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Gifting from a Legal Perspective

While gifting is admirable, it is important that you understand the legal consequences of gifting to prevent unintended consequences. In addition to legal consequences, there are potential tax consequences. It is important that you consult with your accountant prior to making any gifts. This article, while it discusses tax consequences, is not tax advice. Hypothetical 1: Jack and Jill are excited that their son, Robert, is marrying Amy because she is wonderful. As a result, they decide to gift to Robert and Amy, as their wedding gift, $50,000 for the downpayment of Robert and Amy’s new house. Currently, the annual federal gift...

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Minnesota Professional Firms Act

If your business (aka professional firm) provides professional services in Minnesota, you must agree in your legal entity documents, filed with the Minnesota Secretary of State, to be subject to the Minnesota Professional Firms Act (“Act”). Generally, professional services mean the type of services that are provided under a license, registration, or certificate by the state of Minnesota. In addition to this requirement, before your business can provide professional services, your professional firm must first register with the board(s) having jurisdiction over the professional services that you are subject to under the Act. Subsequent to the initial registration, your professional...

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Beware of “Cribbing” Documents from the Internet

Hypothetical #1: Hypothetical: Sarah owns Sarah’s Sauces, Inc. She has 7 employees. Sarah had her employees sign an employee handbook and a non-compete agreement five days after her employees started working for her.   She took both the employee handbook and the non-compete agreement from the internet. The employee handbook states that Sarah’s business follows FMLA (Family Medical Leave Act). One of the employees, Amy states that she needs FMLA.  Sarah says no because that is her busy time. Another employee, Joe quits and starts a competitor business across the street.  Sarah sues under the non-compete. FMLA only applies to employers...

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Random Tips on Common Issues

Tip #1: Are you aware that if your child is under the age of 18, it is in your child’s best interest to have a guardian that you have named in a proper legal document, such as a will? Tip #2: Are you aware that once your child reaches the age of 18, your child should execute a power of attorney and health care directive? Tip #3: Are you aware that you should have an authorization for use and disclosure of protected health information executed that is valid for five years after your death? Tip #4 Are you aware that if you are...

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Ownership Interest in Real Estate and Its Effect on Estate Planning

As a general rule, individuals own real estate property as tenants-in-common unless the deed specifically states that the property is owned as joint tenants. If the property is owned as joint tenants, the surviving “tenant” automatically receives 100% of the property interest upon the non-surviving “tenant’s” death. If the property is owned individually as tenants-in-common, then probate needs to be established in order to lawfully transfer the interest in the real property. Furthermore, if there is a transfer-on-death deed that transfers the property, the transfer on death deed trumps any contrary transfer in a will. The person entitled to the...

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Administrative Termination of an LLC

Hypothetical: Barn Doors Are Us Real Estate Holding, LLC organized in 2000. The LLC annually renewed its registration in 2001 – 2018. However, in 2019 it did not renew its registration and it was administratively terminated by the Minnesota Secretary of State in 2019. In 2020, the LLC purchased the lot next door and a deed was conveyed to the LLC. Because Barn Doors Are Us Real Estate Holding, LLC was administratively terminated, it is a nonexistent entity. Any deeds conveying property to an unregistered LLC are void, and therefore this deed was void. However, if the LLC had reinstated its...

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The Mistake of a Business Owner Regarding LLCs

Hypothetical 1:  Sarah starts Paint by Sarah, LLC by filing the articles of organization with the Minnesota Secretary of State and obtaining the EIN herself. Because she is under the mistaken impression that her husband (who has nothing to with the business except to listen to his spouse vent) is automatically an owner of the business, she states the the LLC agrees to be taxed as a partnership. However, she never files partnership returns, which creates huge tax consequences and penalties to her. Moral of this hypothetical story: The application for an EIN looks deceptively simple, but it is often a...

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Estate Planning Documentation

Now that you have your estate planning finalized, it is important to make your personal representative’s (also known as the executor) job as painless as possible. If your personal representative does not know what assets you have, what debts are outstanding, etc., the costs to your estate for determining the assets and liabilities could be significant. In addition, it also increases the possibility that an asset is missed and not discovered until years later, which even causes more hardship and frustration. Having a binder of information for your personal representative is essential. Updating that binder on a periodic basis is prudent. Your...

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The Mistake of a Business Regarding Do-It-Yourself (DIY)

In an era of do-it-yourself videos and a worldwide library of information available on the internet, engaging in a do-it-yourself project seems relatively easy. Especially considering that a lot of us remember our information being obtained generally from looking up books in a library according to the Dewey Decimal System or in the Encyclopedias that were sold by door-to-door salesmen to your parents. But, even with the amount of information currently available, a do-it-yourself project should be undertaken with caution. When you complete do-it-yourself legal projects on your own, it is not uncommon that you end up with a larger...

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OSHA Still Applies in a Pandemic

OSHA (Occupational Safety and Health Administration) is the governmental agency that oversees the law requiring employers to provide a safe workplace to its workers.  Generally, if you are a private employer in the State of Minnesota, you are required to provide a safe workplace that complies with OSHA.  That requirement – of providing a safe workplace to your workers – still is required for an pandemic, such as COVID-19. Businesses in Minnesota are under the jurisdiction of Minnesota OSHA (unless you are a federal agency, the United States Postal Service, etc.).  Even so, those employers under the jurisdiction of Minnesota OSHA...

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