LIBOR has served as the benchmark interest rate for over 30 years and is currently tied to over $200 trillion in contracts and debt obligations. LIBOR serves as the underlying interest rate for multiple types of contractual obligations including business loans, mortgages, and even student loans. However, given the recent LIBOR rate setting manipulation scandal and its declining reliability, the United Kingdom’s Financial Conduct Authority has agreed to stop publishing the LIBOR, and banks will no longer be obligated to make LIBOR submissions, after December 31, 2021. SOFR is calculated daily based on overnight cash lending between banks collateralized by the United States Treasury in the repurchase agreement market. According to the Federal Reserve, SOFR is much more resilient than LIBOR is numerous ways including its transparency and the fact that it is more representative of the way financial institutions fund themselves today. The Federal Reserve began publishing daily SOFR rates on its website on March 2, 2020.

The ARRC has created the Paced Transition Plan to give guidance and encourage the adoption of SOFR here in the United States. The ARRC has recommended that contracts stop referencing LIBOR as the benchmark interest rate starting as early as this year in order to facilitate a smooth transition to SOFR by the end of 2021. Some financial institutions have already begun the transition process to SOFR, such as Freddie Mac, which will no longer purchase LIBOR Adjustable Rate Mortgages beginning January 1, 2021.

In addition to providing a transition timeline, the ARRC recommends that LIBOR contracts should, as soon as possible, include ARRC recommended, or substantially similar, fall back language. Two approaches for fallback language have been enumerated by the ARRC for those instances where a contract is still using LIBOR as an interest rate or for those previously executed contracts that do not provide for an alternative to LIBOR. The first approach, the “hardwire approach”, specifically sets forth a replacement benchmark interest rate that will be applied at the end of LIBOR and indicates the procedures that will be used to calculate and institute the new interest rate within the contract. Alternatively, the “amendment approach” permits the parties to a contract to amend the agreement at a future date, once LIBOR is phased out, and determine the new interest rate then, while still outlining the procedures that will govern selecting the replacement index. The hardwire approach eliminates the need for an amendment down the road for LIBOR based contracts by including language that addresses the potential replacement, while the amendment approach may work best for those older contracts that may not have anticipated the end of LIBOR. Either way, it is imperative that both approaches address how the new interest rate will be determined.

Whether it be assistance amending an executed contract or current debt obligation that does not include replacement language for LIBOR, or assistance navigating new contract negotiations and loan agreements, our experienced team of attorneys here at Dawda are ready to advise and help guide you through the transition away from LIBOR.

Written by Associate, Kathryn Kaleth.

The post Transitioning Away from LIBOR: What’s Next? appeared first on Dawda PLC.

IDEAS FOR THESE TRANSITIONAL TIMES

As tax lawyers and estate planners, we see that there is a lot of uncertainty and speculation in the marketplace about what the estate and gift tax system will look like if Joe Biden should defeat Donald Trump in the November 2020 election.  We all know that under current law, the estate and gift tax exemption is at an all time high of $11.58 million per person or over $23 million per couple.  Under current law, the exemption amount is designed to revert back to $5 million per person and $10 million per couple (adjusted for inflation) at the end of 2025.

Many commentators have speculated that if Joe Biden wins the presidency, the estate tax exemption will be scaled back to $5 million per person (adjusted for inflation) or even lower to the 2009 level of $3.5 million per person; however, as of October 1^, 2020, a review of Mr. Biden’s tax plan does not contain a definite proposed reduction.  Moreover, his proposed tax plan does not specifically contain an increase in estate tax rate of the current 40% tax.  The one thing Biden’s platform does contain is a statement that the step up in basis at death should be repealed.  Even in the absence of proposed guideposts, nearly everyone predicts that if there is a Biden victory, the estate tax exemption will be scaled back, and the estate tax rate will increase.  Thus, for families with gross estates in the $10-$20 million range, or above, now is the time to consider implementing tax and estate plan strategies to take advantage of lifetime gift opportunities that will likely disappear effective January 1, 2021 if Biden is elected.

Even if your net worth is not over $10 Million we have plenty of sophisticated strategies and techniques which could be implemented depending on your asset mix, goals, and objectives.  The tools in our toolbox include sales to intentionally defective grantor trusts (IDGTs) in exchange for promissory notes to fix growth, the creation of spousal limited access trusts (SLATs), creations of charitable trusts and foundations, and other sophisticated techniques which are both time tested and flexible.

If you are a current client, prospective client, financial advisor, or other interested party, please contact Jeffrey D. Moss or your Dawda attorney for more information.

The post Year End Estate Tax Planning in 2020 appeared first on Dawda PLC.

The Super Lawyers selection process is multi-phased and includes peer nominations and evaluations combined with third-party research. Attorneys are selected from over 70 practice areas and all firm sizes to ensure a credible and relevant annual list. No more than five percent of attorneys in Michigan are selected as Super Lawyers each year, and no more than 2.5 percent are named to the Rising Stars list.

The 2020 list includes:

Kylie E. Bergmann
Rising Stars, 2017-2020 – Real Estate

Alfredo Casab
Super Lawyers, 2019-2020 – Real Estate

Randal R. Cole
Super Lawyers, 2014-2020 – Employment & Labor

Brian J. Considine
Super Lawyers, 2017-2020 – Environmental

Edward C. Dawda
Super Lawyers, 2006-2020 – Business/Corporate
Michigan Super Lawyers Top 100, 2006-2020

Daniel M. Halprin
Super Lawyers, 2020 – Real Estate

Theresa C. Joswick
Super Lawyers, 2007-2020 – Employee Benefits

Jeffrey D. Moss
Super Lawyers, 2017-2020 – Tax

John Mucha III
Super Lawyers, 2010-2020 – Civil Litigation
Michigan Super Lawyers Top 100, 2015-2020

Michael D. Mulcahy
Super Lawyers, 2006-2020 – Real Estate

Glenn G. Ross
Super Lawyers, 2017-2020 – Estate & Probate

Susan J. Sadler
Super Lawyers, 2006-2020 – Environmental

Marc K. Salach
Super Lawyers, 2020 – Business/Corporate

Wayne S. Segal
Super Lawyers, 2007-2020 – Real Estate

Tyler D. Tennent
Super Lawyers, 2014-2020 – Land Use/Zoning

Erin Bowen Welch 
Rising Stars, 2017-2020 – Real Estate

Frances Belzer Wilson
Rising Stars, 2010-2020 – Business Litigation

The post 17 Attorneys at Dawda Honored as 2020 Super Lawyers and Rising Stars appeared first on Dawda PLC.

In November 2019, the Michigan Natural Resources Commission voted 3-2 to amend Fisheries Order 200.20 to reinstate a 10 brook trout daily bag limit regulation on 33 sections of streams in the Upper Peninsula. The NRC issued the Order despite comment provided by Michigan Trout Unlimited opposing it and despite DNR Director Dan Eichinger publicly stating the DNR’s opposition to the reinstatement of the 10 brook trout bag limits based on known scientific evidence.

The post Suit results in change to brook trout regulation in the UP appeared first on Dawda PLC.

On December 20, 2019, while you were finishing your holiday shopping, Congress passed the Setting Every Community Up For Retirement Enhancement (SECURE) Act of 2019.  The SECURE Act became effective for events occurring after December 31, 2019.  This new law impacts many rules related to retirement plans, including mandatory withdrawal ages, treatment of beneficiaries, and the types of investments permitted by a retirement plan.

Here are some highlights of the SECURE Act:

• For people born after June 30, 1949, the required minimum distribution date from retirement accounts is pushed back from age 70 ½ to age 72. This allows for up to two more years without mandatory withdrawals which can allow for more tax-free growth.
• On the flip side, the use of the “stretch” IRA concept which allowed non-spouse designated beneficiaries to receive many years of tax deferred compounding is, in many situations, now limited to 10 years. Without getting into all the details, most IRA heirs, other than spouses, will be required to withdraw assets within 10 years rather than over their life expectancy.  Under the old rules, an account owner could name a younger child or grandchild as a designated beneficiary and obtain distributions over the lifetime of the much younger beneficiary, hence the “stretch”.

The surviving spouse will still have the same options available under current law.

With respect to minor children, there is a special rule for inherited accounts.  A minor child can accept distributions based upon their life expectancy until age 18 when at that point in time, there is an additional 10-year deferral which then mandates the entire account be distributed by age 28.  There is another special exception for minor children which defers the age of majority from 18 to up to age 26 if he or she has not completed a “specified course of education”.  The exceptions discussed above do not apply to grandchildren, if a grandchild is named a designated beneficiary, he or she will be required to have a 10-year payout even if the grandchild is under age 18 at the time of the account holder’s death.

• There are other exceptions when beneficiaries are disabled or chronically ill individuals. If a designated beneficiary qualifies as a disabled or chronically ill designated beneficiary, he or she would still be able to obtain lifetime payout.  There is apparently a “certification rule” for disability and chronic illness.  It is unclear whether one has to be disabled or chronically ill at the date of account holder’s death or if a person becomes disabled or chronically ill during the 10-year period whether this alters the status of the payout.
• Deferred compensation trusts such as conduit trusts and accumulation trusts may be negatively impacted by this legislation. Even in the case of a conduit trust which would require mandatory distributions to a designated beneficiary of his or her share of the subtrust, deferrals would be limited to 10 years rather than lifetime.  Thus, many people may have had expectations that their trust agreement would provide minimum distributions for the lifetime of children or grandchildren.  Individuals expectations now must change.

There are other changes resulting from the SECURE Act including permitting part time workers to participate in 401(k) plans, allowing IRA contributions after age 70 ½, allowing “small business owners” to receive a tax credit for starting a retirement plan, and allowing the withdrawal of 529 plan dollars to pay up to $10,000 in student debt over the course of a student’s lifetime.  There is expanded opportunities for annuities as investments.  ROTH IRA conversions may be favored in some situations.

The result of the SECURE Act is that all retirement account holders should review their beneficiary designation forms and estate plan documents and determine whether or not these new rules fundamentally alter his or her goals and objectives with respect to estate planning and retirement accounts.

Please do not hesitate to contact your Dawda attorney if you have any questions related to the SECURE Act, your estate plan, and the impact of your beneficiary designations.

The post The SECURE Act Makes Stretch IRAs Less Flexible appeared first on Dawda PLC.

Paul was raised by his wonderful parents in a house full of love located in Southfield, Michigan. The Apaps were parishioners at St. Bede Parish. Paul and his four siblings attended St. Bede’s elementary school. He went on to Brother Rice High School where he had the privilege of playing on the hockey team with his brother, John. He graduated from Brother Rice in 1983 and joined his siblings at Michigan State University (all five of the Apap children are MSU alum). After completing his undergraduate degree in Accounting at MSU, Paul attended University of Detroit Law School and received his law degree. Finally, he completed his education at Georgetown University, where he got his Masters in Tax Law. He enjoyed practicing law until the final days of his life. Paul loved his job and always wanted to help people, but his true passion was for the game of hockey. He loved playing, watching, discussing and especially coaching hockey. He built an ice rink in his backyard every year and taught his children to skate on it. Many nieces, nephews, neighbors and friends enjoyed hours skating on that rink.

In 2009, he began to notice weakness in his arms and that eventually led to a diagnosis of ALS. He battled the disease for ten years with an unbelievable amount of grace and courage and he never let his illness define him. Paul was loved and cherished by his whole family and was a true friend to so many people. He was a wonderful attorney, friend, brother, son, uncle, and coach. His greatest role, however, and the one he was most proud of, was being a father to Tommy, Teddy and Ellie and a husband to Maureen. He touched the lives of each and every person he met and brought so much joy to the world.

Beloved husband of Maureen C. for 25 years. Loving father of Tommy, Teddy, and Ellie. Dear son of Clara and the late Harry Apap. Brother of Rose Marie Fricke (Bill), Mary Anne Napolitano (Mark), John Apap (Bridget), and Becky Grace (Terry).

Visitation:

Wednesday, December 11
2:00 PM – 8:00 PM / Rosary 7:45 PM
A.J. Desmond & Sons Funeral Home
2600 Crooks Road (between Maple and Big Beaver)
Troy, MI

Service:

Thursday, December 12
10:00 AM / Instate 9:30 AM
Holy Name Catholic Church
630 Harmon Street at Woodland
Birmingham, MI

Burial:

Thursday, December 12
Greenwood Cemetery
Greenwood and Oak
Birmingham, MI

Memorial tributes to ALS Therapy Development Institute, 300 Technology Square, Suite 400, Cambridge, MA 02139.

Link to obituary

The post Paul C. Apap Obituary appeared first on Dawda PLC.

The landlord-tenant relationship is at the core of the commercial leasing business. In an uncomplicated world, a landlord and a tenant would enter into a lease for a term of years, and at the lease’s expiration, the tenant would either vacate the premises or the parties would agree to continue their relationship. Unfortunately, experience dictates that the world of commercial leasing is anything but uncomplicated. At a national level, trends in brick-and-mortar stores continue to cause broad upheaval in the overall makeup of shopping center tenants, and the personal, more human concerns of specific tenants can affect the landlord-tenant relationship on an individual level.

Given these circumstances, it is in each landlord’s best interest to understand that the tenant with whom they enter into a lease may not be the tenant for the entire duration of that lease’s term. Accordingly, it is crucial that commercial landlords that primarily lease to smaller tenants retain control over the assignment process, and the easiest way to obtain and retain this control is at the outset of the lease negotiation process. This article is a landlord’s perspective on key concepts involved in the negotiation of tenant assignment provisions in a small-tenant commercial lease.

When it comes to negotiating assignment provisions in small-tenant commercial leases, landlords and tenants usually have completely conflicting objectives; while a tenant generally desires the ability to freely assign its interest in the lease without input from the landlord, the landlord wants to limit the tenant’s right to assign its interest in the lease as much as possible. With this in mind, the landlord’s initial position with respect to tenant assignment should be that the tenant cannot assign its interest in the lease without the landlord’s prior written consent, which consent shall be granted or denied in the landlord’s sole and absolute discretion.

Depending on the prospective tenant and the amount of leverage held by the landlord, negotiation on the tenant assignment provision may end here. However, in situations where the tenant is more sophisticated or has more leverage, a landlord may need to compromise its position. In this situation, the landlord’s first “fallback” position would be to retain sole and absolute discretion over tenant assignments to unrelated third parties, but allow the tenant to make certain “corporate” assignments (e.g. an assignment from a corporate tenant to a franchisee, or an assignment from the original tenant to an entity that purchased 100% of the original tenant’s assets) by giving the landlord prior written notice of such a “corporate” assignment.

Each tenant and lease negotiation is unique, and accordingly, it is common to see assignment provisions be negotiated beyond this point. Larger tenants with more leverage may be able to negotiate language in the assignment provision of a lease that, while still requiring landlord consent to a tenant’s assignment to a third party, limits the landlord’s discretion to grant or withhold its consent to the landlord’s “reasonable discretion, not to be withheld, conditioned, or delayed”. Although this language reduces a landlord’s ability to block a potential assignment, the landlord can retain some level of control over the assignment process by inserting criteria for a proposed new tenant that would create guidelines for a landlord’s “reasonable” discretion to consent to an assignment. Some examples of this criteria include a new tenant’s tangible net worth, the level of operating experience of a new tenant, and the business reputation of a new tenant. This type of compromise allows the landlord to retain a level of control over any tenant assignment while still giving the tenant the ability to assign to a strong replacement tenant, and gives the parties a level of certainty regarding what types of assignments will be permitted.

While negotiating the tenant’s ability to assign its interest in the lease, landlords should also be sure to address the assigning tenant’s post-assignment liability under the lease. Ideally, a landlord wants an assigning tenant to remain fully liable with the new tenant, jointly and severally, for the remainder of the term. Not only does this language create a “backstop” against a potential default by the new tenant, but it also encourages an assigning tenant to more thoroughly vet a prospective assignee; if a tenant knows it has continuing post-assignment liability under the lease, it is more likely to pick an assignee that is competent to fulfill its obligations under the lease.

Again, depending on the particular tenant and the level of leverage enjoyed by the landlord, a prospective tenant may be able to negotiate away from post-assignment liability for the entire duration of the term. In any event, landlords should strive to ensure that they are not left “holding the bag” with an assigning tenant relieved of liability and an uncollectible new tenant in default. Common compromises in this language include an assigning tenant remaining liable for a period of time that is shorter than the duration of the lease’s term (e.g. tenant liability for 5 years post-assignment on a lease with 10 years remaining on the term), or the assigning tenant being relieved of liability if it assigns the lease to a tenant that has a sufficient tangible net worth (e.g. a mom-and-pop coffee shop assigning its lease to Starbucks).

While not usually contained within the assignment section of a lease, if the lease is guaranteed by the tenant (or a representative of the tenant), that guaranty can have an effect similar to when a tenant remains fully liable for the obligations of the tenant under the lease. In order to avoid personal liability in the event of a new tenant default, the guarantor (or guarantors) will generally strive to find a strong and competent replacement tenant.

As noted above, this article was written from a landlord’s perspective, and a tenant’s lease negotiation goals will be in stark contrast to most of the suggestions above. However, a landlord acquainted with the takeaways contained within this article is set up for success, and should start lease negotiations from a strong and educated negotiating position.

The post Drafting Assignment Provisions in Small-Tenant Leases: A Landlord’s Perspective appeared first on Dawda PLC.

The following Dawda attorneys were included on the 2020 Top Lawyers list:

• Alfredo Casab: Litigation – Real Estate
• Randal R. Cole: Labor and Employment Law, Litigation – Labor Employment Benefits
• Brian J. Considine: Environmental Law, Intellectual Property and Patent Law
• Edward C. Dawda: Corporate Law, Real Estate Law
• Theresa C. Joswick: Employee Benefits Law
• Joseph M. Judge: Real Estate Law
• David A. Mollicone: Litigation – Commercial
• Jeffrey D. Moss: Nonprofit/Charities Law, Tax Law, Trusts and Estates
• John Mucha III: Commercial Law, Litigation – Construction
• Michael Mulcahy: Real Estate Law
• Glenn G. Ross: Tax Law, Trusts and Estates
• Susan J. Sadler: Environmental Law
• Marc K. Salach: Corporate Law, Mergers & Acquisitions Law
• Todd A. Schafer: Real Estate Law
• Wayne S. Segal: Banking & Financial Service Law, Real Estate Law
• Tyler D. Tennent: Environmental Law
• Frances B. Wilson: Litigation – Banking and Finance, Litigation – Commercial
• Robert A. Wright III: Banking & Financial Service Law

For more information on the awards, visit: www.dbusiness.com/top-lawyers/

The post Eighteen Dawda Attorneys Named 2020 Top Lawyers by DBusiness Magazine appeared first on Dawda PLC.

Kathryn Kaleth has joined Dawda’s growing team of attorneys. She will serve as an associate, focusing her practice primarily in the areas of real estate, business transactions and environmental law.

Kaleth received her J.D. from Wayne State University Law School in 2019 and her B.A. from Michigan State University in 2016, majoring in Environmental Studies and Sustainability with a minor in Conservation, Recreation, and Environmental Law Enforcement. While in law school, she served on the board of the Journal of Law in Society as a Senior Note Editor along with competing in two outside competitions as a senior member of the Moot Court team.

Additionally, during her time at Wayne Law she worked as a Student Attorney with the Transnational Environmental Law Clinic. Her responsibilities included tracking statewide compliance with requirements set by the federal coal combustion residue rules, contributing to an Amicus Brief submitted to the Michigan Supreme Court, and conducting complex legal research into a variety of environmental law and property related issues.

See the original article in Automation Alley

The post Dawda Welcomes Kathryn Kaleth appeared first on Dawda PLC.

See the original press release HERE

Alliance Benefit Group of Michigan To Join Focus Partner Firm Sentinel Benefits & Financial Group

NEW YORK, Nov. 04, 2019 (GLOBE NEWSWIRE) — Focus Financial Partners Inc. (FOCS) (“Focus”), a leading partnership of independent, fiduciary wealth management firms, announced today that it has entered into a definitive agreement under which Alliance Benefit Group of Michigan, Inc. (“ABG of Michigan”), a premier retirement and benefits plan consulting and administration firm, will join Focus partner firm Sentinel Benefits & Financial Group (“Sentinel”), based in Wakefield, Massachusetts. The transaction is expected to close in the first quarter of 2020, subject to customary closing conditions.

Founded in 1969 and located in Bingham Farms, Michigan, ABG of Michigan works with almost 400 benefits and retirement plans representing over 30,000 participants, and provides best-in-class administration and record-keeping services. ABG of Michigan’s wholly-owned subsidiary, ABG Portfolio Strategies, Inc., provides investment advisory services primarily for retirement plan assets. ABG of Michigan, will expand Sentinel’s geographical reach, creating a premier “super-regional” retirement and benefits-focused financial services firm, and will position Sentinel’s business for further growth in the Midwest.

“We are thrilled to have such a well-respected firm join our team,” said Sam Mitchell, CEO of Sentinel. “ABG of Michigan has created an offering that will further enhance the ability of the combined firm to service clients, as well as increasing our bench strength and scale in the Midwest.”

“Having known the group at Sentinel for many years through the Alliance Benefits Group national network, we have seen first-hand Sentinel’s exceptional client commitment and ability to continuously improve the quality of their offerings,” said Lawrence Raymond, President of ABG of Michigan. “Sentinel’s approach to creating successful client outcomes mirrors the core principles of ABG of Michigan and will strengthen the combined firms’ business,” said Carol Tracey, ABG of Michigan’s Executive Vice President.

“We are very pleased that ABG of Michigan will be joining Sentinel,” said Rudy Adolf, Founder, CEO and Chairman of Focus. “This is Sentinel’s fifth merger since joining Focus, further enhancing the depth and scale of its employee benefits and retirement plan outsourcing business. Building on Sentinel’s long-standing presence in these areas demonstrates the value that we offer our firms in helping them scale their businesses within their specific areas of expertise. The diversity of our partner firms’ capabilities across a range of wealth management and retirement planning services provides significant benefits to our partnership.”

About Focus Financial Partners Inc.

Focus Financial Partners Inc. (FOCS) (“Focus”) is a leading partnership of independent, fiduciary wealth management firms. Focus provides access to best practices, resources, and continuity planning for its partner firms who serve individuals, families, employers and institutions with comprehensive wealth management services. Focus partner firms maintain their operational independence, while they benefit from the synergies, scale, economics and best practices offered by Focus to achieve their business objectives. For more information about Focus, please visit www.focusfinancialpartners.com.

About Sentinel Benefits & Financial Group

Sentinel Benefits & Financial Group (“Sentinel”) is an independent provider of employee benefits and financial services located in Wakefield, Massachusetts. Sentinel serves both individuals and institutions, providing offerings including employee benefits and retirement plan administration, open architecture retirement plan recordkeeping, investment advisory services, defined benefit and cash balance plan services, actuarial consulting, employee stock ownership plans, and group benefits brokerage. For more information about Sentinel, please visit https://www.sentinelgroup.com.

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