April Showers Brought May Flowers and More…
Cultivating Your POA Relationships Reaping what you sow translates to more than just the garden—your work, lifestyle, education, relationships (personal and professional). As we previously discussed here and here, as the Principal, you can grant an individual authority through legal instruments to act as your Agent in different ways and for different circumstances. Besides cultivating the relationship with the person designated as your Agent in the power of attorney (POA) world, should you be fostering relationships with others? Yes, third parties. Who are “third parties?” Third parties are any person or entity – such as banks, brokers, businesses, etc. – that your Agent may deal with on your behalf. These entities (or persons) may examine the POA to make sure the Agent does in fact have the proper authority before allowing the Agent to make your legal or financial decisions. In true CYA fashion, these third parties can question the legitimacy of a POA, queuing up legal headaches. By forming a relationship with these entities or persons (and your estate planning attorney, of course), you can let them know about any POAs you form and even introduce them to your Agent before the need for Agent authority arises. Agent Authority. Your Agent may do as much or as little as you have directed them to do and for as long as you have determined they may act for (while keeping in mind that some POAs last indefinitely). It’s crucial that POAs are drafting correctly and fully grasp the details about how you want your affairs handled. Termination and Third Parties. You have the power to terminate the Agent’s authority at any time. But, to make sure the Agent doesn’t continue acting on your behalf without your knowledge, you must notify third parties that the Agent can no longer make legal or financial decisions for you. This is especially important if any third parties have dealt with your Agent previously and the Agent has acted under the POA. You may end up bearing the risk of your Agent continuing to make financial and legal decisions for you if your third parties are unaware that the relationship ended. Start sowing. Maintaining your relationships with your Agent and any third party is equally as important even after you have a POA in place. Iron out the specifics by talking with your New York estate planning attorney to make sure your ducks are all in a row.
Doctors v. Family — Who Decides Treatment When You Can’t
By Melissa Aristizabal An unfortunate reality in living through a pandemic is being forced to think about what directives you have in place if you cannot make decisions for yourself. A common instrument that you may have heard of in all those evening medical sitcoms (looking at you #GreysAnatomy) is a DNR or “Do Not Resuscitate Order.” So what are your options IRL (in real life)? As previously discussed, a Power of Attorney (POA) is an instrument used to appoint another individual, your “Agent,” to make legal decisions for you, the “Principal.” But, unlike in Illinois, in New York, the instrument used to make healthcare decisions on your behalf is referred to as a “Health Care Proxy.” Health Care Proxy. A Health Care Proxy gives you, the Principal, the power to appoint a competent adult as your Agent to make healthcare decisions in your best interest and in accordance with your religious preferences or moral beliefs. Your Agent only makes healthcare decisions for you when a physician determines that you are no longer able to do so, that is, you lack the mental capacity to “understand and appreciate the nature and consequences of health care decisions” or make an informed decision weighing the benefits, risks, or alternatives of the proposed treatment. When is capacity determined? An attending physician or attending nurse practitioner makes the determination and it is summarized in a writing included in the Principal’s medical records that details their opinion on what caused the Principal’s incapacity and its possible extent and duration. The Principal’s capacity is re-evaluated at the time health care decisions are taken and – if the decision to stop life-saving measures is made – another attending physician or attending nurse practitioner must also determine that the Principal lacks capacity before life-sustaining treatment is ended. But, if the Principal regains capacity at any time, the Agent’s authority to make healthcare decisions automatically ends. Benefits. Having a detailed Health Care Proxy takes the guess work out of, for instance, what risky procedures or treatment you wish to undergo or if you would like medical professionals to take heroic efforts to keep you alive. This can also keep the family discord to a minimum. Undoubtedly, stress will be high and it’s likely that there could be a disagreement among family members on what life saving measures should be taken. Be Prepared. Though it’s never fun discussing end-of-life topics, now is the best time to do so with an attorney. Thinking through what we want in a situation we hope to never encounter puts everyone in the best position to ensure our wishes are followed. Contact a New York estate planning attorney to start your planning today.
Springing into power? Deciding the Right POA in New York
Written by Melissa Aristizabal We sprang forward into spring on March 8th but have been diligently cooped up #stayhome dreaming of brighter days to come. Planning for the future (well, further out than this public health crisis, of course) often includes having a plan in place so that another person — someone you trust – may legally act on your behalf. This is especially important if you’re unable to do so. This grant of legal rights is known as a Power of Attorney (POA). A POA is a legal document that, under New York law, allows you, the ”Principal,” to appoint an another individual as your “Agent” to act and make legal decisions on your behalf. The authority granted to the Agent can cover multiple areas or can be narrowed to one such as real estate transactions. You, the Principal decides this agency scope. So when can the Agent begin acting on your behalf? Either immediately or on the happening of a specific event or date. Simple enough, right? Not so fast. This determination can have drastic consequences. Durable Power of Attorney. A durable POA is one that grants rights immediately to the agent which will survive even if the principal becomes incapacitated—meaning when you no longer have the ability to physically or mentally make legal, financial, or personal decisions for yourself. A Durable POA will last until the principal revokes it or passes away. If the principal decides to revoke a durable POA, the principal must notify any third parties in writing that the agent cannot act on their behalf. So what’s the main issue here? This type of POA is indefinite. Springing Power of Attorney. On the other hand, a springing POA comes into play when a specific event or a specific date occurs. To create a springing POA, an event or a date must be spelled out in the POA at the time of signing. An issue that arises here is that, if the event never occurs or the Principal loses capacity before the specific date, then the POA is of no use and the Agent cannot act on behalf of the Principal. The Agent cannot act on behalf of the Principal and the Principal does not have the capacity to enter into a new durable POA unless and until the event or date occurs. However, this does not ring true for springing POA’s where the event is in fact a determination of incapacity – then the POA becomes a durable POA. Worried about abuse of power? New York state law allows you to appoint a watchdog to keep tabs on your Agent. Your monitor can – under Section 5-1509 of the General Obligations Code – request receipts and records of all transactions made by the Agent and on your behalf. The monitor can also request a copy of the POA. This helps to ensure that the Agent is acting with your best interests and within the power given under the POA. Now, It\’s Up to you. As the Principal, it is ultimately your decision on the type and scope of your POA . Thinking about obtaining a POA? Good. Just be sure to contact your New York estate planning attorney to help you work out the specifics.
COVID-19: What We’re Doing Is What We’ve Been Doing
From its inception, The Law Offices of Max Elliott has used technology to provide safe, efficient, secure, and cost-effective services to our clients. Over the years, our systems and processes, which were new to the legal industry, have been slowly adopted by other firms. And we’ve continued to evolve and grow into providing even more convenient and secure services for our clients. We were the first solo firm in Illinois to use a secure, encrypted client portal, which is now critical in light of COVID-19. Using our portal, we collaborate with clients about their legal matters safely and securely. Clients can upload or download the instruments and information they need without leaving home. Potential clients can complete intake online or over the phone. We were one of the first small firms in Illinois to accept credit or debit card payments. From the beginning, clients could forgo using postage or coming to our office to drop off payments. Appreciating the busy lives of clients, we routinely teleconference with clients and provide “house calls” for signing conferences. Recognizing the benefits of technology and productivity, our team members are accustomed to telecommuting. Valuing our workers, even as a small firm, we already have a paid sick leave policy, among other benefits. So, our firmwide processes, which are critical to keeping clients safe during the COVID-19 public health crisis, are processes that we’ve been using for years. We’re not changing much about how we work because we were already providing safe and secure client services. And we thank our clients and vendors for helping us provide a safe and secure law practice for all the individuals and families who comprise our firm\’s universe.
The Smallbiz Entity Trap
When researching what type of business entity to select, entrepreneurs often seek the most popular option – a Limited Liability Company (LLC). LLCs are popular because they don\’t require the administration that S-Corporations (S-Corps) require – filing quarterly tax returns, holding annual meetings, paying employee wages. Additionally, LLC participants, aka “members,” don\’t own the LLC property, which provides members with some liability protection. (Hence, Limited Liability Company.) LLCs can have one or more members, single-member LLCs (SMLLCs) or multiple-member LLCs, respectively. Furthermore, unless an LLC selects to be treated as an S-Corp, LLCs are treated as partnerships, where the loss or gain of profits flow through to the members. However, when approached about entity selection, while administration and tax issues are important, for start-ups, it\’s critical that liability protection is thoroughly considered. If a judgment is placed against an LLC, the judgment creditors can generally only place liens on the distributions or the LLC property. So, if an LLC member of a multiple-member LLC is sued, the judgment is placed solely against that member’s distribution, whereby the other members can receive their distributions. But, if the LLC is an SMLLC, treated as a partnership, and a judgment is entered against the distribution, then that member won\’t be able to receive their distribution (share of the profit) until they settle the judgmentd. What’s a partnership of one? A sole proprietorship. Who gets sued in sole proprietorships? The proprietor. Whose assets are subject to judgments in sole proprietorships? The proprietor\’s. Ergo, depending on the jurisdiction, S-Corps are sometimes more suitable; they provide an extra layer of liability protection. Because an S-Corp owner/employee would be treated as an employee for the S-Corp, if the S-Corp was sued, the S-Corp owner/employee, unlike an LLC manager/employee, would still be able to receive wages and, thus receive part of the profits. (Ownership shares of an S-Corp are not wages.) As mentioned above, an LLC can seek to be treated as an S-Corp, whereby the owner is also paid as an employee. But, that means that the administrative burdens that accompany S-Corp status are now also a part of the LLC. And that defeats the simplicity purpose of establishing an LLC. THE TAKEAWAY…Potential smallbiz owners should consider liability as an important factor when selecting a legal structure: Choosing the wrong entity can mean the difference between a great launch or great flop .
Give Me Your Family and Your Money
Estate planning attorneys help clients manage the 2 most important aspects of our clients’ lives: their families and their money. This means we must know as much as possible about our clients, more than almost anyone. A friend recently chuckled when I told them that if they want to be my estate planning client, then they need to talk to me as they would their doctor and then tell me what their doctor reported; talk to me like they would their tax accountant and then give me copies of their tax returns; talk to me like they would their financial planner and then give me copies of all of their financial records; talk to be about their children, siblings, partners, and parents and then tell me what they don’t want them to know; and, finally, give me the complete contact information for each one of the persons we just discussed so that I can verify, within the bounds of attorney-client privilege, HIPAA, and other fiduciary rules, the information provided with each person. And THAT is why to consider preparing a Last Will and Testament or a Trust as a DIY task is NOT funny … Unless you’re a doctor who can diagnose their own maladies, an estate planning attorney who is also a tax accountant, and a Certified Financial Planner with licenses to buy all the financial products available to amass wealth, AND you have no loved ones or potential beneficiaries. And THAT is why having a credible, experienced estate planning attorney is important for 99.9% of adults… One of our instruments is called a Trust for a reason. No joke.
Probate Horrors: Not All Fiction, Unfortunately
Probate is the court process generally required when a person with assets dies without a Last Will and Testament or some other testamentary mechanism in place that designates who should receive those assets. In Illinois, probate is lengthy – at least 14 months; costly – initial processing fees start at $850 and the average retainer is $2500; and assets are frozen for at least 6 months – so heirs cannot obtain their inheritance. So, in Illinois, unless there’s a possibility that an estate will face a protracted and costlier lawsuit, probate should be avoided. But sometimes, as much as we try, folks just don’t listen: The Other Heir Abe died without a Will, leaving his surviving spouse, Christine, and Brandy, the 3 year-old child borne of their marriage, as heirs. At the time of his death, Abe owned a small business, a home, and about $300,000 in a bank account. Christine was informed that because the bank account was the only asset with a designated beneficiary, the estate would require probate. Unbeknownst to Christine, Abe had another child, Donald, who he’d been supporting even before his marriage to Christine. Donald’s mother promised Abe that she would not confront Christine because the payments she received from Abe were 4 times as much as what she’d receive in child support. At the time of Abe’s death, Donald was 6 years of age. But then Abe died and so did all payments to Donald’s. At Abe’s death, his estate balance sheet and the probate distribution would resemble this: Estate AssetsHome, $250,000Business, $500,000Bank account, $300,000 (but this belonged to Christine)Total non-designated assets: $750,000 LiabilitiesBusiness creditors $250,000Tax Liabilities, $50,000Estate administration fees, $10,000Total Liabilities: $310,000 Distributions to HeirsChristine, 50%, $205,000Brandy, 25%, 102,500Donald, 25%, $102,500 Abe had always been concerned about Donald’s mother’s spending habits; so Abe paid many items, medical bills, clothing, and daycare directly on behalf of Donald. Now, because Donald was a minor and Abe did not plan for him in a Trust, Donald’s mother, the spendthrift, would likely be appointed Guardian of Donald’s estate with direct access to $102,500. Estate planning could have provided benefit for Donald, even without Christine and Brandy ever knowing. But… Abe didn’t plan. That DNA kit/Ancestry App Suppose that Donald was an adult and had just received results from a genealogical investigation, which illustrated that he and Abe were 99.9% son and father. He decides to search for Abe and learns that Abe just died. Christine refuses to meet with him; so Donald shows up in court… Hence, the reason why probate courts also have bailiffs. What if Donald was also a spendthrift or worse? Could he inherit?
New Laws Approaching Fast
Summer has ended for most families with children and we thought about this and other family dynamics in our most recent newsletter. However, the summer didn\’t stop Illinois Governor Pritzker from approving several laws that will affect families and businesses in the coming months. Here\’s a few that you may find interesting: The Illinois Trust Code, effective January 1, 2020, aligns Illinois with states that have adopted or established their own version of the Uniform Trust Code. Meaning for you: As you and your family move among the states, your estate plan may not need much revision. Assault or battery of an elderly person results in a loss of inheritance, effective January 1, 2020. Meaning for you: Nothing, we hope. Recreational cannabis will be legal in Illinois, effective January 1, 2020. Meaning for you: If you will partake or endeavor commercially, remember it is still against the law, federally, Uniform Partition of Heirs Property Act, effective January 1, 2020. Meaning for you: If you inherit property with someone else as a co-tenant and y\’all can\’t get along, the property can be sold without mutual agreement. Department of Public Health Powers and Duties Law amended to allow a feasibility study for a state repository for Healthcare Powers of Attorney and other medical Advanced Directives. Meaning for you: Unclear; these are your taxpayer dollars going to a study to determine if your medical information should be held by the State. Those are the headliners that we found relevant to our clients and associates. We\’ll be providing deeper analyses of these issues and others as the laws become effective and part of our society\’s fabric.
Was I Just Disinherited?
As an estate planning and estate administration attorney firm, we routinely get questions when an individual’s loved one has died and they believe they are owed an inheritance. Perhaps they heard their loved one mention a Last Will and Testament or a Revocable Trust or, worse, a loved one died and because the individual is the only reviving heir, they are confused when they can’t obtain a second mortgage. Leaving the latter situation for another time, below are a few common questions we are often asked. Q: How will I know if I\’m a beneficiary of my mother’s Will or Trust?A: The Executor or Trustee must contact you; it’s the law. Q: My grandmother died a year ago and had a Trust. My uncle, the Trustee, won’t tell me anything. Is there anything I can do?A: Your grandmother may have left everything to her children (your uncle and parent) equally and not per stirpes, in which case, you may not be entitled to know anything. However, if your parent, who was your grandmother’s child, predeceased your grandmother, you could seek to probate your grandmother’s estate. Q: My father died and his Trust left everything to my stepmother, and upon her death, me and my siblings will inherit. Can’t we get anything now?A: If the terms of the trust are validly provided as you stated, you can’t receive anything now. You may receive inheritance from life insurance or bank accounts whereby your were the designated beneficiary but that’s all. A marital Trust, which is what this may be, generally provides all income and complete discretionary distributions of all principal to the surviving spouse. In other words, your stepmother can spend up or sell all trust assets, leaving you and your siblings with nothing. Be nice to your stepmom. Q: My sibling mentioned her Trust before dying a month ago and we can\’t find it among her papers. What she me and our other brother do?A: If she had a lawyer, contact the lawyer. If she was a regular client at a bank, maybe she has a safe deposit box, which will require a Small Estate Affidavit to open; but it could be in there. If you can’t find anything in 90 days, click here to learn about probate. Feel free to contact us if you\’ve got a question.
ABA to Judges: Obergefell Is Still the Law
FACTS. Judge Vance Day, an Oregon judge, was appointed to the bench in 2011 and, upon appointment agreed to solemnize weddings. Judge Day was re-elected to the bench in 2012. In 2014, Oregon overturned its constitutional ban on same-sex marriages. Shortly thereafter, a judicial clerk and assistant asked Judge Day whether he would perform same-sex marriages because of the judge\’s view that marriage was only to occur between one man and one woman. In response to that question, Judge Day created a screening process whereby if he was asked to perform a marriage, his staff was to try to ascertain whether the couple were a same-sex couple. If the couple were a same-sex couple, then the staff was instructed by Judge Day to tell the couple that the judge had a scheduling conflict. If the couple was straight, then the staff could schedule the ceremony. There was only one incident in which the screening took place and a same-sex couple was identified. And on that occasion, Judge Day had a legitimate conflict. ANALYSIS. Judge Day’s behavior was brought before the Oregon Commission on Judicial Fitness and Disability and he was charged with violating a Judicial Rule of Conduct. Judge Day argued that he had not discriminated against any known parties so he could not be reprimanded. The Commission disagreed, explaining that performance was the low bar for judges and that the additional bar judges must abide by is the appearance of impartiality. Judge Day then contended that because his screening process was internal, the appearance of impartiality was sustained. Wrong. The staff knew what he was doing and so he failed that test. The Formal Opinion explained 2 of the cardinal rules of judges’ conduct are to (1) perform their duties impartially and (2) not promote or appear to promote favoritism for certain classes or segments of society. To follow these rules, judge must not evince bias based on “race, sex, gender, religion, national origin, ethnicity, disability, age, sexual orientation, marital status, socioeconomic status, or political affiliation.” And this is an in-exhaustive list. CONCLUSION A judge who performs marriages for opposite-sex couples cannot refuse to perform marriages for same-sex couples. The Formal Opinion even hearkened back to Obergefell v. Hodges, explaining that Obergefell is still the law and the Model Rule of Judicial Conduct requires judges to comply with the law. The Formal Opinion did acknowledge the fact that the Obergefell and infamous Masterpiece Cakeshop decisions considered the issue of deep convictions regarding the concept of marriage. BUT, the Formal Opinion, concluded judges are officers of the law beholden to the model rule. Either marry all or none.