Non-Profit Corporations are special entities that use surplus revenues to achieve their goals rather than distributing them as profit or dividends. Assisting Non-Profit organizations requires specialized knowledge related to the laws and regulations that govern their formation and functions. The attorneys at Fedor Camargo & Weston PLC have extensive experience in assisting national Non-Profit corporations, as well as helping local startup Non-Profit organizations. Our specialized experience includes litigating on behalf of Non-Profit organizations so as to protect their right to gifts and bequests. Whether it is assistance with starting a new Non-Profit organization, or litigating in Oakland County, Michigan to protect a Non-Profit's gifts and bequests, the attorneys Fedor, Camargo & Weston PLC have the experience and knowledge to assist.
Our attorneys have represented numerous charities and non-profit entities in various complex probate litigation matters including, will and trust contests, fiduciary litigation, estate distribution disputes, no contest clause claims, and financial elder abuse. Probate litigation in Michigan is governed by the probate rules and laws and is highly specialized. Our attorneys have developed that specialized understanding of probate law and have used it successfully to represent the interests of our Non-Profit clients.
While our attorneys have vast experience in litigation in the probate court, they also have a wealth of experience in other substantive areas frequently at the heart of trust and estate disputes including real estate, tax, corporate, and partnership law. Our attorneys are particularly skilled in negotiating and drafting complex multi-party settlements, which such cases often demand. Because probate litigation matters often involve numerous competing interests, it is of paramount importance that a Non-Profit's attorney understand how to "fit the pieces together" for the benefit of the Non-Profit organization. At Fedor, Camargo & Weston PLC, our attorneys know how to do just that.
When appropriate, Fedor, Camargo & Weston PLC has the tenacity to litigate a matter to conclusion through trial or appeal. In fact, the firm has represented several of the nation's leading 501(c)(3) organizations in multi-million dollar will and trust contests. Such cases demand a certain understanding of the corporate nature of non-profit organizations and FCW's knowledge and experience help provide their clients with the necessary perspective to appropriately deal with these complex litigation matters in a manner that best suits the non-profit's stated mission. Fedor Camargo & Weston PLC has experienced litigators with real courtroom experience and the ability to successfully convey the genuine interests of a large public Non-Profit organization to judge and/or jury.
Generally, Non-Profits have a board of directors, staff, management, volunteers and executives who work with or without compensation. The duties of board members and potential liability from actions of employees and volunteers requires education and oversight that Fedor, Camargo & Weston can assist the corporation in maintaining with proper policies and procedures. We partner with Non-Profit clients to ensure that the company is in compliance with current laws and educate board members on their duties and obligations while advising them on potential liability and good practices which should be employed.
Directors of non-profit corporations have several duties to the corporation. The duties of care, of loyalty, and other fiduciary duties generally constitute the scope of individual liability of a director.
Michigan statutes provide that a director of a non-profit corporation must discharge the duties of that position in good faith and with the same degree of diligence, care, and skill which an ordinarily prudent person would exercise under similar circumstances in a like position.
The statutory duty of care in Michigan allows for the director's reliance on experts both inside and outside of the non-profit corporation, including accountants and attorneys. Although reliance on another party does not relieve a director of his or her individual duty of care, it does provide a measure of protection if the experts relied upon have been selected with reasonable care in accordance with certain standards. In business corporations, directors who have satisfied the duty of care are afforded the protection of the "business judgment rule." The business judgment rule is intended to provide protection from liability for decisions so long as the business decision had a reasonable basis of rationality, involved no conflict of interest, and was a reasonably informed one. The application of this rule in business corporations provides directors with a safe harbor in which to increase economic returns by taking calculated risks.
Directors of both business and non-profit corporations are also subject to the duty of loyalty. Michigan law provides specific guidelines to prevent potential conflicts of interest from resulting in violations of the duty of loyalty. A contract or transaction between a non-profit corporation and one of its directors, or between a non-profit corporation and another corporation in which one or more of the corporation's directors has an interest, will not violate the duty of loyalty so long as (1) the contract or transaction was fair or reasonable when it was authorized, approved or ratified by the non-profit corporation; (2) the material facts of the director's relationship or interest as to the contract or transaction were disclosed or known to the board and the transaction was approved by the board without counting the vote of the interested director or directors; or (3) the same material facts were known to, and the contract or transaction was approved by, the members of the non-profit corporation.
Conflicts of interest can be avoided by taking a number of precautionary measures. A formal written policy should adopted and address potential conflicts as they arise, including procedures for disclosing the material facts of proposed contracts and transactions with directors while still preserving the privacy of the individual director. A board should practice procedures and build a culture on which to build thoughtful, sound policies to guide the board's actions.
The largest source of personal liability for an individual director is a breach of the fiduciary duties discussed above. It is important to note that these duties are owed only to the corporation. The Michigan Attorney General is charged with representing the interest of the general public relative to charitable organizations and may bring an action against non-profit directors on behalf of the public if the Attorney General feels it is necessary to protect the public interest.
Another action prohibited by directors is "self-dealing." Self-dealing occurs when director use power or information obtained through their positions for their own benefit and may be vulnerable to personal liability for such actions. A director may be held liable for engaging in self-dealing for the benefit of family, friends, or other third parties.
Liability may be imposed upon individual directors who vote for or concur in actions taken by the board collectively, if the action is prohibited under state or federal law. FCW partners with non-profit corporations to ensure that their actions are in compliance with current laws. Michigan law provides that in some situations a director who was not present at a meeting is presumed to have concurred with board actions unless a written dissent is filed with the secretary of the corporation within a reasonable time after the director learns of the action. Similarly, a director who is present at a board meeting may be presumed to have concurred in certain actions taken at the meeting unless his or her dissent is recorded in the minutes or a written dissent is filed with the secretary of the meeting before or promptly after the meeting. Thus, a director who believes the board is taking action which is illegal or not permitted under law should ensure that his or her opposition is properly documented in the corporate records.
Fedor, Camargo & Weston PLC can assist your board in assuring proper compliance with laws and assist your board by providing guidance and advice to protect your board members from liability.
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Fedor, Camargo & Weston PLC serves clients throughout the state of Michigan. FCW is a full service Estate Planning Law Firm specializing in fundamental estate planning, wills & trust planning, powers of attorney, elder law, Medicaid application & qualification, long-term care planning, probate & estate administration, probate litigation, civil litigation, estate & trust litigation, Medicaid crisis planning, special needs & disability planning, veterans benefits, Aid & Attendance qualification, charitable planning, estate tax planning, business succession and sales, and asset protection. FCW serves individuals, families and business owners throughout the Birmingham, Bloomfield, and Troy, Michigan areas, and all throughout the state of Michigan.
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