John M. Whalen, ESQ

Lewiston, Maine – Call (207) 786-0346

Serving Maine People since 1971

We know and care about the people we serve here in the Lewiston area.  We live here. We see you in stores, at church and social events.  Because we're "in it, together," our firm works hard to be a good neighbor and a great advocate for you.   Let us help solve your legal questions, today.

John Whalen, PA

I will, from time to time, post general advice on topics of interest to the site. Please, remember that we cannot give you legal advice on this site. Since each situation is unique, we need to have personal contact. But, we do hope you find our comments helpful.

 “John, I just learned I need to go for major surgery! Is there anything I should do to get my legal affairs in order?”

This is a question I frequently receive from my friends. It is usually accompanied with an admission that the person has not done anything to prepare themselves legally for such a situation. The answer to this question, of course, is yes. Let me explain from my personal experience.

18f83I have had major surgery in my life and I have also served as a care giver for my deceased wife whose cancer caused her to endure numerous surgeries. Major surgery generally requires that your doctor cause you to be unconscious for a period of time. While in most cases the surgery is uneventful, as your doctor will tell you there is no surgery that does not have risks.

Without going into the details, my late wife had complications during two of her surgeries. In both cases a decision needed to be made on the spot. Prior to her going into surgery, she had caused a document to be prepared called a Health Care Power of Attorney”.

In a latter article Kim explains this document in detail, but what it did was to allow the doctors to get the authority they needed from me. This allowed my wife’s surgery to continue. When she recovered full consciousness, I explained what had happened and the decisions I made which were in line with her general wishes regarding her health care.

1. Be Prepared

You really need to have a health care power of attorney properly prepared and signed when you go to the hospital. Before you have your lawyer draft it up make sure you have the names and addresses and all phone numbers of the persons you wish to have this responsibility. I say persons because an emergency may occur when your preferred person is not available. Having several names with all their contact information in a clear order of priority will enable the doctors to react quickly to any crisis. So, if you do not have a health care power of attorney, you should get one done ASAP! If you have one, now is the time to pull it out and make sure it is up to date.

2. “Durable General Financial Power of Attorney”

Since 2005, you are not allowed to have powers of attorney for health care on the same form as gives powers for financial matters. But, when you go into a hospital, sometimes it works best if your care giver has the ability to sign forms and make payment arrangements on your behalf. I can tell you, in my case, it came in handy on numerous occasions. The word “durable” means it can be used even if you are not conscious. But, this form is more often used when you are conscious and simply cannot get to the place where your signature is required, such as the admissions office or a bank. The words “general financial” means it allows the person to do anything with your assets and income that you would do. Because these powers are quite broad you will see the form is much more specific than is the health care power of attorney.

3. Have an Updated Will

A Will is a set of written instructions which directs how your estate will be managed and distributed upon your death.  While the state has a default plan called “intestacy,” if you do not have a Will, that plan generally is not what our clients prefer and it leaves open many questions which can produce a lengthy and expensive probate process. If you do not have a Will, you really should consider having us help you to prepare one. If you have a Will, you should take the time to review it to see if it still does what you want. If it does not, please let us know and we will help you to revise it.

4. Look at Your Beneficiary Designations

You really want them to be up to date. Certain assets fall outside of probate which means they pass directly to your named beneficiary on death. Those assets are: (1) assets placed into a trust during the decedent’s life; (2) property held in joint tenancy, and; (3) contracts, such as IRA’s, annuities, and insurance policies where the beneficiary(s) are designated on the policy.

Major surgery has risks, while we certainly do not want to wish a bad result on anyone, it is a wise person who plans for the worst and hopes for the best. It only takes a few moments for you to review these items. If they are not what you want, give us a call and we will help you get them changed. Likewise, if you do not have any of these documents in place and wish to create them, give us a call and we will help you. As always, if you have questions after reading these articles, please feel free to call us. We are happy to talk to you.


   Business entity form – the pros and cons

Choosing the business entity form is one of the most important series of decisions a business owner will make.  Here are some of the pros and cons of the various options available to a business owner.

business entity form

Sole proprietorship

A sole proprietorship is a business entity form where an individual (or a married couple) elect to operate solely on their own.  He/she may decide upon a name for the business, but in reality the business is her or him.


  1. No additional income tax filings – A sole proprietorship’s profits and losses are shown on the owner’s (or married couple’s) individual tax return.  They are reported on an attachment to the return called,

    Schedule C”.  Consequently, a sole proprietorship is not required to file separate income tax returns.  However, this does not mean it has no tax filing obligations.  If the business has sales which are taxable, it will need to obtain a sales tax number, collect the applicable tax at point of sale and withhold and pay the applicable sales and use taxes as required under state law.  Also, if the sole proprietorship has employees, the owner is required to withhold and pay over to both the federal government and the state the applicable employee taxes and

    sole proprietor

    withholdings.  Finally, a sole proprietor will be taxed by his/her municipality upon the value of the tangible personal property employed by the business.

  2. Complete Management control – The owner of a sole proprietorship only has to report to himself/or herself.  There is no ownership outside of him/her (or the married couple); so there is no need for a structured management scheme.
  3. Inexpensive to create – There are practically no filing requirements.  No formal agreements are needed.  There are no organizational transfers.  While the owner may want to take steps to protect the business’s trade name and trade mark, this may not even be required. So, it qualifies as the most inexpensive form of business to create.


  1. Individual liability A sole proprietor is individually liable for all acts of the business.  So, he/she is obligated personally to pay all debts.  In a retail business, he/she is responsible to the buyer for the quality of items sold. If there is an accident, the owner is responsible.  This applies to offsite accidents caused by an employee where the employee is acting within the scope of his/her employment. So, if an owner asks his/her employee to drive across town to pick up a part and gets into an accident, the owner can be sued.  In such a case, the burden of proof is on the owner to prove the employee was acting outside the scope of his/her employment. Yes, insurance can be purchased to cover some, if not all, of the liability risks; but in a sole proprietorship, the ultimate liability falls on the owner.  We hope to review these issues in depth in future articles.
  2. No survival mechanism The sole proprietorship is the owner.  Should the owner die, the business dies with the owner.  While the law allows a person to step in to manage the business (the personal representative), this is only for a short time (generally, 90 days!).  The same is true, perhaps to a lesser extent, if the owner becomes ill or disabled.  Without an organizational structure, the sole proprietorship is at risk.
  3. No multiple taxpayers Yes, we know, up above we wrote that a single income tax return was a plus.  It is, but it is a two edged sword.  The negative side is there is only one spot to put income and expense items. Often, in the business context, it helps to have multiple taxpayers which we go into in future articles.


A partnership is a business entity form which is created when two individuals (or existing entities) agree to enter into a business relationship with the goal of creating a profit.  The agreement need to be in writing, although we would recommend it be.  The business does not need to actually earn a profit.  All that is needed is the common goal.


  1. No tax on entity – A partnership under the income tax laws of Maine and the federal government is not considered a tax paying entity. While there is no tax at the partnership level, the profits, losses and credits of the business are taxed to the individual members.  A tax return is required, but it is basically and income statement with a form, Schedule K, which allocates items among the partners.  partnershipThis schedule is included in the taxpayers’ tax return.
  2. Flexible organizational form – As stated above, a partnership does not require anything to be in writing.  There is no required form or mandated identity to positions in the organization.  Further, there are no special filing requirements which need be made with the government with the exception of tax filings.  This allows the partners to establish their organization by agreement.  To reduce future misunderstandings, we recommend that our clients put their agreement in writing. The writing also can serve as a set of instructions going forward which, among other things, can be helpful to the tax return preparer in making tax allocation decisions.
  3. Inexpensive to maintain – A partnership does not require yearly filings; so it is fairly inexpensive to maintain.


  1. Individual liability – Each partner is liable for the acts individually and collectively with the other partner or partners, legally stated: every partner is jointly and severally liable to the public for the acts of the partnership.  What this means is just like a sole proprietorship, each owner can be sued individually even if he/she had no involvement in the act that caused the liability or damage.  While your partnership agreement can be useful to the partners to allocate risk within the partnership and among themselves, such an agreement has no direct impact on those who are outside the partnership.
  2. Limited life – A partnership is an agreement, when individuals are involved, that lasts only as long as the individual partners are alive.  Death ends the partnership just like it does the sole proprietorship.  After death, the Personal Representative can operate as a partner for only a short period; so any partnership agreement should have death provisions which can be funded at the death of a partner.
  3. Complex tax return – While the partnership pays no tax, it still is required to file income tax returns with the federal government and the state of Maine (as well as any other state which imposes an income tax on business operations).  These returns are basically income statements but they can be costly to prepare, especially if the partners have allocated certain rights among themselves.
  4. Expensive to establish – A partnership is basically a series of compromises between the partners on issues of organizational structure, distribution of profits and losses and allocation of tax benefits and burdens.  These compromises require time to work through and a writing to memorialize the understandings.  While often this can be done with a single attorney representing the partnership entity, each partner has a separate interest which may require him/her to employ separate attorneys.  We can help the new business owner to budget out the costs, but these documents are an expense of any start up partnership.  A benefit of this form is these writings do not need to be updated unless there is an event causing the revision and there is no filing requirement with the state.


A corporation is a business entity form which is created by statute at the state, not the federal, level.  By filing the appropriate form, Articles of Incorporation, correctly with the state (in Maine, with the Secretary of State’s Office) a business entity is deemed to exist which is treated as having a separate identity from the individuals who created it.   In essence, a corporation once filed with the state is treated as a person.  A corporation’s membership can be small. It needs only have one shareholder


  1. Limited Liability – A corporation provides its owners (shareholders) with protection from liability which does not exist under any of the above entity forms.  In most cases, the shareholders are not directly responsible for acts done by the corporation.  So, unlike a partnership, if an employee is driving the company truck on company business and gets into an accident, the corporation can be sued, but not the owners. business entity form The same concept applies to business contractual liability. So, you may ask, why the term “limited liability”? The answer is, while the owner will be free from liability for acts he/she is not associated with, he/she remains for those things he/she participates in. So, in the accident example, if the owner was in the passenger seat an ordered the driver to run a stop sign which caused the accident, he/she would be liable. Turning to the business contract, if the owner neglects to show his/her corporate authority in signing a contract or goes further and personally guarantees performance of a contract, he/she may be found responsible.  The concept of limited liability protections deserves an in depth review which we hope to do in future articles. Of course, if you have a question before the articles come out, we invite you to give us a call.
  2. Unlimited life – Since a corporation is a creature of statute and not a human, it does not have a temporal existence. Theoretically, it can live forever.  This can be very important in estate planning for the owners because the business will survive them. The going concern value of the business may be passed on to survivors. Frequently when we are faced with estates in which the personal representative is pressured to liquidate, we suggest the use of a corporate form (or the limited liability form discussed below) to allow the business to continue to operate.
  3. Established structure – A corporation has a statutory structure.  The corporation is managed by its owners either directly or through a board of directors.  They are required to work under a set of bylaws. The corporation must have at least three officers:  a president, a treasurer and a secretary/clerk.  These individuals are identified to the state on a yearly basis. The actions of these individuals when properly authorized are the actions of the corporation. It is wise to have the board or shareholders have written authorizations in place.  We hope to review these issues in future articles, but if you have a question please give us a call.
  4. Tax election – Most corporations in Maine qualify to report their taxes as either a regular corporation, a “C” corporation, or as a small business corporation, an “S” corporation.  A “C” Corporation reports and pays all income at the corporate level; while an “S” corporation uses a pass through approach, similar but not identical to a partnership.  There are rules for electing and qualifying for S corporation status which we hope to review in a future article.


Double taxation – A “C” corporation is subject to tax at the corporate level.  When the profits are distributed to the shareholders as dividends, they are taxed again at the individual shareholder level.  Now, the impact of this double taxation is reduced a bit if a corporation elects “S” corporation status because most corporate attributes are passed through to the shareholders like a partnership.  The concept is that small businesses should incur income tax only at the shareholder level, but there remain situations where even  after an “S” corporation election is made  double taxation is imposed.
Regulatory Compliance – A corporation, being a creature of statute, must comply with the statutes.  In Maine that means the shareholders need meet at least yearly and the corporation must file a report annually with the Secretary of State’s Office.
Inflexible structure – That “established structure” discussed above which to many is a benefit of the corporate form can also be a burden.  Many business arrangements just do not fit easily into the ridged corporate structure.  Many service businesses, such as accounting firms, accounting firms and real estate offices, work on a more collegial basis. While these types of businesses can function within the corporate structure, it is often like putting a square peg through a round hole.
Cost of organization and operation – A corporation begins with a meeting of incorporators who approve the filing of Articles of Incorporation.  When the Articles come back, they meet again to adopt bylaws and issue shares. Then, the new shareholders meet to elect a board of directors (if management by a board of directors is elected) and to elect the initial slate of officers.  This should all be documented in writing in a book, the corporate minute book.  Then, at least annually, the directors and/or shareholders need to meet to satisfy the law. Again, this should be recorded in the minute book. Finally, as the corporation moves through a year, situations may arise which require a vote.  For example, the corporation may purchase vehicles on an installment loan or through a lease. The authority for the action is the vote which will be recorded in the minute book.  All of this causes the corporation to incur legal costs.  Again, please ask us for a budget plan, we can work with our clients to spread out the cost in appropriate circumstances.

Limited Liability Companies.

A limited liability, like a corporation, is a business structure which is established by a filing with the state (in Maine, the Secretary of State’s Office).  A limited liability company works through the agreement of its members; so its filing is a relatively simple document called Articles of Organization, but its operations are controlled by the members’ agreement, called the Operating Agreement. The Operating Agreement is very similar to a partnership agreement.  Unlike corporate bylaws, it can be tailored to the entities needs.  But, like a corporation, a sole person can be its only owner (member).


  1. Limited liability – The owners of a limited liability company (LLC), the members, have the same protections from liability as do shareholders of a corporation.
  2. LLCPass through of tax liability – There is no taxation at the LLC level. Like a partnership, the income, losses and tax attributes pass directly to the members.  Unlike an S corporation where there is taxation if the entity dissolves, there is no tax on dissolutions. Further, the members generally are free to take their property out of the entity without adverse tax consequences. So, the tax costs of incorporation are avoided while the liability protection remains.
  3. Organizational life not measured in human life – Since an LLC’s existence is based upon filings with the state, its life is not necessarily controlled by the term of life of its owner or owners (although they can make such an agreement among themselves).  The entity lasts as long as it is registered with the state.
  4. Flexible organizational structure – An LLC must elect to be managed by the owners (members) or by a board (managers), but the members are free to set up the organizational structure to address their needs.


  1. Regulatory Compliance – Like a corporation, an LLC needs to file a report annually with the Secretary of State’s Office.
  2. Cost of organization and operation – Because the entity needs to have evidence of existence, the owners will find, like the corporation, they will need to maintain a minute book to maintain its decisions in writing.  This work is generally done by the attorney.  This work, along with the organizational writings and tax filings, cause this to be a fairly costly entity. As with the creation of the other entity forms, please ask us for a budget plan, we can work with our clients to spread out the cost in appropriate circumstances.


There are multiple options for the person who wishes to operate a business in Maine.  There are pros and cons to each business entity form.  We do hope this article is of help to those of you who are thinking of starting or buying a new business.  Please give us a call, if you need to discuss a situation in detail.

social media

Technology and Social media have combined to form the perfect storm for parties to a legal matter. While it is tempting to share, post, email or tweet about your divorce, eviction, injury claim, court proceeding, or statements your attorney made to you, it is important to understand the negative implications that can come from sharing information online.

When you consult with and hire an attorney to represent you in a legal matter, you form an attorney-client relationship. By definition, this relationship triggers the attorney-client privilege. This privilege protects information that you discuss with your attorney from being disclosed to others, including the opposing party. With the advent of social media and advances in technology, it is now easier and faster than ever to lose this privilege.

It is important to remember that you should not talk about your case with others. Even a simple post on Facebook, email to a family member to keep them informed, or a verbal conversation with a coworker or friend may be enough to allow the opposing attorney to force you and your attorney to reveal all communications about that matter.

You might be asking yourself, “How do I protect myself?” The answer is simple; don’t discuss your legal matter with anyone except your attorney. When discussing your legal matter, be sure that no one else is present who is not also a client in the same matter, as doing so may cause the loss of the privilege. If you text message, think of who might be viewing them. If you emailed someone, did you carbon copy or blind copy anyone? If so, you may have lost the privilege.

Next, think of where you are sharing the information from. Employer-supplied computers, laptops, and cell phones are subject to inspection and you have no reasonable expectation of privacy on such devices because thesocial media laptop employer owns the device. Moreover, public Wi-Fi systems or public computers present the same issues of non-protection. You should always use your personal devices and personal email accounts, which should be password protected, to communicate about your legal matter. If you share email accounts or cell phone accounts with the other party to the legal matter, you need to establish an independent email account or cell phone account and both should be password protected.

While we are not prohibiting you from engaging in electronic and social media conversations, we strongly encourage you to refrain from sharing information relating to your legal matter in any forum that could jeopardize your attorney-client privilege. We are happy to discuss this more in person at the time of your initial meeting, but please be advised that you may see a statement similar to the one below on the engagement letter/fee agreement that we ask you to sign and acknowledge:

“We strongly encourage you to refrain from participating in social media during the course of representation. This includes Facebook, Twitter, Tumbler, Flickr, Skype, Instagram, and the like. Information found on social media websites is not private, can be discoverable, and may be potentially damaging to your interests. Understand that information shared with others, either verbally, in writing, in an email, text message, or even posted online could lead to the loss of the attorney-client privilege were that information in any way relate to the legal matter that we are handling for you.Given this, we advise you to refrain from communicating with us on any device provided by your employer or any computer, smart phone, or other device that is shared with someone else. In addition, when communicating with us, please do not use your work email address or a shared email account. You should only use a private email account that is password protected and only accessed from your personal smart phone or computer.”

estate-gift taxesMaine Estate-Gift Taxes

Will your family be subject to Maine estate-gift taxes when you die?  Maine is one of the few states which continue to have an estate tax.  Being married may help you avoid or defer it.

The Maine Estate-Gift Taxes, on those estates which are taxable, are at rates which range from 8% to 12%.  While this tax is credited against the federal estate tax, because of the differing exemption levels, the Maine estate tax might get imposed even though there is no federal tax.

The federal estate tax is a “gross up tax.” This means that it looks at the total value of gifts during life together with the value of assets held by the decedent at death to establish the value of the taxable estate.  This tax scheme has recently been modified with a broadening of the amount of the exemption, but with an increase in the maximum tax rate imposed upon those estates which are taxable.  Under current law, the life time exemption is index to inflation.  It began at $5,000,000.00 and rose to $5,250,000.00 last year. It should continue to rise with inflation.  The maximum rate on estates which are taxable is 40%.

The State of Maine can impose a tax only on estates of individuals who were residents of Maine on the date of death or estates which hold property in Maine which includes real estate, personal property, such as vehicles, and intangible assets, bank accounts, stock, etc.  In Maine, an estate which has a value in excess of $2,000.000.00 is taxable.  While this number may initially appear big, remember this tax not only is on items owned at death; but also, items where a benefit is paid due to death such as life insurance.  So, it can very well be that while there may not be a tax at the federal level, one will be imposed at the state level.  Marriage can allow a couple to avoid and/or defer that tax.

Unlike any other arrangement, couples, who join in a marriage recognized by Maine, are allowed under both the laws of Maine and the federal government to make unlimited gifts to each other and to join with each other in making gifts to others.  This allows the couple to equalize their estates by the one with fewer assets transferring assets to the other spouse.  Also, by combining on estate gift tax returns, they equalized the cost of the gift which can either avoid a gift tax or reduce its impact.  The result is a married couple by gifting between each other and to others can greatly impact the tax on their total estate.  Since the tax is imposed as of the date of each partner’s death, this provision in the tax law avoids a tax result governed by the date of either spouse’s death.  It can even result in no tax ever being paid with proper planning.  Unmarried couples cannot do this.

Another advantage of marriage is a provision called the “marital deduction”.  Under both federal and Maine state law, property which one spouse receives or obtains control over from the other spouse is deducted from the total value of the estate of the first to die.  The idea behind that law is the tax is only deferred.  When the second spouse dies, assuming that spouse has not remarried, a tax is collected upon those assets.  But, even the impact of that tax can be avoided or limited with proper estate tax planning.  By using an estate plan which utilizes both the exemption and the marital deduction, a married couple can pass substantially more onto future generations that can a single person.

In future articles we look more closely at how a couple can plan their estates to limit or avoid the impact of the estate or gift tax.  For now, it is suffice to say, if you have recently been married, or if married have not updated your estate plan,  please consider giving us a call.

Are you starting a business in Maine?

starting a business in maineOur office is gets a lot of calls from individuals who are thinking about starting a business in Maine; so we thought it might help to post a short series of articles on the subject. We need to first begin with a disclaimer.  The information in this article (and those that follow) should not be taken as direct legal advice as each case is different.  If you are in the process of starting a business, please give us a call so we may gage your specific situation and respond to you in greater specific detail than can be given on a website like this.  But, there are things everyone should consider before starting a business of their own or purchasing a going concern owned by another.  We will be presenting articles focused on specific legal issues over the next few weeks.  However, today, we would like to address an area which, while perhaps not directly connected to your legal issues, is something we would suggest you have in place before you venture into owning a business, a team.  So, we call this first of our series,

Building the Team

Perhaps, this comes from our background in sports, but we like to think of a business as a team.  Just like any other team, a business is only as good as its owner, its coach and its players.  As the owner of the team, it is up to you to bring to your team this important mix. Let us look at this team.

The role of the owner – Perhaps the most important member of the team is you.  As the owner you receive the profit from the business, but you also have to bear the losses of the enterprise.  To obtain those profits, it is the owner’s job is to develop a team which will be successful.  Yes, as a start-up, you might have to wear all of the hats, owner, coach and player, but it is never too early to plan on being just the owner. Before you begin a business, we suggest you take an honest inventory of your strengths and weakness.  Do you have the knowledge of the business and its market which you wish to enter as does, for example, Bob Craft, the owner of the New England Patriots, has of the NFL?  If not, where do you get that knowledge? We would suggest if you have not worked in the area, that you find a business which will employ you.  Also, we suggest you read as much as you can both about the business you are targeting and about the skill sets by others, like the Bob Crafts, Bill Gates, Steve Jobs, etc., who have traveled the start up road with success. But, if you do nothing else, we urge you to have an informal group of advisors in your contact list to call upon.  Let’s look at the makeup of this group of advisors:

The Mentor – This person or persons is perhaps the most important in your group. He/she is a person who has experience and the time to lend you an ear. While it might be someone directly in your line of work, it does not have to be. For example, John was fortunate enough to have two. His old boss from the Army and a local businessman, served as his mentors.  His Colonel, although he devoted his entire work life to the Army, was an attorney who interacted with attorneys all around the United States.  Further, he was in charge of the team which created the United States Army Claims Service which basically is a large law office.  He knew how to staff and equip an office which was something John had no knowledge.  He also gave him valuable hints on what books to buy; and perhaps more importantly what books he could simply borrow from the law library.  The other mentor was a longtime resident and owner/operator of a successful business.  He not only knew how to create a profit; he knew how to train his managers to get the best out of his employees.  He had a deep knowledge of the community and was willing to share his knowledge and insight.  But, another very important function served by both was to be an impartial ear.   John could talk things over with them before he took action.  Their assistance was invaluable.

Accountant – If you are going to play the game, you need to know the score.  The person who sets you up to know the score is your accountant.  The accountant’s role is to help you best set up your bookkeeping system so it gives you up to date information on your financial condition. Your accountant can also be helpful to you in finding a few key numbers in those books which will help you guide the business along.  He/she also can be helpful, along with your attorney, in selecting the business form (or forms) you will elect (a subject we plan to expand upon in our next article in this series).  Next, he/she will be helpful in getting your various tax returns properly prepared and filed.  Finally, since they deal with businesses on a daily basis, they can also serve in the mentoring role.

Insurance Agent – Our job as attorneys is to try to help you structure your business to limit your personal liability exposure, but we can do just so much.  Let’s face it, life is a risky place; so we recommend our clients establish a relationship with an insurance agent, preferably an agency which is broad based.  Clearly, you need a general liability and casualty policy to cover general risks, but there is more.  If you are a professional you need to consider professional liability coverage. If you are a contractor, you might wish to have a product liability type of insurance.  If you have any employees you will need worker’s compensation insurance.  Finally, you might need to consider health, disability and life insurance to protect the business should you get sick, disabled or die.  The role of a good insurance agent is to help you through these decisions and to find the least expensive product for your needs.

Media/Marketing Specialist – While we live in a networked world, few of us have the time, knowledge and/or ability to do our own media work.  While word of mouth advertising may be the best form of advertising, it is also the slowest.  A start up business does not have the luxury of time.  Your media/marketing person has the time, knowledge and talent to get your name out to potential customers.

Attorney – The last, but certainly not the least, member on your group of advisors is your attorney.  While the attorney can do the paperwork needed to establish your business, he/she can do so much more.  He/she can help you structure your contracts to make the laws work for you. He/she can help you design employment packages to attract and retain employees.  He/she can maintain your business documents to satisfy tax and other government regulators.  He/she can help you collect on just debts owed to you and defend you in court from claims made against you. He/she can help you design and implement a transition security plan which will allow your business to continue if you get sick, injured or die.  There are many other support functions which an attorney provides. But, one that might be best serve you is the attorney is duty bound to protect your secrets.

The role of the coach/manager

Have you ever watched a sporting event and looked at the actions of the coach?    The role of a coach is very similar to that of a business manager.  The coach has the responsibility to find and select players to fill specific needs on the team.  The coach must mold those players into an effective unit to be prepared to win the game. The coach establishes the basic strategy to be employed during the game.  Once the game begins, the coach has the responsibility to watch the players as they engage in play, to encourage them and to make adjustments to the game plan as it develops.  After the game ends, it is the coach’s job to review the team’s performance to make adjustments for the next game.  The coach reports on the performance to the owner.  If the team loses, it is the coach who bears most of the brunt of the loss; but if the team wins, a good coach gives the credit to the team.

This role is exactly what the manager/owner of a small business does. The only difference is each transaction of the business can be like a new game.  In real life, those decisions can dictate how much, if any profit, the business makes.  A person with that skill set is essential to any successful business.

The roles of the Players/ Employees

The chemistry among the players and the proper matching of their abilities are the keys to the success of any team.  The coach/manager needs to know what his staffing requirements are and how to fill those needs.  The coach/manager needs to have a good knowledge of the job assigned to each player/employee.  The coach/manager needs to select and train individuals to match those needs. But, it is the player/employee who will do the work on the field to bring success.

In a business, this means each employee must have a clearly defined job description and must be gauged against that job description.  Let us imagine your business has six employees: a receptionist, a bookkeeper, a sales person and three production/shipping people.  Your receptionist is your voice to the world.  She/he is not only greeting your customer, she is your first point of sale.  While it is your salesperson’s job to seek out and find customers, the receptionist’s job is to keep them coming through the door.  Her job description should match these requirements.  Your bookkeeper probably will have many hats.  He/she will record your transactions, cut your checks, send out your invoices, prepare your payroll and file your taxes.  At least initially, she/he will deposit payments and call on delinquent accounts. They should be spelled out in a job description.  Your sales person (which might be you) must know the customer’s needs, but also the production staff’s capabilities.  Putting this in the job description allows both the employer and employee to know their roles. Finally, the production staff needs to create the profitable product you are selling.  They also need to communicate with the salesperson and bookkeeper to make certain the product they are producing is going out the door in a timely manner.  This should be laid out in a clear job description.  This does not just happen.  It requires hard work by the owner and/or manager.  It takes time to draft proper job descriptions.  It takes a wise, patient person to blend the talents of each of the employees into a team which is trained to focus on the same goals. Finding, molding, and training the proper mix of individuals to allow them to act independently, at the top of their abilities, is just as difficult for the small business as it is for the New England Patriots.  Yet, when it is done properly, like any champion sports team, it is a beauty to behold.

In our next article, we will turn our attention to what forms can a business take and what are some of the advantages and disadvantages of each.

Want additional information about starting a small business in Maine?

The Small Business Administration provides more information on this topic and still more can be found at the IRS Website.

There are many options available to you if you can’t afford an attorney, which we will explore below:

can't afford an attorneyLegal Services for the Elderly

If you can’t afford an attorney the Law Offices of John Whalen & Kimberly Levesque, we have partnered with Legal Services for the Elderly of offer legal assistance to older Maine citizens whose income falls below 200% of the federal poverty level. As Referral Panel Attorneys, both John and Kimberly have agreed to comply with the terms of the reduced fee schedule as set by Legal Services for the Elderly and will provide an initial one-half hour consultation free of charge.

Too see if you qualify for the reduced fees or to find out more about Legal Services for the Elderly go to their website or call 795-4010 to see if you qualify for reduced fees. Tell them you would like to use either John Whalen or Kimberly Levesque. A representative of LSE will then call us and inform us if you qualify for the reduced rates. We will then call you to discuss your options and schedule an appointment.

As always, you may call us at any time with questions. We are here for you and we are happy to talk with you.

Maine Judicial Branch Website

This page contains a wealth of information including representing yourself, information about the different Courts of the State of Maine, information about the Lawyer Referral Service, and legal service organizations that can help you through your legal matter.

Pine Tree Legal Assistance

Pine Tree Legal Assistance is another great resource for low-income clients of all ages. This site also offers detailed, but easy to understand, information on a wide variety of common legal issues arising every day.

Volunteer Lawyers Project

Volunteer Lawyers Project offers free legal assistance to low income clients of all ages. Visit their website for more details.

Tax Advantages for all married couples

In the last year, we have experienced a major change in the law with respect to the rights of our gay, lesbian, bi-sexual and transgender friends, neighbors and family members here in Maine.  marriage and taxThey may now have a civil marriage under the laws of the State of Maine which will also be recognized by the federal government.  Regardless of one’s religious view on the subject, this change is a big deal.  Now, any couple who have had their union recognized as a marital union in Maine will be treated under the law as a married couple.  While this issue, on the multistate level, becomes a bit more complex if one or both of the members lives or earns taxable income in a state which does not recognize same sex marriages, if all of the couples’ income is earned in Maine, the couple may avail themselves of the advantages of the special treatment the tax law gives to those who become married.  But, remember, regardless of your sex, these advantages are significant.  Let us take a moment to look at some of those advantages:

Income Tax:

  1. The joint return.  A married couple is given an election to either file jointly or separately.  In most cases, the joint return because it merges the couple’s income and applies a lower rate of tax, results in a lower tax cost to the couple.  But, if there are children involved from prior unions or other special factors, the couple is not locked into the joint return. They may elect to file separately. income tax Before a couple, especially a newly married couple, files their income tax return they should request their tax return preparer to calculate their tax both ways. You may file at whichever approach achieves the lowest tax cost.  But remember, if one spouse selects the joint return approach, the other must join in the election.
  2. Tax Withholding. Many couples forget to have their employer adjust their withholding after they get married.  If the couple withholds using the married election, they will have significantly less taken each pay period from their check.  Some argue that by keeping their withholding at the higher married filing single rates, they are assuring themselves a refund. While this may be true, what they are actually doing is giving the government an interest free loan.  Interest on tax funds begins not on the date of withholding, but on the date the return is filed. Again, this is a subject you should take up with your tax return preparer, especially in the first year of marriage.
  3. Home Sales.  It is come with marriages of older couples that each brings a home into the marriage.  If both own houses and they wish since 2010, a single tax payer who owns a home for two years does not have to pay taxes on the first $250,000.00 of gain on the sale of a house which it has been owned for more than two years.  So, if the couples plan is to just sell one house and move into the other, timing of the sale may not matter.  But, if the value of the house is over $250,000.00 or they wish to sell both houses, they may wish to wait to sell until after the date of their marriage.  Married couples do not have to pay taxes on the first $500,000.00 of gain.

Power of Attorney provides protection


Every day, you make decisions about finances and healthcare in an effort to protect yourself, your family, and loved ones. What happens when you can’t make those decisions for yourself? Life on is short and unpredictable. When you least expect it, your ability to make these decisions may become impaired. At The Law Offices of John M. Whalen, P.A., Attorneys Kimberly A. Levesque and John M. Whalen, can help you plan for the unexpected.

Power of Attorney for financial and legal issues

A General Durable Financial Power of Attorney, grants broad authority to an individual (also known as the “agent”) of your choice, to make decisions with regard to your finances (i.e., bank accounts, bill payment, stocks, bonds, etc.). The agent does not have authority to make healthcare decisions on your behalf. A separate document, titled, Healthcare Power of Attorney, will control who will make healthcare decisions on your behalf. Because the General Durable Financial Power of Attorney is very broad in its scope, it is advised that you choose someone you can trust with your money, your personal information, and account information. More importantly, you should choose someone who understands your views and/or principals and who will act in accordance with them.

Power of Attorney for Healthcare

A Healthcare Power of Attorney grants decision-making authority to an individual of your choice with regard to healthcare decisions. This agent does not have authority over your finances, as mentioned above. When you are unable to make your own decisions about your healthcare, this agent will act on your behalf in accordance with your wishes. This agent’s authority to act includes end-of-life decisions, artificial nutrition and hydration provisions, and relief from pain measures.

When considering whom to choose as your agent for either power of attorney, be sure to ascertain whether that person will act in your best interests and make the decisions that you would make, if you could. These conversations are crucial to ensuring that you, your family and loved ones are protected. When you are ready, we are here to draft and prepare these documents for you. Often, we can have the documents drafted, signed, and executed on the same day. If you have questions, or wish to schedule an appointment, please call us. We look forward to talking to you.

John, my loved one just died. Do I have to go to Probate Court?

probate1This is a question we often get from my clients, neighbors and friends after their loved one has died or in the period just before death.  With all the negative information in the media about the complexity and cost of probate, it is no surprise that this is a concern.  But, the reality, in Maine, is that even if a probate is required, the process can be fairly simple and relatively inexpensive.  In future articles, we plan to go through the probate process in detail. But, with this introduction, we would like to address this basic question. Do I have to go to Probate Court?

What is Probate?

Before we look at the answer to this question, it might help to understand why the law has this process called “probate”?  The answer is quite simple.  Way back in the middle ages in England, it was recognized that a system needed to exist which allowed for the orderly settlement of a decedent’s debts and the orderly disposition of his/her assets. The term “probate” comes from the term used in Saxon law, “probare”, which meant to claim a thing as one’s own.  Black’s Law at p.1365 (4th ed.1951). This system was brought to America with the first colonists.  In Maine, until the mid nineteen seventies, the system was extremely complex and expensive because just about each step of the process required a hearing before the probate judge.  This changed with the adoption of Maine’s Probate Code, which greatly simplifies the process and allows most estates to be probated without the need for a hearing before a judge; but the reputation lingers.

So, in brief, the answer to the question is an estate may be needed if the deceased died holding ownership to “probate” assets and/or with unresolved debts which the family and loved ones of the deceased wish to conclude.  Let’s look at this in a little more detail.


I am afraid the definition of probate assets is one of those exception type definitions.  Probate assets are all assets owned or controlled by the decedent at the time of death except (1) property which was placed into a trust before death, (2) property which passes to an existing beneficiary by operation of a contract executed by the decedent before death, and (3) property held in joint tenancy with an individual or entity that is alive or existing at the time of the decedent’s death.  A trust is an arrangement where a person turns assets over to another person(s) or entity to hold, invest, manage and distribute to an identified beneficiary pursuant to an agreement, usually in writing, between the person turning over the assets and the person who will manage them.  This can actually be set up with the same person serving both roles.  These trusts are often called ‘living trusts” because they are set up before death, but with the intent of controlling matters after death.  But, the important thing to remember is to avoid probate there must be proof the assets are actually in the trust at death. If a question exists, the Probate judge can be asked to answer the question.  The second class of probate assets covers insurance type arrangements where the beneficiary is identified.  These assets include all types of insurance policies.  It also includes annuity investments and pension plans, including IRA plans and 401 (k) plans.  The last class applies to all types of property, real estate, vehicles, bank accounts and investments. An arrangement that passes ownership on the death of one owner directly death to the survivor on the deceased’s death falls within this class. Most married couples title their assets in this form; often when one spouse dies there may not be a need for probate.  But remember, if there exist assets which fall into this definition, probate will need to be considered.  If the total value of these assets is $20,000.00, ownership can be achieved through an affidavit of transfer provided the beneficiary is clearly known.  If the total is greater, a probate is advisable.

Unresolved Debts

The other situation which may motivate the family to consider a probate is when the decedent had unresolved debts at death which they wish to resolve.  When this question arises with an estate with little or no probate assets, my question to the family is, why do you want these debts addressed?  Unless they have done something to make themselves directly responsible for the decedent’s debts, the creditors have no claim against them unless and until they agree to be responsible for the debt.  If the family wishes to get these debts addressed, I suggest they consider a filing in probate court.  By going through probate court the debts can get settled without their being personally exposed to the creditors. By creating an estate through probate court, a person is appointed to manage the estate.  Often clients use the older terms for this role of “executor’ or “administrator”; but, in Maine, the person (or entity) who serves in this role is called the “personal representative”. The personal representative is responsible to identify the assets, address debts of the decedent and distribute the estate.  This person is not directly responsible for the debts of the decedent.  The creditors cannot proceed against the personal representative; they can only make their claims against the assets of the decedent (generally, the probate assets, but in some cases, this could expand to non-probate assets).  In these situations, the probate court functions like a bankruptcy court.  The creditors’ claims are classified and paid (or not paid, if there are no assets available to their class) in accordance a framework which the legislature has designed and put in place under Maine’s Probate Code.

We do hope this discussion has been helpful.  We will be addressing issues of estate administration, as well as estate planning, in depth in further articles. But, one last point for you to keep in mind if ever you are placed in this position.  While there is no time limit on when an estate once opened must be closed, there is a time limit on when an estate can be established. An estate cannot be established if three years have passed since the date of the decedent’s death.