What is a fiduciary duty?

Adam Keilen Business/Corporate Law

Under Michigan law, a fiduciary relationship is defined as “a relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship.” In re Karmey Estate, 468 Mich 68; 658 NW2d 796 (2003), citing Black’s Law Dictionary (7th ed). Generally, Michigan law gives rise to a fiduciary …

What is a charitable remainder trust?

Adam Keilen Estate Planning

A charitable remainder trust is an irrevocable trust that allows a donor to make a gift to a trust, then receive income from the trust during the donor’s lifetime. Upon the donor’s death, a trustee will distribute the assets to certain charities named in the trust. The key benefits to a charitable remainder trust are: Income tax deductions; The ability …

Are prenuptial agreements enforceable in Michigan?

Adam Keilen Contract Law

Short answer. Yes. In Michigan, when a “prenuptial agreement is clear and unambiguous; changed circumstances do not render its enforcement unfair and unreasonable. Accordingly, the agreement should be enforced.” Reed v. Reed, 53 Mich. App. 625 (2005). Prenuptial agreements often come up with respect to inherited assets and trusts; they are often times grounded in realistic expectations and mutual respect, …

Is a hypothetical promise enforceable?

Adam Keilen Business/Corporate Law

Short answer. Generally, no.  In contract law, an illusory promise is unenforceable due to indefiniteness, or lacking mutual obligation. For example, owner of a business forms an agreement to “pay for products if he feels like it.” Such promises are illusory because they merely hold the illusion of a contract – generally, courts won’t enforce them. Under the Restatement (Second) …

Does a contract have to be in writing to be enforceable?

Adam Keilen Real Estate Law

Short answer. It depends. Statute of Frauds. State law varies; however, generally, pursuant to the Restatement (Second) of Contracts § 110, certain contracts, subject to a statute, are not enforced unless there is a written memorandum or an applicable exception. Examples of contracts that often must be in writing: A contract for an executor to answer for a duty of …

Are Noncompete Agreements enforceable in Michigan?

Adam Keilen Business/Corporate Law, Litigation

Short answer. Yes, but nuances affect how they are enforced.   Consideration. An enforceable noncompete requires legal consideration. Legal consideration means something was given, a legal value and bargained for exchange; in other words, “this for that.” However, the Michigan Court of Appeals held that “[m]ere continuation of employment is sufficient consideration to support a noncompete agreement in an at-will …

Estate Planning for Young Families

Adam Keilen Estate Planning

If you die without an estate plan, your loved ones may have to go through the probate court process, wasting time and money. In probate, you run the risk that the court’s decisions may not be consistent with your goals; rather, intestate succession (the process automatically applied when there is no trust or will) determines how your assets are distributed. …

What are some of the most common drafting mistakes that you see in contracts?

Adam Keilen Contract Law

Short answer. Litigation often involves scrutinized arguments over forum, dispute resolution, and limitation of liability clauses. Bottom line, these provisions are vital and often get glazed over without enough thought and consideration, thus, glazing over these provisions is a common drafting error, small provisions that make a big difference. Forum selection clause: the parties agree that litigation arising out of …

If a contract violates the law, can it still be enforced against me?

Adam Keilen Litigation

Short answer. No. Under Michigan law, courts will generally not enforce a contract that violates a statute or a public policy.  Under Michigan law, parties may enter into any contract, so long as the contract is not contrary to Michigan law and does not conflict with a public policy. Cudnik v. William Beaumont Hosp, 207 Mich App 378, 383-384, 525 …

What is a frivolous lawsuit?

Adam Keilen Litigation

A frivolous lawsuit is a case that has no legal merit, meaning, the case has no basis in fact or law. When a case is lost, it doesn’t necessarily mean it was frivolous; rather, frivolous cases are based on absurd legal theories, or when parties file extreme and outrageous motions, additional suits, or claim bizarre remedies; thus, frivolous claims and …

What happens if someone sues me or my business as a result of an injury, but they are partially at fault?

Adam Keilen Personal Injury

Al is driving above the speed limit. Bob runs a red light, and smashes into Al. Al suffers serious injuries as a result of the automobile accident. Al sues Bob. At trial, it is determined that Al was 20% at fault, and Bob was 80% at fault. The damages are $100,000. Michigan’s Comparative Negligence Rule. Under Michigan law, MCL § …

If I am sued, can they take my house?

Adam Keilen Real Estate Law

Some states recognize real estate ownership in the form of Tenancy by the Entirety (TBE), meaning, a judgment lien can’t be attached to the real property you own with your spouse (if held TBE). Thankfully, Michigan recognizes TBE. The only exceptions to this would be if someone sues both of you or if there is evidence of a fraudulent transfer. …

Can a Trust own and manage my business?

Adam Keilen Estate Planning

Estate Planning and Probate: Wills, Trusts, & Estates.  Can a Trust own and manage my business? The short answer – yes, it can; however, there is more to it. Trusts can own businesses and manage them for the benefit of your heirs, but there are nuances to consider. S-Corp thoughts/considerations. For example, if your business is an S-Corp, you avoid …

What is intellectual property?

Adam Keilen Intellectual Property

Intellectual property law provides certain rights for property owners; intellectual property rights protect the “fruits of mental labor.” In other words, intellectual property rights protect things such as inventions (ex: widget or device), written and artistic expression (ex: books and architectural designs), brand names/logos that identify the source of goods and services (company name or mark). Intellectual property rights are …

Offer to Compromise

Adam Keilen Litigation

How do I send the opposing party an offer to compromise without giving them something to use against me in Court? – Keilen Law, PLC Federal Rule of Evidence/Michigan Rule of Evidence § 408 (Compromise and Offers to Compromise) refer to the admissibility of offers to compromise; evidence of the following can’t be used by either party to prove the …

What is an Irrevocable Life Insurance Trust (ILIT)?

Adam Keilen Estate Planning

The Goal of an ILIT is to Avoid Inclusion in the Insured’s Gross Estate: For a typical life insurance policy, the death benefit proceeds are includible in a decedent’s gross estate for estate tax purposes. IRC 2042. Further, in Michigan, the cash value of a life insurance policy is not protected during the insured’s lifetime from the insured’s creditors. MCR …

Certain contracts must be in writing

Adam Keilen Construction Law

Generally, verbal contracts are enforceable, although they are very difficult and expensive to prove. Thus, contracts should always be committed to writing. However, although verbal contracts are valid, some contracts must be in writing to be enforceable. States vary in their interpretation, but under the Restatement (Second) of Contracts § 110, certain classes of contracts require a written memorandum or …

Should I get a trust?

Adam Keilen Estate Planning

Should I get a Trust? The short answer – it depends. There are several factors to consider; primarily, trusts help clients avoid probate (saving time and money), thereby privately distributing assets upon the grantor’s death. However, not everyone needs a trust. Consider the following factors: How much of your estate will bypass probate? One of the main advantages of a …

What is a “Temporary Injunction”?

Adam Keilen Litigation

Generally, an injunction is a court order requiring a person to do something or stop doing something. A “temporary restraining order and preliminary injunction” is a “temporary injunction”, as opposed to a permanent injunction, meaning, a temporary order from the Judge to do something or stop doing something until there is a final hearing-trial. Injunctions are common in cases involving …

When does the law excuse complete performance of a contract?

Adam Keilen Construction Law

Generally, a contract is a promise, and a basic principle of contract law states that “promises ought to be kept.” For example, Al executes a contract with Bill, thereby Bill promises to paint Al’s house on Monday. Thus, Al pays Bill to paint the house on Monday. Neither party may break their promise or ignore their responsibilities. However, there are …

The contractual provision implied in every agreement – the implied covenant of good faith and fair dealing

Adam Keilen Business/Corporate Law

Generally, the implied covenant of good faith and fair dealing is a presumption that parties to a contract will handle the contract’s affairs in a manner that is honest, fair, and in good faith, meaning, neither party will, in bad faith, attempt to destroy the other party’s right to receive the benefits of the agreement. In other words, despite not …

Can my company sue for business defamation?

Adam Keilen Litigation

Yes. Corporations can sue for business defamation. Each state has different laws regarding defamation; business defamation is a common law action based on false spoken or written statements that injure the business interests of another, thereby deterring third parties from doing business. Business defamation claims must prove that: There was a false and defamatory statement concerning the business; The statement …

Is it possible to contest a Will or a Trust?

Adam Keilen Estate and Trust Litigation

Why would I contest a Will or a Trust? If your loved one’s Will or Trust is not what he or she really intended, there are corrective actions you can take so that your loved one’s wishes are properly carried out. Who can contest a Will or a Trust? A beneficiary of a Trust, a devisee of a Will, or …

What is Legal Consideration (Contract Law)?

Adam Keilen Contract Law

Why does Consideration matter? A valid contract must have consideration, or a valid substitute. If a contract lacks consideration, the court might not uphold the agreement. What is Consideration? Consideration is a legal detriment, meaning something that was bargained for or given in exchange for a promise, in other words, “this for that.” Higgins v Monroe Evening News, 404 Mich …

What is a material breach?

Adam Keilen Construction Law

A breach of contract occurs when one party fails to perform, resulting in legal consequences for the breaching party. Oftentimes, we hear the words, “material breach.” A material breach is nonperformance that reaches to the heart of the agreement, the underlying purpose of the contract. Generally, the legal test to determine whether there was a material breach is whether the …

Why are LLC’s so common?

Adam Keilen Business Formation

What should I be doing if I already have one? Limited liability companies (LLC’s) offer LLC owners personal protection from business debts, lawsuits, and other liabilities, just like a corporation does for its shareholders. The key difference between an LLC and a corporation is that a corporation pays its own taxes, whereas an LLC is a pass through entity, meaning …

Adhesion Contracts – What are they?

Adam Keilen Business/Corporate Law

A contract of adhesion is a standard form drafted by one party, usually a party with stronger bargaining power, and signed by the other party, usually a party with weaker bargaining power. Adhesion contracts most often involve a consumer who needs goods or services, and the consumer is required to adhere to the contract as a perquisite for the good …

What constitutes acceptance of an offer?

Adam Keilen Business/Corporate Law

When it comes to contracts, under Michigan common law, what constitutes acceptance of an offer? Under M Civ JI § 142.13, Acceptance, acceptance is a statement or conduct by a person receiving an offer that would reasonably lead the person who made the offer to believe that the material terms of the offer have been agreed to, although an offer may require …

Decanting Statutes in Michigan

Adam Keilen Estate Planning

Decanting is the discretionary exercise of a fiduciary power to appoint assets in trust, meaning, under IRC 2652, to “effect an arrangement that although not a trust, has substantially the same effect as a trust.” “The paradigm of the activity is the trustee of trust 1, T1, is currently authorized by the trust instrument to distribute trust income and principal …

Contract Interpretation

Adam Keilen Construction Law

Contract Law. The most basic principle in contract law is simple, “a contract is a promise, and promises ought to be kept.”  Contract Interpretation. Contract interpretation often controls the outcome of a lawsuit. Ambiguous contracts can be unpredictable in court. However, when contracts are clear and fully integrated, interpretation of the contract is a question of law, meaning it will be decided …

Copyright Protection

Adam Keilen Copyright Law

What is Copyright protection? Does my Business/Company have any rights? Copyright protection grants certain rights to authors of “original works of authorship.” The protected work includes literary, dramatic, musical, artistic, and other intellectual works, for example, the creative designs of architects/builders. So if you wrote something, created original artistic work, authored a new design, or some other form of creative work, …

Damages for Breach of Contract

Adam Keilen Litigation

How are damages calculated for contract disputes? Expectation Damages. Generally, if your lawsuit involves a contract, the contract damages (also called “expectation damages”) are calculated so as to put you in the same position you would have been in had the contract been performed. In other words, you are entitled to the harm caused by the breach, and will be entitled …

Estate Planning – Business Succession Planning for Family Enterprises

Adam Keilen Estate Planning

Startling Facts. Family run businesses make up a significant portion of the US Economy. Yet, merely 12% of family run businesses survive into the third generation. Thus, 88% of family run businesses fail at, or prior to, the third generation. One of the primary reasons for such failures is failing to groom a successor with a business succession plan, i.e., …

Groundbreaking Case in Estate Litigation

Adam Keilen Estate and Trust Litigation

Rachal v. Reitz; Mandatory Arbitration Agreements. Historically, according to most states, a mandatory arbitration agreement in a trust or a will is unenforceable. Yet, arbitration can be a great way for families to resolve disputes headed for drawn out estate litigation. Very few states have specific statutes that enforce such clauses; notably, Florida is one of them. Generally, courts find …

Truth in Lending; Mortgage Loans.

Adam Keilen Real Estate Law

As of June 1, 2013, Regulation Z has prohibited arbitration in mortgage lending. TILA and Regulation Z prohibit contracts that require arbitration in closed-end loans secured by a dwelling and open-end loans secured by a traditional consumer’s dwelling. The new regulations and the TILA provisions also provide that no mortgage loan agreement can be applied to “bar a consumer from …