Good Estate Planning Goes Beyond The Will

While a Will is an important part of any estate plan, there are other things that should be considered too.

Beneficiary designations and joint tenancy property should be considered when reviewing your estate plan.  Your bank accounts, stock brokerage accounts, retirement accounts may have beneficiaries that you named to receive the assets in those accounts.  These accounts might also be held in joint tenancy.  Real estate might also be in joint tenancy.

The reason that this should be reviewed with your Will is that assets that have a beneficiary designation or are held in joint tenancy will go directly to the persons listed and that necessarily might not be the persons that you named as beneficiaries in your Will.  It also might not result in dividing the money between your beneficiaries in the way that you want.

For accounts that you set up many years ago and for real estate purchased years ago, you may want to check the to see if they are held in joint tenancy or if you have named beneficiaries.  Then check your Will to make sure that the you will be leaving your property to the persons and in the amounts you intend.

So a good estate plan goes beyond the Will and considers any property held in joint tenancy and any beneficiary designations that you may have made.

Disclaimer:  This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Another Cost a Will Can Avoid

A properly drafted Will can save your beneficiaries costs in many different ways. One of those ways that people don’t ordinarily think about is the cost of a bond.

A Will can contain a provision that waives the requirement that the executor post a bond. If your Will does not have this provision or if you don’t have a Will then a bond will be required. These bonds can be very expensive. In many cases the cost of the bond is more than the cost of preparing a Will.

For example, if a person’s estate has a value of $100,000.00 the cost of the bond would be $1,500.00.

The statutory requirement for a bond is that it be equal to 150% of the value of the estate. The premium for the bond is 1% of the value of the bond. No the bond premium is not refundable. So using the example of the $100,000.00 estate (and yes that does include the value of real estate) the bond would be $100,000.00 X 150% X 1% bond premium = $1,500.00.

Again this cost can be avoided entirely by having a Will that contains a provision waiving the requirement that the executor post a bond.

DisclaimerThis is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Employee Non-Compete Agreements

A nightmare for business owners is an employee, who you spent a lot of time and money training, leaves to work for a competitor. One way to reduce the risk of that nightmare becoming reality is to have employees sign non-compete agreements.

Sounds great in theory, but are they practical in Illinois. A recent Illinois Appellate Court decision discussed two tests Illinois courts have used to determine whether an employee non-compete agreement is valid. One makes non-compete agreements difficult to enforce. The second and newer test makes non-compete agreements easier to enforce, hence more practical.

The court in the case Steam Sales Corporation v. Brian Summers stated that the new test, which it referred to as the “reasonableness test” was the correct standard Unfortunately, the court applied the older and narrower “legitimate business interest” test. The facts in the case were so egregious that the employee would have lost under either test.

What are these two tests and what is their effect on employee compete agreements? To answer these questions you have to look at both tests.

The first test is the legitimate business interest test. Under the legitimate business interest test, the business must be one where its relationships with the business’ customers are near permanent and the employer would not have had contact with the customers if it had not been an employee. This test can also be satisfied if the employee gained confidential information through his employment that he attempted to use for his own benefit. Most businesses are not able to demonstrate that they have a “near permanent” relationship with their customers. So, it is very difficult to enforce a non-compete agreement if the court applies the legitimate business interest test.

The second test is the reasonableness test. Under the reasonableness test, the court looks at whether the terms of the non-compete will be injurious to the public (the customers) or cause undue hardship to the employee and whether the restriction on the employee is greater than necessary to protect the employer. This test is much easier for an employer to meet.

There are other factors in determining whether an employee non-compete will be enforceable. One such factor is whether the employee received any meaningful consideration for signing it. This is easy to show for brand new employees since the job offer can be conditioned upon signing a non-compete agreement.

Illinois courts applying a reasonableness test should allow employers to sleep a little more peacefully knowing that it is easier to have an effective employee non-compete agreement.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Now Paid On Time Isn’t Good Enough

Paying your mortgage on time apparently now isn’t good enough for one of the country’s largest mortgage lenders-GMAC.

Surprisingly, with all the problems mortgage lenders have with loans that are not being paid GMAC has time to make threatening collection calls to its borrowers who are paying on time.

The standard residential loan and mortgage state that payments are due on the 1st of the month, but they will not be considered late if the payment is received by the 15th of the month. Because the payment is not late until the 15th, many people choose to send their payments right before the 15th. This is much easier to do now if you are paying electronically such as with a bank’s online bill pay service.

So one would expect not to receive collection calls if their payments were received by the 15th of the month.

Nonetheless, GMAC starts making collection calls after the 1st day of the month. They make these calls several times a day, everyday of the week. Yes, they do call on Sunday morning too. The caller says you are late with your mortgage payment and if immediate payment is not received they will foreclose.

GMAC customer service representative explains that its “investors” have asked them to make these calls after the 1st of the month even though GMAC knows and admits that the payment is not late if they receive it by the 15th of month.

If anyone has had a similar experience with other mortgage lenders I would like to hear about what are lenders are doing this too.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Do It Yourself Estate Planning

In a time when everybody is trying to save money is estate planning software a good way to save money? That is a “loaded” question. Certainly using estate planning software is cheaper than hiring an attorney. But is it a good solution? Will the software create the documents that accomplish your wishes?

A New York Times writer tested several different estate planning software programs. The the writer had the documents reviewed by an attorney. This link is to his article titled In Using Software to Write a Will, a Lawyer is still Helpful.

When you hire an attorney that has experience in preparing Wills, Trusts and other estate planning documents you are not paying for the documents themselves. The attorney, like the computer programs, has basic documents. You are paying for the attorney’s time to talk with you about your specific situation, then modify those basic documents to fit your situation. With the attorney you also get advice on how other investments such as your home, IRA accounts and life insurance policies should integrate with your estate planning documents.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Payroll Taxes - A Personal Liability Trap

Recently, I was speaking with a very successful small business owner who almost stepped into a payroll tax trap. The business owner wanted to give a bonus to a key employee. The business owner, who uses a payroll processing company, thought that it would be okay to write the bonus check out of the business checking account. However, the business owner, who did not consult the payroll processing company was not planning to deduct payroll taxes from the bonus check. The business owner was about to step into a trap.

Bonuses like salary are compensation and are subject to payroll taxes. Failure to deduct payroll taxes will subject a business owner to personal liability. The fact that the business is a corporation or LLC will not shield the owner from personal liability.

Further, the personal liability for unpaid payroll taxes is not dischargeable in bankruptcy. I was also recently speaking with another small business owner who is in financial trouble. The business owner made the decision to use the business’ scarce cash to pay vendors instead of paying payroll and sales taxes. The business owner planned to get caught up on the past due taxes, hoping, like many struggling businesses, that sales would improve in the future.

When sales did not improve, the business owner considered closing the business and filing for personal bankruptcy. Doing so would protect the business owner from other business liabilities that the owner personally guaranteed like bank loans. This business owner was surprised to learn that they could not discharge the unpaid business payroll and sales taxes in a personal bankruptcy.

So if the business owner files a personal bankruptcy, the owner would exit the personal bankruptcy still being liable for all the payroll and sales tax. Then the business owner would have lost everything--house, cars, business and the job working for the business with the liability for the unpaid payroll and sales tax still haunting them.

In these tough economic times payroll taxes and sales taxes are bills a business should not defer in the hope that times will improve.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Estate Planning - Frequently Asked Questions

If you have basic questions about estate planning, but are unsure about the reliability of information that you find on the Internet, here is a reliable resource. The Chicago Estate Planning Council Frequently Asked Questions.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Advice for New Business Owners

The Wall Street Journal published an article titled 10 Mistakes That Start-Up Entrepreneurs Make. Rosalind Resnick made some good points. In my experience representing new businesses, the ones that failed made one and often several of the mistakes listed in the article. The successful businesses made few if any of these mistakes.

The article also contained links to related articles on marketing on a limited budget and the Wall Street Journal calculator for estimating the start up costs.

People who have just started a business or are thinking of starting one should considering reading this article.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Employee Credit Checks Banned Effective January 1, 2011

Employers will be prohibited from doing credit checks on prospective employees under a new Illinois law. The new law that was just signed by Governor Quinn will be effective January 1, 2011. There are a few exceptions for employers in the banking and insurance industry and those dealing with trade secrets.

Here is a link to a Chicago Tribune article on the new law.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Springfield Believes in the Fountain of Youth for New Senior Citizen Property Tax Exemption

Our elected officials in Springfield apparently believe in the Fountain of Youth when they passed the residential property tax law that requires senior citizens to re-apply every year for the senior citizen exemption.

Thats right when you turn 65 and apply for your senior citizen property tax exemption, you will need to re-apply for the next year. Using normal arithmetic, the year after you turn 65 you would then be 66.

Using "Springfield Arithmetic" you might turn 64 the year after your 65th birthday. Perhaps our elected officials hope that "Springfield Arithmetic" will make the $13 billion deficit magically decrease over time too.

Their explanation for this amazing possibility -- that you will get younger after you turn 65 is they want the prevent the possibility of people 64 and younger inappropriately applying for the exemption. Apparently, they forgot that when you apply for the exemption you have to provide proof that you are in fact 65.

Here is link to a Chicago Tribune article on this new law.

Governor Quinn has promised to "fix" this provision. Let's hope he keeps this promise. Otherwise our senior citizens will have to remember to let our government know every year that they are still senior citizens--or risk overpaying their property taxes.

Disclaimer: This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Summer Interns - A Benefit or a Liability

Summer interns may be a good opportunity for both your business and the intern, but if the interns are not paid you may be exposing your business to significant liability.

The U.S. Department of Labor applies a six factor test to determine whether a for profit business may have an unpaid intern.

A copy this test and the Department of Labor's analysis can be found at the link below.

http://www.dol.gov/whd/opinion/FLSANA/2004/2004_05_17_05FLSA_NA_internship.htm

Briefly, the six factor test that permits a for-profit business to have an unpaid intern is

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees (rather than the employer);
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

If you have an unpaid intern and you do not meet all six factors of this test then you could be exposing your business to a Fair Labor Standards Act violation.

Disclaimer This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern. An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Making a Power of Attorney for Health Care More Useful

On March 26^th, I wrote about the importance of having Powers of Attorney for Property and Health Care. Today, I am continuing that story to mention a service that can make a Power of Attorney for Health Care more useful.

That service is called DocuBank. It provides a card the size of a credit card. The card contains

• your name,
• allergies or medical conditions that a hospital would need to know
• The person to contact in an emergency with multiple phone numbers
• A toll free telephone number and web site where a hospital can get your Power of Attorney for Health Care, Living Will and HIPAA authorization as well as a list of your current medications.

The DocuBank card is useful because it improves the usefulness of the Power of Attorney for Health Care. For example, if you are unconscious and taken to an emergency room. How will the hospital know who to contact? The hospital will look through your wallet hoping to find something in there that will give them a clue. Remember if you are unconscious, the hospital will have to look at your driver’s license just to find out your name.

If you have a DocuBank card in your wallet, the hospital will not only know who to call, they will also know about allergies and medical conditions—vital information for them. In addition, the hospital can call and get a copy of your current list of medications and your Power of Attorney for Health Care.

So, when the hospital reaches your emergency contact they will not have to ask your emergency contact, do you have a Power of Attorney for Health Care, and please bring it. That is one less thing that your emergency contact will have to worry about when they are focusing on getting to the hospital to see you as soon as they can.

There are similar services tailored to college students and children.

For your security, the card and the service do NOT contain any financial information at all.

The cost for this service is $25.00 per year (about 50 cents a week).

Below is a picture of a sample card

Disclaimer

This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern.

An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Powers of Attorney - Estate Planning Basics for Everyone

Everyone, young and old, from an eighteen year old high school senior to an eighty year old retiree need Powers of Attorney for Healthcare and Property.

Briefly, a Power of Attorney authorizes someone to act on your behalf for either financial matters (Property Power of Attorney) or health care decisions (Health Care Power of Attorney)

Powers of Attorney are not complicated documents and therefore they are not expensive to prepare. Nevertheless, they are very useful. They can help prevent a court guardianship case.

A court guardianship can be a very expensive process. It involves a court hearing to determine whether a person is competent to manage their health care decisions and or their financial affairs. Even if there is no one contesting the guardianship, it can involve several hours of an attorney's time. For financial affairs, which is called Guardianship of the Estate, annual accountings are required. In addition, the court must approve all financial transactions. All these court approvals require attorney's time to prepare the documents for the court. So, the fees can add up quickly.

These fees can almost always be avoided by having a Power of Attorney for Property and for Healthcare.

Disclaimer

This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern.

An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.

Why You Still Need An Estate Plan – Even if there is No Estate Tax

Currently, there is no federal estate tax. However, there are many reasons why you still need an estate plan. This post summarizes some of those reasons to still do an estate plan.

1. Incapacity If you become incapacitated, Powers of Attorney for Health Care and Property can help you avoid a court guardianship case. Court guardianship cases are both time consuming and costly. Additionally, Powers of Attorney for Property and Health Care let you pick the person that you trust to carry out your wishes. This might not be the same person a judge would pick.

For unmarried couples, Powers of Attorney for Property can provide that your domestic partner can continue to use automobiles and other property that is owned solely in your name.

2. Intestacy If you don’t have a Will, the State will provide one for you. But you might not like what State provides. Having a Will lets you decide who you want to leave your money and other property.

3. Guardians for Minor Children For parents of young children, one of the most important reasons to have a Will is to name guardians for your children. If you don’t pick a guardian, a judge will pick one for you. Minor guardianship cases are time consuming and costly.

4. Children Managing Money Do you have children or grandchildren that are mature enough to manage large sums of money (that are meant to pay for their support and college education)? If not, then an estate plan can leave the money in trust so that an adult whose judgment you trust can manage the money. A trust will ensure that the money is spent the way you intend.

Another reason not to leave money to minor children is that a court can decide that if the child inherits more than $10,000.00 (including life insurance and retirement plan benefits) that a guardian should be appointed to manage the money. The guardian will be permitted to hire a lawyer to represent them in the court hearings. These court hearings will occur at least once a year until the child reaches 18. All of the guardian’s fees and the lawyer’s fees will be deducted from the money left to the child. By the time, the child reaches 18 the guardian’s fees and the guardian’s attorney’s fees may have used up some if not all the money for the child’s college tuition.

5. Creditor Protection Creating a trust can protect the money from your children or grandchildren’s creditors. It also can be drafted to prevent their ex-spouses getting the money in the event of a divorce.

These are some of the reasons why it is important to have an estate plan without waiting for the situation on estate tax to be resolved. Even if you believe that estate tax might be applicable to you when Congress addresses the estate tax situation, relatively simple modifications can be made to an existing estate plan.

Disclaimer

This is a passive blog and the materials contained herein are provided for informational purposes only. Nothing contained in this blog should be interpreted as a solicitation of business and none of the information contained herein constitutes legal advice. The law is subject to change without notice, and the local laws of your residence may be different from the general information displayed on this blog. You should not rely on the information provided on this blog without first consulting an attorney. Contacting this website does not establish and attorney/client relationship between you and its publisher Christopher W. Matern.

An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. Christopher Matern does not intend to practice law in any jurisdiction in which he is not licensed.