Matern Law - From A Client's Perspective

A Will with Unintended Consequences

2011-12-30T12:02:00.000-06:00

A recent Florida court case illustrates what can result from a poorly drafted Will.

The case describes how a woman wrote a Will using an “EZ-Legal Form.” Her Will contained a very specific list of her real estate and bank accounts and left that property to her sister and brother. The Will did not contain what is known as a residuary clause, which states what happens to property not specifically listed in the Will.

The problem occurred when the woman’s sister died before her leaving the woman the sister’s land and cash. The woman did not revise her Will after her sister’s death. When the woman died her brother, as the sole beneficiary under her Will, claimed that property the woman inherited from their sister should be given to him even though it wasn’t listed in the Will.

The woman’s nieces claimed that since the “EZ-Legal Form” did not contain a clause stating where property should go that was not specifically listed in the Will then the property the woman inherited from her sister should go to them. Basically the nieces were claiming that the property the woman inherited from her sister should be treated as though the woman had no Will. The court agreed with the nieces.

This case illustrates the risks of using a do-it-yourself Will. The woman thought she was being very detailed and very careful. Unfortunately she did not understand some of the important elements that should be in every Will.

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 for Property Should be Taken Seriously

2011-10-11T14:23:00.000-05:00

In the Chicago Tribune a letter to columnist “Dear Annie” illustrates important concerns about Powers of Attorney for Property. Below is a link to the story.

Her children sold her house and possessions

Briefly, an 80 year old woman was in the hospital for a very serious illness and she was not expected to survive. Fortunately, she did recover. Unfortunately, she learned that her children - acting under a Power of Attorney for Property she had given them - sold her house, took her possessions they wanted and then sold rest.

Many people think of a Power of Attorney for Property as a simple, standard, routine document that is part of their estate plan. As this story illustrates it is not simple, not routine and shouldn’t be standard. A Power of Attorney for Property can have serious implications.

The implications can be limited. For example, a Power of Attorney for Property can be narrowed to limit the authority to very specific types of transactions. This might be appropriate if the purpose is to give someone only the authority to pay bills while you incapacitated but not sell your house or other possessions.

Depending upon your personal situation a broad Power of Attorney might be appropriate. In the story the woman complains about how her children sold her house at an auction. It is possible that the woman did not have any other significant assets besides her house; that her medical expenses were large and the only way to pay them was to sell the house quickly.

In the situation where the only way to pay the bills is to sell the house then a very limited Power of Attorney would not have worked well. In that situation the children would have needed to ask a judge to appoint a guardian. A guardianship proceeding is neither quick nor inexpensive.

Another concern is trust. The person you give Power of Attorney obviously should be someone you trust to act in your best interest - even when it is contrary to their self interest. If you are not fortunate enough to have someone who meets that standard then that is another reason to consider limiting the scope of the Power of Attorney for Property.

A Power of Attorney for Property is not a simple “fill in the blank” document. It should be tailored to a person’s individual needs.

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.

New Real Estate Transfer on Death Deed - a Solution or a Problem

2011-09-01T23:08:00.000-05:00

The Illinois legislature recently passed a bill allowing a homeowner to name a beneficiary who will receive the property when the owner dies. The hope was that this new type of real estate deed would simplify estate planning for people with smaller estates. Unfortunately, it may create more problems than it solves.

The bill will become law on January 1, 2012. This a link to the full text of the bill. http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=097-0555&GA=97

How this would work is that a homeowner would prepare a new deed naming one or more people as beneficiaries. Those beneficiaries would receive ownership of the house when the owner died. The new deed would have to be signed in the same way that a Will is signed. So, the homeowner would sign the new deed in front of two witnesses and the witnesses, at the same time, would need to sign the deed too.

This new deed would have to be recorded with Recorder of Deeds office in the county where the home was located (just like other deeds are now recorded).

When the current owner died, the beneficiaries would need to prepare an affidavit saying that the owner had died and acknowledging that they accept the real estate. This affidavit would also need to be recorded with the local county recorder of deeds.

This sounds like a great way to avoid the time and expense of probate for people who have very few assets other than their house. But the legislation has some important restrictions.

Those restrictions may significantly limit the effectiveness of this new deed. This deed can be challenged anytime within two years after the homeowner dies unless a probate estate has been opened and then the time limit is six months.

Practically what does this mean. It depends upon how title insurance companies treat this situation. Today, no one can sell a house unless they can provide the buyer with a title insurance policy. So, how the title companies treat transfer on death deeds will have a large effect on whether such a deed is practical.

I have spoken to underwriters and and attorneys with two of the largest Illinois title insurance companies. Both of them are analyzing the situation, but neither one of them has adopted formal guidelines. One title insurance company indicated that they anticipate reviewing each situation separately and making individual decisions on whether to issue title insurance. Another title insurance company indicated that they might charge an additional premium equal to 2% of the sale price for sales within 1 year after the person’s death and a 1% premium for sales more than one year, but less than two years after a person’s death.

In comparison, a Will and the cost of probating the Will probably would cost significantly less than a the extra premium on the title insurance policy.

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.

New Requirement for Illinois Landlords

2011-08-25T13:46:00.000-05:00

Landlords in Illinois will be required next year to change or “rekey” the locks before a new tenant moves in. Here is link to the new lock changing law. http://www.ilga.gov/legislation/publicacts/97/PDF/097-0470.pdf

There are only limited exceptions to this law including rooming houses and buildings with four or fewer units where the owner lives in one of the units.

If the landlord does not comply with this new law and there is a theft that is attributable to failing to change the locks, then the landlord will be responsible for the tenant's losses.

I foresee a potential for possible fraud and abuse caused by the law’s requirement that the “theft that is attributable to failing to change the locks.” Some examples are that the new tenant forgets to lock the apartment door and a burglar walks in the unlocked door. Alternatively, the new tenant files a fraudulent police report about an alleged burglary and then claims that the door was locked. If the tenant then sues the landlord for damages and claims that the tenant locked the door before the burglary how will the landlord effectively be able to disapprove that story.

So Illinois landlords to protect themselves from claims by tenants for stolen merchandise will need to change the locks each time they get a new tenant.

For landlords the current rental market should make it easier to pass this new expense along to tenants.

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.

Interns - A Benefit or a Liability - Update

2011-05-02T13:19:00.000-05:00

Last week, on April 28th a Federal appellate court issued a decision on whether students working in a school affiliated nursing home should be considered employees. The court’s ruling disregarded the Department of Labor’s six factor test about whether an student serving an internship should be classified as an employee. Last June, I wrote an article about the six factor test titled Summer Interns A Benefit or a Liability.

The court in Solis v. Laurelbrook Sanitarium said a different analysis should be used. The court said “We find the WHD's test to be a poor method for determining employee status in a training or educational setting. For starters, it is overly rigid and inconsistent with a totality-of-the-circumstances approach, where no one factor (or the absence of one factor) controls."

The court focused on who receives the primary benefit - the intern or the business. To make that determination who receives the primary benefit, “Factors such as whether the relationship displaces paid employees and whether there is educational value derived from the relationship are relevant considerations that can guide the inquiry. Additional factors that bear on the inquiry should also be considered insofar as they shed light on which party primarily benefits from the relationship.”

For people using interns, the good news is that you don’t have to meet all six factors in Department of Labor test. However, in looking at all the circumstances the experience needs to be a greater benefit to the student rather than to the business.

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.

Government Targets Business Owners for Employee Work Eligibility

2011-04-22T16:09:00.000-05:00

Business owners, particularly in the food service industry may want to review their employee work eligibility status.

A recent article in the Wall Street Journal titled Immigration Crackdown Widens With Criminal Probe and Arrests at Restaurant Chains highlights recent government investigations and in one case criminal prosecution relating to hiring illegal immigrants.

As the article notes the government’s focus previously had been on just arresting and deporting illegal immigrants, but now the government is focusing on prosecuting the business owners.

A recent story in QSR Magazine titled Who’s Working in Your Kitchen? reported “Recent government crackdowns on Chipotle and Pei Wei that forced both concepts to at least temporarily close locations have reminded restaurant operators that the government is taking illegal immigration very seriously.”

Illinois business owners can use the E-Verify system. One advantage of using the system is that it creates a “rebuttable presumption” that the employer has complied with immigration laws. However, Illinois state government is not a fan of the E-Verify system. In fact,Illinois attempted to block private employers from using the E-Verify system, but lost a lawsuit brought by the Department of Homeland Security.

Even though the Illinois state government failed in its attempt to prevent private business owners from using E-Verify, Illinois has placed significant restrictions on its use. Therefore, an Illinois employer should review those restrictions carefully before using the E-Verify system. Illinois employers are required to complete I-9 forms for each of their employees.

It is these I-9 records that the government is auditing and which are being used as the basis for prosecutions.

To avoid being the federal government’s next target business owners may want to review their personnel files to make sure that they are in compliance.

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.

Will Your Trust Work

2011-04-17T12:06:00.000-05:00

Will your Trust work the way you intend it. Many people have created Revocable Trusts, which are also known as Living Trusts. They have done so for a number of reasons (avoiding probate, avoiding court guardianship, tax planning). But if your Trust is not funded it may not work the way you want.

A recent post on an trust and estate planning e-mail list illustrates what happens if a trust is not properly funded.

Dear Listmates:

Can a revocable trust be properly funded by simply attaching a schedule to the trust document that states that the settlor “hereby sells, transfers, and conveys” to himself the property listed therein? The listed property includes real estate and bank accounts. The real estate is identified by address and tax ID. The bank accounts are identified simply by bank name and address. The schedule containing the listed property is signed by the settler and one witness but is not notarized. The main trust document, to which the schedule is attached, is notarized.

This was the answer posted to those questions.

The short answer is no.

The reply to that answer illustrates the terrible consequences that can occur from not properly funding the Trust.

The settlor [the person who set up the Trust] passed away. If this trust is not upheld, then the settlor's estate will pass to the very persons he intended to disinherit.

So how do you fund a Trust to avoid this terrible result. A Trust is funded by transferring assets to the Trust. The procedure for legally transferring assets to a Trust depends upon the type of asset.

For a bank account or a stock brokerage account, the name of person who owns the account needs to be changed to the name of the current trustee as trustee of the trust identified by its proper name. For example, if John Smith has a Revocable/Living Trust and he is the current trustee then account needs to be changed from John Smith to John Smith as Trustee of the John Smith Trust (what ever the Trust designates as the proper name of the Trust).

For real estate, a Deed needs to be prepared transferring the real estate to the Trust. For example, John Smith would need to Deed his property from John Smith to John Smith as trustee of the John Smith Trust. This Deed would need to be recorded in the County where the real estate was located with the County Recorder of Deeds. Also, you may need to obtain an endorsement to your title insurance policy to cover the trust. Whether this needs to be done will depend upon the specific language in your title insurance policy.

You can transfer personal property such as airplanes, automobiles and boats by transferring the title with the Secretary of State to the Trustee (John Smith as Trustee of the John Smith Trust). Unless this property is of significant value most people deal with this property through their Pour Over Will.

A Pour Over Will is a Will that includes a provision stating that any property that I own, which I have not specifically provided for at my death is to be transferred to to my Trust.

A Pour Over Will will not be effective if the property is held in joint tenancy or if a payable on death beneficiary has been named. Property that it is held in joint tenancy automatically passes to the surviving joint tenant. It is not part of a person’s estate. Therefore, the Pour Over Will would not be effective to transfer the joint tenancy property. Likewise an account that has a payable on death beneficiary designation like a bank account, life insurance policy, stock brokerage account, pension plan will also pass directly to the beneficiary. It too will not be included in your probate estate.

So, it is a good idea to check the beneficiary designations on your accounts to make sure that they list the people that you intend to receive the money. The same is true for any accounts that you hold in joint tenancy.

If you have gone through the effort and expense of creating a Recovable/Living Trust you should make sure that it is properly funded.

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.

Buy/Sell Agreements - Planning Ahead

2011-04-13T15:29:00.000-05:00

For small businesses with two or more owners, a buy/sell agreement can help prevent challenging situations from becoming unbearable.

When one of the business owners dies, becomes disabled, divorces or just says “I have had enough - I am out of here” that can be challenge for the remaining owner or owners just to keep the business operating. That challenge can be unbearable if there is no arrangement in place to deal with those situations.

One of my fellow lawyer bloggers wrote an excellent article on buy/sell agreements. The article raises a number of questions that business owners should think about. Just thinking about these questions should provide a mental picture. That picture may be as sobering as Ebenzer Scrooge’s glimpse of “Christmas yet to come.” Fortunately, like Scrooge there is an opportunity to do something about it.

Employer Liability - Common Mistakes That Can Be Costly

2011-03-14T16:50:00.000-05:00

With the economy improving, businesses are hiring again and bringing in independent contractors. Because mistakes relating to compensation can be costly, now might be good time to review several common mistakes that can be expensive.

The most common mistakes involve:

Misclassifying an employee as exempt from overtime;

Misclassifying a person as an independent contractor when they should be an employee;

Assigning tasks to an unpaid intern that result in them being classified as an employee;

Failing to file employee payroll taxes on time.

This article discusses some of those common mistakes and how to avoid them.

Misclassifying an employee as exempt from overtime pay

The federal Fair Labor Standards Act (“FLSA”) requires that employees receive overtime pay equal to 1.5 X their hourly rate if they work either more than 8 hours in one day or more than 40 hours in one week. There are several job classifications that are exempt. Employer problems often occur when they mistakenly believe that a particular employee qualifies for the exemption when they don’t.

The overtime pay exemption categories include a) executives, b) administrative, c) professional, d) computer employee, e) outside sales and f) highly compensated employee. The most common problems involve the administrative, computer and outside sales exemptions. Job titles don’t count. What counts is the type of work that a person performs.

Here is a link to a brief overview of requirements to qualify for those exemptions.

2. Misclassifying a Person as an Independent Contractor

One of the most common mistakes businesses make is to classify someone as an independent contractor when they are actually an employee. The IRS and state governments aggressively pursue this type of misclassification because it reduces the amount of taxes that IRS and state governments collect.

The IRS website provides some guidelines to help determine whether a person qualifies as an independent contractor. You can also ask the IRS to evaluate your specific situation. The IRS will issue a determination. This can be done by filing IRS Form SS-8.

Briefly, factors that the IRS considers in determining whether a person is properly classified as an independent contractor include:

Does the person have the ability to perform similar work for other businesses without your permission;
Can the person set their own hours for when they will perform the work;
Can the person hire other people to assist them in performing the work;
Does the person supply their own tools or equipment to perform the work;
Is the work done for a fixed fee where the person bears the risk of profit or loss depending upon how quickly they perform the work;

Because businesses do not pay payroll taxes for independent contractors a business can be liable for significant expenses if the IRS later determines that the person should have be classified as an employee.

As discussed below under the payroll tax liability section the business owners can be personally liable for failing to pay payroll taxes.

3. Unpaid Interns Who Should Be Treated as Employees Based Upon Their Work

An internship can be beneficial for both the student and the business. The student gets experience that can help them find a job when they graduate and the business gets assistance for free. However the intern’s activities must meet a six factor test for the business to justify not paying the intern.

Briefly those six factors are:

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;
The training is for the benefit of the trainees (rather than the employer);
The trainees do not displace regular employees, but work under their close observation;
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;
The trainees are not necessarily entitled to a job at the conclusion of the training period; and
The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

A business must meet all six factors. Failing to meet one of the six factors can expose the business to liability under the Fair Labor Standards Act and to liability for failing to pay payroll taxes.

4. Personal Liability for Failing to Make Payroll Tax Payments

A problem that commonly effects businesses that are having cash flow problems is failing to pay their payroll taxes on time. The IRS and state governments take this issue very seriously. Their position is that this is money that doesn’t belong to the employer, but is held in trust for the benefit of the employees and the government. So, it goes beyond failing to pay taxes. The government views it as taking money that doesn’t belong to you. For that reason, the officers, directors and shareholders can be personally liable for failing to timely pay payroll taxes.

Further, this is a liability that a business owner cannot discharge by filing a personal bankruptcy.

In Illinois not only is there potential tax liability, but also there is potential liability from the Illinois Department of Labor and the employees themselves in lawsuits under the Illinois Wage Payment and Collection Act. For more information on a business’ potential exposure under this Illinois statute see my blog post titled Potential Exposure for Employers Under New Illinois Law.

When Separate Corporations Are Not Separate for City of Chicago Head Tax

2011-03-07T11:20:00.000-06:00

Business owners who have operations at separate locations often set up separate corporations for each location. There are many good reasons to do this including limiting liability at one location from effecting the other locations. The separate corporations should have their own bank accounts, bookkeeping, business licenses, corporate records, employees, tax identification numbers.

But apparently, this is not enough for the City of Chicago. A recent Illinois Appellate court decision DTCT v. The City of Chicago upheld the City of Chicago’s position. In this case a husband and wife owned several separate corporations. Each of those corporations owned a different McDonald’s restaurant location. The City of Chicago said that because each of the corporations had the same shareholders then all the corporations would be counted as one business entity for the purpose of calculating the employer’s expense tax (a.k.a. the “head tax”). This tax applies to employers who have 50 or more employees working in Chicago. The tax rate is $4 per employee per month. The individual restaurants had less than 50 employees, but all of them together had more than 50 employees.

The separate corporations had followed all the corporate formalities. They had separate bank accounts, separate books and records, each had their own City of Chicago business license, they had separate tax identification numbers and filed separate tax returns. But this was not enough for the City of Chicago in determining the “head tax.”

Small Business and the Health Care Law

2011-03-03T13:57:00.000-06:00

The new health care law certainly has been controversial, but its effect on small business is less certain. A recent article in QSR magazine discusses possible effects and provides a timeline illustrating when various provisions and obligations will take effect. The article is titled The Real Way Health Care Reform Affects You.

For small businesses with 50 or more employees, particularly businesses where many of the employees salaries are close to the minimum wage the impact of the new law is likely to be significant. The article does not recommend taking drastic action now, but watch for developments and evaluate plans for how to comply with the new law cost effectively.

Another Challenge for the Chicago Condo Market

2011-02-28T12:53:00.000-06:00

There is another challenge for buyers and sellers of condominiums in Chicago. According to a Chicago Tribune article titled Condo deals die in shadows of financially distressed buildings lenders are refusing to make loans in buildings that have a high number of renters, a large percentage of past due assessments or foreclosures.

This another reason to carefully research a condominium association before purchasing a unit.

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.

Potential Exposure for Employers Under New Illinois Law

2011-01-24T14:45:00.000-06:00

Changes to Illinois Wage Payment and Collection Act provide substantially more exposure to Illinois employers.

On January 1, 2011 changes to Illinois wage claim statute became effective. The changes give employees substantially more leverage in claims for unpaid compensation. The term compensation includes not just salary payments, but also benefits such as vacation pay, bonuses, commissions, incentives, etc. So even an honest dispute about compensation can come within this new law. The reason for concern is the increased potential damages can put employers at serious disadvantage.

Here are some of the important changes that give employees more leverage.

An employee in a private lawsuit against an employer can recover attorney’s fees. This will encourage more attorneys to take wage claim cases since they can recover fees. Those fees can be greater than the amount of the wages claimed. This attorney fee’s provision is a one way street. If an employer wins, there is no provision for getting the employee to pay the employer’s attorney’s fees. This amounts to a “heads I win and tails you lose situation” for employees.

An employee who wins in a private lawsuit is also entitled to interest on the unpaid wages. The interest is equal to 2% per month. Yes, that is 2% per month (not per year). The interest starts from the date that the payment should have been made up until it is finally paid. In comparison, interest on judgments in Illinois is 9% per year. And interest on judgments accrues from the time you win the lawsuit not from the time the claim arose. So the interest under this law is not only at a much higher rate, but also it accrues from the time the claim arose.

There now is personal liability for the company’s officers even if they didn’t have knowledge of the dispute but have day to day operational control. For many mid-size businesses that have human resources and payroll personnel handling employee compensation, the company’s officers who may also be its owners now have personal liability. If lower level employees--say the payroll department person--have knowledge of the wage claim they now also can be personally liable.

For wages claims of $3,000.00 or less, the Illinois Department of Labor has the authority to hear those claims and now their findings will be binding. An employer still can dispute the finding in the circuit court, but the standard for reversing that decision will be higher.

These changes mean that Illinois employers must be more careful about how they deal with employee compensation. A dispute, if not resolved quickly, can be substantially more expensive for employers than the disputed amount.

Good Estate Planning Goes Beyond The Will

2010-12-29T13:47:00.000-06:00

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

2010-11-23T15:42:00.001-06:00

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

2010-10-18T18:05:00.003-05:00

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.

Now Paid On Time Isn’t Good Enough

2010-10-13T12:04:00.001-05:00

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.

Do It Yourself Estate Planning

2010-10-07T17:08:00.010-05:00

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.

Payroll Taxes - A Personal Liability Trap

2010-09-15T14:09:00.001-05:00

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.

Estate Planning - Frequently Asked Questions

2010-09-13T18:02:00.004-05:00

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.

Advice for New Business Owners

2010-09-01T13:11:00.008-05:00

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.

Employee Credit Checks Banned Effective January 1, 2011

2010-08-11T09:51:00.004-05:00

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.

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

2010-08-02T16:26:00.013-05:00

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.

Summer Interns - A Benefit or a Liability

2010-06-01T15:52:00.007-05:00

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

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;
The training is for the benefit of the trainees (rather than the employer);
The trainees do not displace regular employees, but work under their close observation;
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;
The trainees are not necessarily entitled to a job at the conclusion of the training period; and
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.

Making a Power of Attorney for Health Care More Useful

2010-04-15T11:19:00.004-05:00

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

2010-03-26T13:27:00.009-05:00

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

2010-02-25T13:52:00.010-06:00

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.

Worker's Compensation Insurance for Condominium Associations - Is it Necessary?

2009-12-18T10:18:00.000-06:00

Do condominium associations need Worker's Compensation? For a large high rise with 24 hour security, building engineers and janitors the answer is obviously yes, since all these people are full time employees of the association. For smaller condominium associations the answer is less obvious.

Recently the board treasurer of a 16 unit condominium association asked me about whether his condominium association should have Worker's Compensation Insurance.

With only sixteen units, I asked whether they had any employees on their payroll. He said no. They do have a women who cleans the hallways twice a month. They also have a person who plows snow off the driveways. And they have a scavenger service that picks up the trash. Occasionally, they hire contractors to do work on the air-conditioning, paint, and do other repairs to the building.

Since they have no employees on their payroll, my question was why would you think that you need Worker's Compensation insurance. His answer was that his insurance broker suggested it. The insurance broker explained that since some of the contractors that they hire might not have Worker's Compensation insurance for their employees. Even if this was true, I questioned why Worker's Compensation insurance would be necessary since the condo association has general liability insurance coverage and general liability insurance covers suits by people injured on the property.

One of the arguments that insurance brokers and insurance companies make is what if the person files a Worker's Compensation claim. But unless their real employer has Worker's Compensation coverage, that person (and their lawyer) would probably prefer to file a traditional personal injury suit in the county court. By doing so, they would have the chance to get a much bigger verdict since they could make a claim for pain and suffering (usually several times the amount of their medical bills). Worker's Compensation claims are resolved under a different system and claims for pain and suffering damages are not allowed. Arguably, it would be malpractice for a personal injury lawyer not to file a lawsuit in the county court system where they could get their injured client more money.

The fundamental question is could the employees of the businesses that the associations contracts to perform services be considered employees of the association? The IRS has a number of criteria they consider in determining whether a person is an independent contractor or an employee http://www.irs.gov/businesses/small/article/0,,id=99921,00.html. The Illinois Supreme Court has considered this question too. The Illinois Supreme Court looked at whether the person's services relate to the business purpose of the company. In the Illinois Supreme Court case the company was in the trucking business and the person was an owner/operator of a truck. The court found that the owner/operator was an employee because the trucking company's business purpose was trucking and truck drivers were obviously necessary. In this situation, the business' purpose is a condo association. They are not running a cleaning service company. Similarly, the association is not in the business of snow removal, painting or roof repair.

Applying the IRS criteria, the cleaning lady should be considered an independent contractor. The cleaning lady can decide on what day of the week to come. She can decide what time to start (morning or afternoon). She can hire an assistant to help her. She can send a substitute. She receives a flat fee for the services. The few hours per month she cleans the association's hallways is not her only source of income. She cleans on the other days at many other places. All of these suggest that the IRS would agree that the cleaning lady is an independent contractor.

The snow plow company's relationship is similar. So, it too would be an independent contractor and not an employee.

Then why would the insurance broker and the insurance company think this association needs a Worker's Compensation policy.

There could be many reasons why an insurance broker would recommend that a condominium association with no employees purchase a Worker's Compensation policy. One reason is that the broker wants the client, the association, to be protected to the maximum extent possible. Another reason is that the broker wants to protect itself from a possible claim by the association against the broker for not recommending all the possible types of coverage. One could be cynical and say "follow the money." The insurance broker receives another commission. The insurance broker is going to sell the general liability policy anyway so selling the association a Worker's Compensation policy is an additional policy and an additional commission.

Following the money, the insurance company would rather place a claim under a worker's compensation policy than under a general liability policy because they are likely to pay less. Worker's Compensation claims are handled initially by the Industrial Commission, they are usually resolved more quickly and under Worker's Compensation law the claimant is not entitled to damages for pain and suffering (a significant part of the damages in a traditional lawsuit). So, insurance companies have an incentive to be able to handle a claim under a Worker's Compensation policy.

Whether a condominium association needs a Worker's Compensation policy depends upon the association's specific circumstances. But for many small buildings it may not be necessary.

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.

Secretary of State Warns of Scam on Corporations

2009-12-07T20:37:00.003-06:00

The Illinois Secretary of State posted the following warning of a scam to charge a fee for filing corporate minutes. As the Secretary of State warns corporations are not required to file their corporate minutes.

WARNING! A non-governmental firm called "Illinois Corporate Compliance" or "Annual Corporate Compliance" is contacting Illinois businesses in an attempt to collect a $150 fee to file corporate meeting minutes. Please be aware that corporations are NOT required by law to file minutes with ANY government or private entity. It is recommended that corporations do NOT reply to the solicitation.

If you have questions about whether it is necessary to file a particular document you should contact your attorney.

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.

Will Essentials

2009-11-22T12:35:00.002-06:00

A Will is a very important document. You should review it periodically to make sure that it expresses your intentions. Along with the provisions that deal with to whom you are leaving your property, there are several other provisions that are equally important to make sure that your Will functions that way you intend. Here are a few provisions that should be part of your Will:

Waiver of bond for the executor
At least one successor executor (in case the first named executor can't serve)
Trust provisions if you have minor beneficiaries
Comprehensive powers for the executor and/or incorporation of statutory powers
Contingent beneficiaries (in case the primary beneficiaries are deceased)
Self-proving affidavit (witnessed and notarized)

If you have a Will you should check it to make sure that these provisions are included.

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 Not Just for the Wealthy

2009-10-25T16:05:00.006-05:00

Estate Planning is not just for the wealthy. Estate Planning also is important for people with modest means too.

A recent article in the Chicago Tribune titled Estate planning saves headaches for heirs discussed reasons that estate planning is important for people with modest means.

The article highlights some of the challenges people are now facing such as providing for children from a prior marriage. It also gives a good explanation of the differences between a Will and a Revocable Trust (also known as a Living Trust).

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.

Providing for Parents in Your Will

2009-08-25T15:38:00.003-05:00

This linked article provides two good examples of why it can be appropriate to include your parents and or grandparents as beneficiaries of your Will or Revocable Trust.

If you currently are supporting either your parents or grandparents or even if you anticipate needing to provide some support for them in future, it would make sense to include a provision in your estate plan to provide for their support.

This should not be very difficult or expensive.

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.

Illinois Estate Tax

2009-07-10T16:18:00.001-05:00

New Illinois estate tax legislation may provide a way to defer Illinois estate tax. Currently there is $1.5 million difference between the Illinois and Federal estate tax credits. This could result in some estates for Illinois residents having to pay Illinois estate tax even though they were exempt from Federal estate tax.

For 2009 the Federal estate tax credit is $3.5 million. However, the Illinois estate tax credit is only $2 million. An Illinois resident with a $3.5 million estate would owe $0 of Federal estate tax, but would owe Illinois estate tax of $209,124.

The proposed legislation would permit a husband and wife to defer that $209,124 until the second spouse passed away. For this to work the couple would have needed to include a specific provision in their estate plan. This specific provision is called a qualified terminable-interest property trust. This type of trust is commonly known by its acronym as a QTIP trust.

If a husband and wife residing in Illinois have a combined estate over $2 million, a review of their estate plan might be worthwhile.

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.

Good Estate Planning – Not Just a Will and a Trust

2009-06-04T15:24:00.003-05:00

A good estate plan includes not only a Will and possibly a Living Trust, but also includes a review of beneficiary designations.

It seems obvious that a Will transfers property in your estate. But what may not be so obvious is that if you have beneficiaries named for bank accounts, brokerage accounts, life insurance policies those would not be part of your estate. Your will would have no effect on how they are distributed. The assets in those accounts will pass directly to the named beneficiaries. This is also true for real estate owned in joint tenancy. It too is not part your estate. While this may work exactly as you intend but then it may not.

For example, a person early in their life may name their parents as beneficiaries. This is fine at the time since the person might want to provide for the future care of their parents. But in later years they marry and have children and, if they thought about it, they would want to change the beneficiary designations.

So, beneficiary designations and joint tenancy accounts and real estate in joint tenancy should be considered in evaluating your estate plan.

This is even more important with respect to IRA and 401(k) accounts. Because these types of accounts have special rules involving withdrawals, extra consideration should be given to the beneficiary designations.

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.

US Targets Smaller Businesses for Hiring Illegal Aliens

2009-05-07T14:38:00.005-05:00

The Department of Homeland Security announced last week that it is going to be targeting businesses that employee illegal aliens for prosecution. In a fact sheet, the Deparment of Homeland Security indicated that it will target smaller businesses for prosecution. Previously, the Homeland Security targeted business with at least 150 illegal employees. Now Homeland Security is targeting business with at least 25 illegal employees for prosecution.

Employers who might have illegal alien employees might want to review their personnel files to make sure that they have current I-9 forms or have used some of the new verification tools such as E-Verify.

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.

Condo Insurance Requirements

2009-04-30T13:50:00.005-05:00

If you live in a condominium or manage a condominum Illinois law specifies minimum amounts of insurance the condominium association must carry.

As you probably know, in Illinois, most aspects concerning a condominium are governed by statute in 765 ILCS 605, commonly known as the Illinois Condominium Property Act(the “Act”). Specifically, Section 12 of the Act discusses the insurance requirements for a condominium. As a condominium you are required to maintain property insurance, general liability insurance, a fidelity bond (if you have more six or more units), and directors and officer’s coverage.

Section 12(a)(1) discusses the requirements for property insurance. The property insurance must cover the common elements, the units, and limited common elements. The individual units should be covered to the extent of the bare walls, floors, and ceilings. It is the individual unit owner’s responsibility to purchase insurance for the personal contents of the unit. You must provide coverage for special form causes of loss and increased costs of construction due to building code requirements at the time the insurance is purchased and at each renewal date. Lastly, the total amount of the coverage can be no less than the full insurable replacement cost of the insured property less the deductibles.

Section 12(b)(2) covers the general liability requirement. You must have coverage for claims and liabilities arising in connection with the ownership, existence, use, or management of the property. The amount of the policy has to be a minimum of $1,000,000, however, given the size of your condominium you may want to discuss a larger coverage amount with your insurance agent. You must include as additional insureds: the board, the association, the manager and their respective agents and employees, and the unit owners to the extent of claims arising out of their use of the common elements.

Section 12(3)(A-C) discusses the fidelity bond. All condominiums with six or more units are required to obtain one. The bond must cover both the management company and the individual manager, their employees or agents who have access or control over association funds. The amount of the bond for both the company and individuals must be in the full amount of the association funds and reserves that are in the custody of the association or management company.

Section 12(3)(D) covers the director’s and officer’s liability coverage. This needs to cover all contracts or actions taken by the board in their official capacity as directors and officers, excluding actions for which directors or officers are not entitled to indemnification by law. You may decide the amount of coverage to carry if it is not already established in the declaration or bylaws.

These are the minimium amounts required by Illinois law. Like the mininium required amounts of automobile coverage, your situation might warrant having more coverage than the legally required minimum amount.

It might be a good idea to check with your insurance agent to determine whether you have the proper coverage.

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.

Secretary of State Jesse White on Online Filing Fees

2009-04-21T15:03:00.004-05:00

In a January 23^rd post , I wrote about Illinois Secretary of State premium/penalty for filing annual reports online. The premium that Secretary of State charges for filing online is 50% above the normal filing cost. Since then I had the opportunity to speak with Illinois Secretary of State Jessie White personally.

I gave Secretary White my reasons opposing his online filing fee premium. I told him in an era of heightened environmental consciousness, his policy was anti-green. It not only wasted paper, but required more fuel usage for mail delivery. I also said that discouraging filing online meant more staff intensive handling of paper files.

Secretary White gave me the “Springfield Smile.” The “Springfield Smile” is a look a politician gives you before he is going to pass the blame to someone else. Secretary White followed his “Springfield Smile” with the response that his fees were set by the legislature. So, it was “out of his control.” Secretary White’s response was disingenuous. While it is technically true that the state legislature approves his fees, they act on his recommendation.

Perhaps a call, letter or e-mail to your state representative and state senator asking for an explanation of why Secretary of State Jesse White should be discouraging online filing might be helpful.

You can find the name of your state representative and state senator along with their addresses by clicking on this link to the Illinois Board of Elections.

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.

Directors & Officers' Duty to Creditors

2009-04-08T15:54:00.006-05:00

In normal situations, a corporation's directors and officers owe a fiduciary duty to the corporation and its shareholders. But when a corporation becomes insolvent, that duty shifts to the corporation's creditors. In these challenging economic times, this duty by corporate directors and officers to the corporation's creditors could lead to lawsuits from creditors against the directors and officers personally.

If a corporation is insolvent, contemplating bankruptcy or has filed for bankruptcy protection a suit by its creditors is likely a useless effort. However, the corporation may have a directors and officers liability insurance policy and/or the at least some of the directors and officers may personally have money. So if creditors can sue the directors and officers personally the suit may be worthwhile.

For the duty to creditors to exist, the corporation must be insolvent. So when is a corporation insolvent? A corporation can be insolvent even before it has filed for bankruptcy protection or done an assignment for the benefit of creditors. A recent Illinois federal district court opinion stated that "A corporation is insolvent when its liabilities far exceed its assets, or when it is unable to pay its debts."

For creditors this may provide another path to repayment. For directors and officers of financially challenged corporations, it is one more of many risks to consider.

Disclaimer

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.

Avoiding Probate for Custodial Accounts

2009-04-01T13:17:00.006-05:00

To save taxes and make gifts to children, grandchildren, nieces or nephews, many people have created custodial accounts. These accounts are commonly known by their initials UGTMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act). They can be relatively low cost ways to make gifts to minors and good for tax planning.

But without good planning they can create problems in the future. The problems arise if you have not named a successor custodian. Without a successor custodian, upon your death or disability, a probate case would need to be filed before any money could be distributed.

Since these accounts are typically funded with relatively modest amounts, having to later file a probate case would be relatively costly.

Two ways to avoid this problem are:

1) name successor custodians for each of the accounts or

2) make a global designation of successor custodian for all custodial accounts in your Living (Revocable) Trust or Will.

This is another example were proper planning can avoid costly expenses.

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.

Bring Your Thumb for the Next Real Estate Closing

2009-03-20T16:19:00.004-05:00

On June 1st, people selling real estate in Illinois will not only have to have their signature notarized, but also they will have to add their thumb print. (Chicago Sun Times Article).

As a convenience some notaries would notarize a signature even though it was not signed in their presence. This practice has always been improper. Nonetheless, it probably was not rare.

Now with the thumbprint requirement, physical presence is required.

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.

Free Estate Plan from the State of Illinois

2009-02-11T15:54:00.005-06:00

The State of Illinois has provided a free Will for people who—for any number of reasons—have not prepared a Will.

Like many things that are free or low cost do-it-yourself, you may not be pleased with the results.

The State of Illinois “free” version that I have reproduced below is for a married couple with one or more children.

If you are not married or if you have a domestic partner the “free” Will that the State of Illinois provides for you may be even less satisfactory.

Here is Mr. Smith's "Free" Will from the State of Illinois

Last Will and Testament of John Smith

Drawn Up For Him by The State of Illinois Because He Died Without a Valid Will

I, John Smith, a resident of Illinois, do hereby accept this to be my Last Will and Testament drawn by the State of Illinois, because I do not otherwise have a valid will.

1.0 I give my wife one-half (1/2) of my assets, which I own in my own name, and I give my children the remaining one-half (1/2).

1.1 I appoint my wife as guardian of my children, but as a safeguard I require that she report to the Probate Court each year and render an accounting of how, why, and where she spent the money necessary for the proper care of my children.

1.2 As a further safeguard, I direct my wife to produce to the Probate Court a Performance Bond to guarantee that she exercises proper judgment in the handling, investing, and spending of the children’s money.

1.3 As a final safeguard, my children shall have the right to demand and receive a complete accounting from their mother of all her financial actions with their money as soon as they reach legal age.

1.4 When my children reach age eighteen (18) they shall have full rights to withdraw and spend their shares of my estate. No one shall have any right to question my children’s actions on how they decide to spend their respective shares.

2.0 Should my wife remarry and also die without a will, her second husband shall be entitled to one-half (1/2) of everything my wife owns in her own name.

2.1 Should my children need some of this share for their support, the second husband shall not be bound to spend any part of his share on my children’s behalf.

2.2 The second husband shall have sole right to decide who is to get his share, even to the exclusion of my children.

3.0 Should my wife predecease me or die while any of my children are minors, I do not wish to exercise my right to nominate the guardian of my children.

3.1 Rather than nominating a guardian of my preference, I direct my relatives and friends to get together and select a guardian by mutual agreement.

3.2 In the event that they fail to agree on a guardian, I direct the Probate Court to make the selection. If the court wishes, it may appoint a stranger acceptable to it.

4.0 Under existing tax law, there are certain legitimate avenues open to me to lower death taxes. Since I prefer to have my money used for governmental purposes rather than for the benefit of my wife and children, I direct that no effort be made to lower taxes.

IN WITNESS WHEREOF, I have set my hand and seal to this, my Last Will and Testament, consisting of two (2) typewritten pages, on this __________ day of ____________, 20__.

_________________________ (SEAL)

John Smith

Disclaimer

Proposed Bankruptcy Law May Reduce Foreclosures

2009-02-10T11:53:00.000-06:00

An article in the Daily Herald (link to article) predicts that new bankruptcy legislation may be passed this month.

This new legislation would empower federal bankruptcy judges to modify residential mortgages including reducing the principal, the interest and the monthly payment.

Bankruptcy is an extreme solution that persons should never take lightly, but with this new legislation it might provide a way for people in financial trouble to keep their homes.

It could also help the real estate market recover. While real estate appraisers valuing neighboring homes might consider that a bankruptcy judge had reduced the loan principal, which is better for a neighborhood -- an occupied home home or a boarded-up bank owned house.

A Good Time for Estate Planning

2009-02-03T14:18:00.000-06:00

In today's economic situation, estate planning maybe the last thing to consider. But with the stock and real estate markets depressed as well as historically low interest rates now may be a very good time to do some planning.

Below is a link to a Wall Street Journal article that discusses some of the many different ways that people can use the depressed markets and low interest rates for their benefit.

http://online.wsj.com/article/SB123249848140700515.html

Power of Attorney for Property Concerns

2009-02-03T11:59:00.000-06:00

A Power of Attorney for Property is an important document to have in your estate plan. It is a very powerful tool that authorizes someone else to handle your financial affairs in the event that you cannot do so. However, like other types of powerful tools--it can be very dangerous if not used properly.

On Sunday February 1st, Eileen Ambrose wrote a good article in the Chicago Tribune cautioning people when they give a Power of Attorney over their property. Below is a link to the article.

http://www.chicagotribune.com/business/yourmoney/chi-ym-attorney-0201feb01,0,5256908.story

The article discusses the risks when someone gives a Power of Attorney for Property to a person who is not unscrupulously honest. It is best to name someone whose honesty is beyond question; someone who is strong enough to resist temptation.

This philosophy also should apply to persons named as sucessor holders of the Power of Attorney for Property.

The article's other good suggestion is to require that the Power of Attorney document include a requirement that the holder must provide copies of the account statements to another person you trust. The person would look at the account statements and raise an alarm if they suspected embezzlement.

A Power of Attorney for Property is very useful document, but it must be used carefully.

Disclaimer

Government "Bad Bank" Plan May Slow Mortgage Relief

2009-01-29T15:49:00.000-06:00

The federal government has been considering creating a new bank to buy all the high risk loans held by private banks. This new bank has been nicknamed the "bad bank" because it would hold only high risk loans.

The "bad bank" plan is the subject of an article by Greg Burns in today's Chicago Tribune (the link to the article is below).

In addition to the risks to taxpayers discussed in Greg Burns' article, there is another potential problem. That is banks that are currently negotiating with their borrowers on modify their loans may decide to wait to see if the Federal Government does in fact create a "bad bank" Waiting may not be could for borrowers who every day get further behind on their payments

http://www.chicagotribune.com/business/columnists/chi-thu-bad-bank-burns-jan29,0,5378928.column

Federal Goverment May Modify Mortgages

2009-01-29T15:31:00.000-06:00

Federal Government Plan on Modifying Mortgages

The Federal Reserve is planning to modify mortgages where it holds the loans as collateral for Federal Reserve payments to the lender.

As Fox News reported (the link to the story is at the bottom of this post), homeowners will not know if the Federal Reserve is holding their loan as collateral. The homeowners will have to wait for the servicing company to contact the homeowner.

If you or a person you know is have problems paying their mortgage this is something to ask them about.

http://www.foxbusiness.com/story/markets/federal-reserve-modify-mortgages/

Second Marriages – A Critical Time for Estate Planning

2009-01-26T16:43:00.000-06:00

Second Marriages – A Critical Time for Estate Planning

A second marriage when there are children from a first marriage can unintentionally disinherit those children.

A recent “cocktail party” question illustrates the unfortunate possibilities.

A 61 year old man recently dies leaving a wife and several adult children from a previous marriage. The man had no estate plan. Also, he and his second wife were in the process of divorce. But when he died, the divorce was not final so he was still legally married to his second wife.

With no estate plan, the man’s estate would go ½ to his wife that he had not yet divorced and ½ to his children.

If this man had been asked week before he died if it was his intention to leave ½ of his estate to the woman he was in the midst of divorcing how likely is it that he would have answered “No.” (The “bereaved widow” brought her boyfriend to his wake.)

The story could have been worse. The man could have put most of his assets into joint tenancy with his second wife after he married her. Then when he died his wife would have received all those assets. There would not have been a 50-50 split of those joint tenancy assets with his children.

Major life changes are good time to prepare or revise an estate plan. Second marriages are certainly one of them.

Disclaimer

Reasons Why You Need A Will

2009-01-23T16:01:00.001-06:00

There are many reasons why you need a Will. A recent article in Forbes Magazine discusses many of them. You can read the Forbes article "Why You Need A Will at

http://www.forbes.com/2009/01/17/will-livingtrust-intestate-pf-in_ae_0119taxes_inl.html

Briefly, if you don't have a Will, the State will provide one, but the State law may not be what you want done.

Another excellent reason, which the article did not discuss, for parents of young children is to name guardians for the children.

Disclaimer

Jesse White’s Latest Money Grab

2009-01-23T14:25:00.000-06:00

Jesse White’s Latest Money Grab

Illinois Secretary of State Jesse White has instituted a new policy that

Increases fees to businesses
Discourages efficiency in his office and
Wastes paper

Jesse White’s office has instituted an additional $50.00 fee for the convenience of filing annual reports online. This new fee is in addition to the existing $5.00 processing fee. So, the total fee for filing online is now $55.00.

This is 55% of the existing fees. That is pretty heavy “juice” for the convenience of online filing.

With businesses watching every penny to keep their doors open, now is not the time for a 50% increase in fees.

With a state government budget that is deeply in the red, now is not the time to encourage staff intensive procedures such as handling documents and payments by hand.

With a heightened concern for the environment including saving paper, now is not the time to discourage people from filing documents online.

If you think Jesse White’s new fees are not the kind of change for which you were hoping and voting, click on the e-mail link below.

In red, is a portion of Secretary of State Jesse White’s web site regarding the new fees.

Please Note: The pilot promotional program (with no expedited fee charges) for Web site filing of Certificates of Good Standing and Annual Reports expired November 30, 2008. Expedited processing fees will now be assessed on these transactions effective December 1, 2008. If you have any questions you may contact the Department of Business Services at 217-782-6961 or via email.

Below is a table of the annual report filing fees with the new online fee highlighted.

Annual Report Filings

Your Fee For This Transaction

Franchise Tax:	$25.00
Filing Fee:	$75.00
Penalty:	$0.00
Interest:	$0.00
Payment Processor Fee:	$5.00
Expedited Fee:	$50.00
Total Fee:	$155.00

Bankruptcy Reform Proposal from Senator Durbin

2009-01-21T12:54:00.000-06:00

This is a press release from Senator Dick Durbin regarding his proposed bankruptcy reform legislation.

The text of Senator Durbin's bill can be found at http://thomas.loc.gov/cgi-bin/query/z?c111:S.61:

DURBIN DISCUSSES FORECLOSURE CRISIS, MORTGAGE BANKRUPTCY REFORM WITH HOUSING SECRETARY NOMINEE

Wednesday, January 14, 2009

[WASHINGTON, D.C.] – U.S. Senator Dick Durbin (D-IL) met with Shaun Donovan, President-elect Barack Obama’s nominee to head the Department of Housing and Urban Development (HUD), today, where he discussed the foreclosure crisis with the nominee and confirmed Donovan’s support of Durbin’s Helping Families Save Their Homes in Bankruptcy Act, a bill that will allow homeowners at risk of foreclosure to alter the terms of their mortgages in bankruptcy.

“Shaun Donovan will be an excellent HUD Secretary and will play a central role in the resolution of the current housing crisis,” Durbin said. “Under his leadership, HUD can help stem the tide of foreclosures and move the housing market, and the broader economy, back on track. I look forward to working closely with him to help those at risk of foreclosures keep their homes.”

Durbin urged Donovan to see that the bankruptcy measure would be part of the upcoming economic recovery package. Donovan agreed that judicial modifications of troubled mortgages are appropriate and pledged to work towards its quick passage.

Earlier this month, Durbin reintroduced legislation that would change the outdated bankruptcy code to allow at-risk homeowners to alter the terms of their mortgages in bankruptcy. He first introduced this bill in the fall of 2007, when experts estimated that nearly 2 million homeowners were at risk of losing their homes to foreclosure. Over the last fourteen months, that number has quadrupled. Today nearly 8.1 million homeowners - 16 percent of all homeowners - are at risk of foreclosure.

Last week, Citigroup, one of the nation’s largest mortgage lenders, announced its support of the legislation, splitting the industry that had once opposed the bill.

President-Elect Obama announced his plans to nominate Mr. Donovan on December 13th. Donovan, the current head of New York City’s Department of Housing Preservation and Development, will play a major role in reversing the current housing and economic crisis in the Obama Administration.

At his confirmation hearing yesterday before the Senate Banking Committee, Donovan said, “Clearly the most important public policy decision facing Congress and the new Administration is how to best ease the economic pain that millions of American families are feeling right now because of our unsteady housing markets. Housing is at the root of the market crisis we are now experiencing, and HUD must be part of the solution.”

Bankruptcy - A Consumer's Overview

2009-01-19T12:49:00.000-06:00

A Consumer's Overview of Bankruptcy

Why is there Bankruptcy protection?

The bankruptcy code is designed to protect you and help you regain your life after financial disaster.

Bankruptcy is NOT failure.

It is a tool for success and getting back on track.

Bankruptcy is NOT irresponsibility.

The vast majority of bankruptcy cases do not involve people who were simply frivolous with their finances.
Most common causes of bankruptcy are: job loss, divorce, high medical bills from injury or serious illness, death of a supporting family member, poor economic conditions.

Bankruptcy does NOT simply protect debtors.

While the Bankruptcy code does help debtors get rid of debt, it also protects creditors to make sure all creditors are treated fairly.

If you have a customer who owes you money and is filing for bankruptcy, the Bankruptcy code can help you get the most money you can toward what you are owed.

Bankruptcy does NOT leave you destitute.

Most people who file for bankruptcy can keep their house, car, and other personal belongings. The Bankruptcy code is designed to leave you with the tools necessary to begin a new financial life.

Types of Bankruptcy

For individuals there are two ways of filing for bankruptcy:

Chapter 7 “Liquidation” Bankruptcy

Chapter 13 “Debt Reorganization” Bankruptcy

“Chapter 7” Liquidation Bankruptcy

Liquidation Bankruptcy is governed by Chapter 7 of the Bankruptcy Code.

v In a Chapter 7, all of your non exempt assets are “turned over” to the Bankruptcy trustee and are sold and distributed to the creditors. With a couple exceptions, any new assets acquired after the bankruptcy petition is filed belong to the debtor and are out of the reach of pre-bankruptcy creditors. This gives the debtor their “fresh start.”

What Chapter 7 Does and Does Not Do.

Chapter 7 DOES:

Discharge almost all of a debtor’s debt:

ü Credit card bills

ü Hospital bills

ü Certain taxes

ü Department store bills

ü Bills for personal services

Reduce the amount of secured debt to the market value of the secured debt

For example, if you have $300,000 left on a home mortgage, but the market value of the home is only $250,000, the amount due on the mortgage gets “stripped down” to $250,000. The $50,000 deficiency is discharged. However, the bank can still foreclose when the case is discharged.

Chapter 7 DOES NOT:

v Discharge debts secured by a lien or a mortgage:

ü Mortgage on property

ü Purchase money lien on a vehicle

ü Judgment liens

ü Tax liens

v Discharge certain “priority” debts

ü Child support

ü Alimony

ü Damages owed on a drunk driving case

ü Income taxes assessed within 3 years of filing

ü Condo assessments

“Chapter 13” Debt Reorganization Bankruptcy

Unlike a Chapter 7, a Chapter 13 reorganizes the debt. This means the debtor keeps all their property and does not turn any over for liquidation. Most debtors who file Chapter 13 are attempting to stop a foreclosure and/or catch up on a mortgage. In Chapter 13 you enter into a payment plan generally for 5 years where you pay off your secured debt and a fraction of your unsecured debt. Debtors MUST have a steady stream of income to file for Chapter 13. If there is no steady stream of income, a Chapter 13 plan cannot be confirmed.

Chapter 13 DOES:

v Give the debtor time to pay off non-dischargeable items secured by:

ü Mortgages

ü Tax liens

ü Judgment liens

v Allow a debtor to catch up on past due mortgage payments

v Allow the debtor to pay off only a portion of most debt with the remainder discharged

o For most debts usually ten cents on the dollar

v Force all creditors to accept the payment plan approved by the Bankruptcy judge

Chapter 13 DOES NOT:

· Reduce the amount due on a home mortgage or car loan to the market value of the property

o If you have $300,000 left on a home mortgage but the market value of the property is $250,000, you will still owe the $300,000 and do not get the “strip down” offered in Chapter 7

· Get approved unless ALL of the debtor’s disposable income goes to the payment plan for the entire 5 year period.

The Automatic Stay

Regardless of which way you file bankruptcy, you will have the protection of the automatic stay. The automatic stay becomes effective immediately upon the filing of a bankruptcy petition.

What is the automatic stay?

The automatic stay is like an impenetrable steel door slamming down between the debtor and all the creditors. Once the automatic stay is in effect, ALL creditors (including governmental creditors like the IRS) must immediately stop ALL actions to collect debts from the debtor. The automatic stay generally remains in effect until the case is discharged.
While the automatic stay is in effect:

Ø     Creditors are not allowed to call the debtor or send letters;

Ø     Any foreclosure actions and collection lawsuits are halted;

Ø     Creditors cannot repossess property AND sometimes must GIVE BACK property recently repossessed:

Ø     Utilities, including cable and internet service providers must continue service to the debtor

Ø     Creditors who violate the automatic stay can be fined, lose their priority or even be imprisoned by the Bankruptcy court!!

BE WARNED: Sometimes creditors can argue that they are not receiving “adequate protection” under the bankruptcy case and will ask the court to lift the automatic stay for their claim. Courts will sometimes do this if a debtor missed scheduled payments during the bankruptcy case or the debtor has no equity in the property. However, generally the automatic stay will remain in effect until the discharge of the case.

Which Chapter DO I choose?

Why would people choose to enter into a five year payment plan under Chapter 13 rather than file a Chapter 7 immediate discharge of the debt??

Ø     Most people who file for Chapter 13 are trying to save their home from a foreclosure. In Chapter 13, you can catch up on mortgage payments and get the mortgage reinstated.

o      In Chapter 7, if you cannot come up with all the past due mortgage payments by the time of discharge (generally 60-90 days after filing), the lender will often continue with the foreclosure when the case is over.

Ø     Some debts, like recent income taxes, are not dischargeable. Entering Chapter 13 lets you pays those taxes over the 5 year plan, AND, the IRS only gets the interest rate allowed by the Bankruptcy Code, not the IRS preferred penalty rates.

Which Chapter CAN I choose?

The Bankruptcy Code now limits who may file for Chapter 7 and who must file for Chapter 13 based on the debtor’s income and the number of dependents in their household:

·       If your income is below a certain median income set by the Bankruptcy code, you may automatically file for Chapter 7.

For example in Illinois the median income levels are

STATE

1 earner

2 people

3 People

4 People

Illinois

$45,606.00

$57,829.00

$66,189.00

$78,182.00

·       If your income is above the median, then you must go through the Bankruptcy Code’s “Means Test”. If you are above the Means Test limit, you may not file for Chapter 7 and may only file for Chapter 13.

Can I do both?

The so called “Chapter 20”
- Some people will enter a Chapter 7 bankruptcy to discharge all the unsecured debt, and then immediately file a Chapter 13 bankruptcy to get a payment plan for paying off all the non-dischargeable debt.
- Under current bankruptcy law, generally this is harder to do because the law sets a minimum amount of time between filing a Chapter 7 and then a Chapter 13.
- However, some courts will allow a debtor to file a Chapter 13 while a Chapter 7 is pending, but this is a rare circumstance.
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 publisherChristopher W. Matern.
An attorney/client relationship can only be established with Christopher Matern by engaging in direct person-to-person contact with Christopher Matern. ChristopherMatern does not intend to practice law in any jurisdiction in which he is not licensed.

STATE	1 earner	2 people	3 People	4 People
Illinois	$45,606.00	$57,829.00	$66,189.00	$78,182.00