Good Estate Planning Goes Beyond The Will

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

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

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

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

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

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

Another Cost a Will Can Avoid

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

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

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

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

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

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

Employee Non-Compete Agreements

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

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

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

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

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

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

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

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

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

Now Paid On Time Isn’t Good Enough

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

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

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

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

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

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

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

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

Do It Yourself Estate Planning

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

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

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

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

Payroll Taxes - A Personal Liability Trap

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

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

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

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

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

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

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

Estate Planning - Frequently Asked Questions

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

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