuming all goes well)?

6 mos. to 2 yrs

6 mos. to 2 years

2 – 9 mos.

Can I retain control over my assets while I’m alive?




Can I change/revoke the plan?




Does the plan provide for someone to handle my finances if I
become disabled?




ABC’s of Divorce

Divorce can be a traumatic and complex process for many couples. In part, this is due to the fear of the unknown. This page provides an outline of the divorce process and is intended to offer a simple explanation of some of the key issues involved in a divorce.

How is a Divorce Started?

A divorce case is started by filing a complaint for divorce in circuit court. If you are served with a divorce complaint, you must file an answer within 21 days or else you could be defaulted. If you are defaulted, you will not be allowed to voice your concerns regarding any issues involved in the divorce.

While the divorce case is pending, the judge will typically require that the martial home be maintained as it has been during the marriage. Thus, the mortgage, utilities, food and other expenses will continue to be paid as they have in the past.

Once the case has been started, the process of “discovery” begins. This process allows each spouse to “discover” or demand what property, income or other information is in the possession of the other spouse.

Once discovery is completed, a settlement can be negotiated between the parties. If the parties are unable to reach an agreement, the judge will typically refer them to a mediator. A mediator is an experienced divorce attorney who assists the parties in reaching an agreement. It is not binding.

If you do not reach a settlement, your case will eventually go to trial and the judge will decide all of the issues involved in your divorce. However, in Michigan, less than 3% of all divorce cases go to trial. Judges simply do not like to hear divorce cases because of the difficult and emotional issues involved.

Dividing Property in a Divorce

As a starting point, marital property is usually divided equally between the parties. However, each party is allowed to keep “non-marital” property – property that a spouse brought into the marriage and inheritances and gifts received and kept separate during marriage.

Equitable factors, such as fault and age and health of the parties, could cause the court to sway from a 50-50 division of marital assets.

What is Marital Property?

Marital property is any property acquired during the marriage, no matter who was responsible for earning it or in whose name it is titled. It includes a pension even though it may have been earned by only one spouse during the marriage. It also includes the appreciation in value of the pre-marital property of a spouse.

Spousal Support

Alimony may be awarded by the court in addition to the property settlement. The factors considered by the court are:

  • length of marriage
  • ability of parties to work;
  • age of parties;
  • conducts of the parties;
  • property awarded to the parties;
  • ability to pay alimony;
  • prior standard of living of the parties.

Alimony is typically for a limited period of time – referred to as rehabilitative alimony. It is designed to provide support for a few years while the spouse receives job training or education. Alimony is tax deductible by the payer and taxable to the recipient.

Child Custody

There are two types of custody issues involved in a divorce case – legal custody and physical custody. Legal custody refers to decision making authority over matters affecting the child (education, medical, religious, etc.). Michigan favors joint legal custody.

Physical custody has to do with where the child resides. Among the factors which a judge must consider when making a custody decision are:

  • love, affection and other emotional ties;
  • capacity to give love, affection and guidance to the child;
  • capacity to provide food, housing, clothing and medical care;
  • length of time the child has been in a stable environment;
  • moral fitness of the parties;
  • mental and physical health of the parties;
  • reasonable preference of the child (if of sufficient age to express a preference).

What is the Role of the Friend of the Court?

The Friend of the Court is an agency of the circuit court which assists the court in divorce cases. They will investigate and make recommendations regarding custody, visitation and support. Although the recommendation is not binding on the parties, it holds a lot of weight in the divorce proceeding.

How is Child Support Determined?

In determining the amount of child support, Michigan has adopted a Statewide Child Support Guideline. The court must use the amount calculated under the Guideline in setting support unless there is a compelling reason not to. The Guideline considers the income of both parties and the needs of the child based on national statistics.

When and How Does a Divorce Become Final?

Michigan has a mandatory waiting period before a divorce can be granted. In cases not involving minor children, it is 60 days after the filing of the complaint. With minor children, six months. The six month waiting period can be waived by the court for good cause.

A divorce cannot be granted without a court hearing. At the hearing there must be testimony that the allegation that the complaint is true and that there has been a breakdown of the marriage relationship. A document titled Divorce Judgment is presented to the judge to sign. The judgment contains the property settlement, alimony and custody and support provisions agreed to by the parties. When the judge signs the judgment, your divorce is final.


For most people, buying or selling a home is likely to be the single most important transaction in a lifetime. Here’s some advice about how to protect your interests when you’re involved in the sale of a home, as either a buyer or a seller.

The Listing Agreement

If you’re selling your home, the first document you may encounter is a real estate broker’s listing agreement, in which you hire a broker to find a buyer for your home and agree to pay the broker a commission for doing so. It covers such important questions as whether the listing is “open” (any broker can sell it) or “exclusive” (only your broker can sell it); how long the listing will remain in effect; the selling price and terms of sale; and how much the broker’s commission will be.

Once signed, that listing agreement is a written contract between you and the broker. It creates certain legal obligations for both of you. Before you sign that contract you may want to review its terms with an attorney.

The Offer to Purchase

If you are a prospective buyer and are interested in a house, the broker will prepare an Offer to Purchase and ask you to sign it and make a deposit on the property. If the seller accepts and signs the offer, without any change in its terms, then the Offer to Purchase becomes a binding contract between buyer and seller.

Whether you’re a buyer or seller, you may want to have an attorney review the Offer to Purchase before you sign it and becomes a contract. A real estate broker may not have the legal training to recognize all the problems that could result from an imperfectly drawn contract.

The buyer’s attorney will make sure that the purchase is conditioned upon the buyer’s ability to obtain a mortgage loan or other necessary financing; that any “extra” items included in the sale (such as drapes or kitchen appliances) are listed in the Offer to Purchase; that the buyer is not agreeing to assume any liens or other claims on the property (such as special assessments for street paving) which should be the seller’s obligation, or which would interfere with the buyer’s use of the property.

If the buyer wants a municipal inspection of the property, a termite inspection, engineering studies or water quality tests, these should be stated in the Offer to Purchase before the sale is completed.

The seller’s attorney will make sure that a reasonable limit is placed on the time the buyer is given to obtain financing, so that the property is not held off the market for too long, should the buyer not qualify for a loan.

What if I’ve Already Signed?

Take the contract to an attorney immediately. If it does contain errors or unclear provisions, you may be able to get it changed by agreement with the other parties.

The sales agreement generally provides that the seller will arrange and pay for evidence of title, including any title insurance. The buyer’s attorney will review the evidence of title to be sure that the ownership of the property is undisputed. Attorneys for the seller and the buyer will review the adjustments for taxes, water bills or insurance premiums paid or due, and will discuss the financial details with their respective clients before the closing (final business transaction of sale).

If a new home is involved, the buyer’s attorney will request any necessary certificates of completion or occupancy and will attempt to protect the buyer’s interest if the builder has not completed and paid for all the agreed-upon improvements. An escrow fund to insure completion and payment of any potential liens (claims) against the property will be requested.

Do I Need an Attorney if I’m Buying a Condominium?

It’s certainly advisable. In addition to all the legal questions surrounding the purchase of a single-family home, condominium home ownership involves additional questions best explained and reviewed by an attorney. Among these are such questions as association dues and assessments, responsibility for common (shared) elements of the property, and relations among condominium homeowners and their association.

What is the “Closing”?

A real estate closing is the occasion at which title (ownership) is transferred from the seller to the buyer. If there’s a land contract involved, seller and buyer both sign it. (Title is not transferred at the start of a land contract.). If the purchase involves a mortgage loan, the buyer may sign the loan documents at the closing. Under federal regulations there are usually many other papers to be signed.

Customarily present at the closing are the seller, the buyer, their attorneys, a representative of the mortgage lending institution (if a loan is involved) and the real estate broker. The closing may take place at the offices of the lending institution, the broker’s office, a title insurance company or the office of one of the attorneys.

The role of the two attorneys (buyer’s and seller’s) is to make sure their clients are fully informed of all the legal meanings and effects of the documents they are signing, and to attempt to protect their clients’ legal rights. You, the client, should always be sure that you understand what’s being signed.

The attorney will see that a closing statement and the other closing documents are executed by buyer and seller, that the necessary documents are exchanged and that required payments are made.

Following the closing, the attorneys will make certain that the money paid at the closing is properly transferred and that the correct papers are officially recorded.

What Will an Attorney Cost?

An attorney’s fee depends upon the time required, the attorney’s ability and experience, the nature of the work, the responsibilities involved, and, in some situations, the results obtained. An attorney is required by the legal profession’s Code of Professional Responsibility not to charge more than a reasonable fee for his or her work. You should discuss the question of fees with the attorney at your first meeting, and come to a satisfactory arrangement so that you know what this cost will be.

How Do I Find an Attorney?

If you do not have a family attorney, you could ask friends or relatives for a recommendation, or you can call your local bar association Lawyer Referral Service for referral to an attorney. The Statewide Lawyer Referral number is (800) 292-7850.

A Final Word of Advice

Whether you are buying or selling a home, it is important that you be represented by your own attorney. Any other lawyer involved in the transaction is obligated to represent the interests of the person who hired him or her. Only the lawyer you engage can put your interests first.