10 Essential Steps to Start a Nonprofit

You have a deep desire to make a difference to a cause very important to you—animals, the environment, mental health, youth, poverty, veterans, among many others—so you decide that starting a nonprofit is the best way for you to make an impact.  This blog post is first in a series of ten steps to starting a nonprofit organization.

STEP #1: DEVELOP A MISSION STATEMENT

The first step is to develop a mission statement.  This step is more crucial than people realize.  An effective mission statement will guide every aspect of your organization moving forward, serve as your pitch for raising funds or securing grants, and explain to the world your organization’s reason for existing.  (Note: existing nonprofit organizations should review their mission statements and update them if necessary.)

Your mission statement is crucial but is not the place to describe every aspect of your organization in detail.  For example, the North Shore Animal League’s mission statement is, “To provide, promote and advance the humane protection, care, and treatment of animals by any and all means.”  This statement is general enough to cover various animals, and various methods of care.  It allows for future growth by not limiting the types of animals or any specific area the group serves.  Other groups benefit by a more narrow mission statement, such as specific breeds of dogs, or specific care such as spaying and neutering, depending upon the group’s purpose.

The fundraising platform Snowball suggests three elements to a mission statement that keep your statement broad yet focused on purpose:

1. Drive. What are you trying to solve?  Who do you want to help?  Do you want to start a community program to keep kids off the streets (solving boredom, wanting to help youth)? Do you want to start a group that takes dogs out of shelters and places them in foster homes until they are adopted (solving overcrowded shelters and resulting euthanasia, wanting to save dogs)?
2. Action. What do you want to do to help?  You want to start a community program to keep kids off the street by “developing after-school programs”?  You want to start a group that puts shelter dogs in foster homes by “organizing a network of foster homes”?
3. Impact. What are your goals?  What impact do you want to have?  We want to reduce problematic behaviors and increase positive outcomes in kids.  We want to save the lives of adoptable dogs.

Mission statements should be no longer than two sentences.  Eliminate unnecessary adjectives, use action words versus passive speak, and be concise.  Classic examples of conciseness include replacing “at this point in time” with “now.”  If possible, work with a group to develop your purpose, then reduce it to a mission statement.  Read the statement out loud a few times to be sure it sounds clear and concise.

Once you have your mission statement finalized, memorize it!

The next blog post, Step #2, will address choosing your board of directors and leadership team.  If you have any questions about starting a nonprofit in Ohio, or developing an effective mission statement, email me at julie@juliemillslaw.com, or visit www.juliemillslaw.com for additional methods to reach me.

Starting a business in Ohio

The first of the year typically brings clients wanting to begin the new year by starting a business.  I enjoy working with people who want to pursue their dreams, whether it is working for themselves, or turning a hobby into income, or providing a product or service to others.  In addition to filing forms and preparing organizational documents, my role as your attorney is to take all steps necessary to protect you and your assets from personal liability.

The necessary actions in starting a business in Ohio will vary according to what type of business you’re starting.  Basic steps include:

• File with the Ohio Secretary of State;
• Get an Employer Identification Number (EIN) from the IRS, even if you have no employees;
• Open a business bank account;
• Prepare an operating agreement;
• Register with the Ohio Department of Taxation.

This list is not exhaustive.  If you have employees, you should contact the Ohio Bureau of Worker’s Compensation and the Ohio Department of Job and Family Services to determine any steps you need to take.  Certain businesses will need to obtain special licenses and permits, particularly if your business involves preparing and selling food.

If you want to discuss starting your own business, contact me at julie@juliemillslaw.com.  It is never too late to become an entrepreneur in business-friendly Ohio.

Trustees for special needs trusts: “You must choose, but choose wisely.”

There are special considerations when choosing a trustee for a special needs trust.  As with any trust, the trustee should be responsible and trustworthy.  If the trust is for the benefit of someone with a disability, you have added issues to factor into your choice that are critical to family relationships, safeguarding assets in the trust, and maintaining the beneficiary’s eligibility for government benefits.

In my practice it is typically the parents or grandparents of a child with a disability who creates a special needs trust.  The natural choice to my clients for a trustee is someone who knows and cares about the child–usually a family member.  Oftentimes, however, the family member is unaware of what is involved with administering a trust for a disabled person, which could lead to legal and financial problems for the trust and the trustee.  Professional trustees (financial institution, etc.) are viewed with skepticism because the child often has specific, individual needs unfamiliar to someone who doesn’t know the child, and their fees can seem excessive.

ISSUES TO CONSIDER

1.  Trustee will need to learn about government benefits, trust taxation, money management.  There are rules and regulations that the trustee will need to know.  Government benefits are complex, and maintaining them requires diligence.  Certain actions can jeopardize the beneficiary’s receipt of government benefits.   There are tax rules for trusts, and assets in the trust that need managed.  Your trustee should prepare to become very knowledgeable in unfamiliar areas of government benefits, trust taxation, and trust asset management.
2. Trustee can be held liable.  A trustee of any trust can be held liable for “wrongdoing,” even for mistakes.  With a special needs trust, mistakes from a well-meaning family member serving as a trustee could result in the loss of crucial government benefits for the disabled beneficiary, most notably, medical insurance (Medicaid).  Unfortunately, family-member trustees often do not purchase trustee liability insurance, making them vulnerable if they make an improper distribution that jeopardizes receipt of benefits, or if they fail to file taxes or submit accountings correctly. (I highly recommend trustee liability insurance for trustees.)
3. Family relationships might become strained.  If Uncle John is serving as the trustee of his niece Jane’s special needs trust, it is John who decides whether a distribution should be made.  If Uncle John and Niece Jane have always had a good relationship, and suddenly he is in a position of having to disappoint Jane by deciding against her request for something, their relationship might become strained.  Additionally, if John is a future beneficiary in the trust if Jane dies, an inherent conflict could also strain relationships.  Perhaps John is declining Jane’s distribution requests so as to keep as much money in the trust as possible for him if Jane dies?  Whether true or not, such a conflict has the potential of creating familial tension.
4. Cost.  One of the main complaints with professional trustees is their fee.  For some financial institutions, annual trustee fees can range from 1-5% of the value of the assets of the trust.  This might not be excessive when you consider costs associated with a family member serving as trustee.  Due to liability and time concerns, it is advisable for the trustee to hire an attorney to advise on government benefits and maintaining eligibility.  A CPA is advisable due to tax filings and tax considerations with trusts.  An investment professional is suggested to meet the trustee’s fiduciary obligation to maintain trust assets.  The family-member trustee can be compensated a reasonable fee for his or her services as trustee.  It’s the trust that pays for these services.  A professional trustee’s fees might be comparable to the cumulative fees associated with having a family member serve as trustee–if so, then I suggest factoring in other considerations above when choosing a trustee.

There is a middle ground.  For clients who want the personal involvement of a family-member trustee, but want the expertise of a professional trustee, I recommend designating the family member as “trust protector” and a professional trustee as the trustee of the trust. The trust protector safeguards the financial and other interests of the beneficiary, and can take legal action on behalf of the beneficiary if there are problems with the trustee.  The professional trustee has the financial ability to compensate the trust if mistakes are made, and the expertise to reduce the chance of making mistakes.

If you have questions about special needs trusts, special needs planning, choosing a trustee, or the role of a trust protector, please contact me by email at julie@juliemillslaw.com, or visit my website for other ways to reach me.  Planning for the future of a loved one with a disability is both critical and complex!

 

 

 

“Adverse Possession,” or “legally stealing property”

Yes, you can legally take real property (land) belonging to someone else.  It’ll take a couple decades, but it can be done!

Most people have heard of “adverse possession,” or “squatting.” These occur when one who doesn’t own the land (trespasser) eventually acquires ownership by means of possessing the land for a certain time period.  Trespassers become the property’s legal owners.  Often this possession is intentional, such as someone who builds a structure on land that appears abandoned or where the owner doesn’t pay attention (think vast farmland), or someone who encroaches on a neighbor’s property thinking that the neighbor won’t say anything or notice (think widening your driveway into the neighbor’s boundary line or extending your landscaping into the neighbor’s yard).

Adverse possession can occur unintentionally also.  Examples of this occur typically through mistake, such as a someone building a fence on a neighbor’s property by relying on a faulty survey.

In Ohio, you can acquire ownership of property if you adversely possess it for 21 years.  The acronym to remember when determining if the elements of adverse possession have been met is “OCEAN”: Open (visible, obvious, capable of being seen), Continuous (regular, uninterrupted use of the land), Exclusive (adverse possessor treating land as if he or she is the owner), Adverse (non-permissive) , and Notorious (owner has been put on notice by trespasser; trespassing can’t be sneaky or secretive).  Does a squatter grow a tomato garden on your land for 15 years, stop for two then claim “adverse possession” at 21 years?  (No adverse possession.)  Does a neighbor mow into his neighbor’s lawn for 21 years, but only in the middle of the night and is never seen?  (Sneaky or secretive behavior defeats “notorious” element and results in defeating claim of adverse possession.)

Adverse possession claims are very fact-specific.  To avoid “squatters,” you should:

1. Keep an eye on your property.  Enforce your boundaries.
2. Post “No Trespassing” signs if you own a large area of land.
3. Give written permission to use your land and get the user’s acknowledgement of such permission.  Examples include giving permission to drive across your land, park on your land, grow crops, etc.  This permission and acknowledgement defeats adverse possession and easement claims.

You might eventually need to involve the police or courts in situations of adverse possession, but whatever you do, do not ignore the situation for 21 years or you have a good chance of losing a claim of adverse possession in Ohio.

Contact me at julie@juliemillslaw.com or visit http://www.juliemillslaw.com with any property or other legal questions.