Financial Agents Importance
Financial Agent for Power of Attorney
The Illinois Power of Attorney Act provides, in part, that every individual has the right to appoint an agent to make property, financial, personal, and health care decisions for that individual.
However, this right cannot be fully effective unless the principal empowers the agent to act throughout the principal's lifetime. This right includes, during periods of disability, with confidence that third parties will always honor the agent's authority.
There are two legal Power of Attorney (POA) documents, one for health care decisions and the other for financial decision-making.
Each has its importance, and everyone over 18 should have both of these documents. For another person you choose to be able to sign your name and handle your financial affairs legally, you need to sign a Power of Attorney for Property and name an Agent.
Financial Agents Power
Considering the authority you are granting an individual to sign your name and handle your financial transactions, careful consideration should be made in choosing the right person. Periodic review is essential to ensure that person is still appropriate and, of course, is still available.
Your agent will have a legal responsibility that provides checks and balances, called a fiduciary responsibility. However, your bank accounts can be emptied, and your finances in shambles before you can enforce that fiduciary conduct. So, choose wisely, and update when necessary.
Scope of Financial Agents Power
- When: For the duration, you have a choice; your agent's power begins immediately or only upon your disability s determined by a physician. Most couples choose to have each spouse's power to start immediately for the convenience of use in the document if one spouse is unavailable or chooses not to handle the household finances. Or maybe one spouse can't make the closing of real estate, and the agent can use the POA and could not do so if it was only activated on disability.
- How: The agent can use the POA for such financial transactions as:
- Pay bills, borrowing transactions, and business operations. Banking, investing, insurance and annuities, and real estate transactions act as a Digital Fiduciary to access and manage online accounts.
- You are dealing with the IRS, Medicare, Medicaid, credit card companies, Social Security, VA, employment, and military benefits. Supplemental Needs Trusts and caregiver agreements.
- Hire agents, accountants, lawyers, and financial advisors.
- Why: You can only appoint an agent and sign the POA while you have your mental capacity. It is too late to do so if you are severely injured, or illness limits your capacity. Now you are subject to a full court proceeding to have a Legal Guardian appointed. Even if you are married, having your spouse established and operating under the court's control for the property and investments you own together is required. You do not want that to happen.
As you can see, there is no reason not to have a valid POA. Not having one can lead to financially disastrous consequences for numerous reasons.
POA of Property and Health Care should be part of a Living Trust estate plan. Ho ever, you can also obtain them separately. You can change or revoke a POA anytime while you still have capacity.
Living Trusts
At the end of your life or incapacitation, they risk Probate if you have property, investments, or bank accounts in your name.
- A Will = Probate. The rule is no one can legally sign your name. Therefore, at your death or incapacity, all assets in your name are subject to the complete Probate process, which averages 18 months and is costly.
- Living Trust completely avoids Probate.
- A Living Trust estate plan includes Health Care and Financial Power of Attorney documents and a Last Will and Testament for guardianship of minor children and to "pour over" any assets still in your name at your death out of Probate.
- Your life insurance policies and deferred compensation accounts can name your Living Trust as beneficiary, subject to essential tax considerations.
Comprehensive Benefits of America
For an expanded presentation of asset protection and financial wellness strategies and to receive regular updates on strategies to protect what you have earned, visit and register with CBAPlan at the link below. Registration is free.
Visit www.cbaplan.com or call 1-312-559-8444 for assistance with registering.
Tom Tuohy is the founder and CEO of Comprehensive Benefits of America, LLC, and Tuohy Law Offices.
The information being provided is strictly as a courtesy. When you link to any of these websites provided herein, Comprehensive Benefits of America, LLC does not represent the completeness or accuracy of the information provided at these sites. CBA does not provide professional financial, investment, tax, or legal advice. You should seek certified financial planners, CPAs, and attorneys for advice about your personal needs. See complete Disclosures and the CBA Security and Privacy policies.
Legal Capacity Consequences
Legal Capacity
The American Bar Association defines 'legal capacity' as "the ability to perform a task – or make a decision. State laws set out the standards of legal capacity for various tasks – consent to treatment, make a Will, Trust or Deed, and make a gift or contract."
In Illinois, legal capacity depends on the circumstances:
- Every adult is presumed to have the capacity to make health care decisions unless proven otherwise. An often confusing example is that diagnosing Alzheimer's or dementia will not necessarily prove a lack of legal capacity. However, diagnosing advanced Alzheimers or dementia could likely prove that legal capacity is lacking.
- Testamentary capacity: a person's mental and, therefore, legal ability to make or change a Will or Trust estate plan. While you must be over age 18 to enter into any legal contract, Will, Living Trust estate plan, or Power of Attorney, you must also:
◦ Understand the nature and extent of your property.
◦ Remember your relatives and descendants.
◦ Be able to articulate who should inherit your property.
While most people wait too long to make a Trust or Will estate plan or essential Health Care and Financial Power of Attorney documents, often people believe a relative needs more legal capacity to do so than they currently have. However, that, too, is objective. Like a contract, a Will requires the highest level of capacity; you are of sound mind and memory.
The Consequences of Lost Capacity
Last week I received a call from a grade school classmate. Two years ago, he asked for my advice regarding his mother, who was in her late 80s.
He said she wants her real estate to go equally to him and his three brothers. They all agreed that his two brothers, who live with his mother, would remain in the house, as both have lived there their entire life and have special needs.
I clarified that he needed to act quickly to protect the house and his brother's ability to live there at their mother's death. His mother needed to make a Living Trust that protects her two sons' interest in her estate in a Supplemental Needs Trust at her death, or they will lose their SSI and Medicare or be required to reimburse the government for benefits.
The family house would be sold, and 50% of the value would go to the government. And worse yet, his brothers would lose the only home they have known.
My old classmate was calling to update his mother's Power of Attorney. He said he 'dropped the ball' on the Trust but needs the POA for the long-term care facility where his mother now lives with advanced dementia.
I don't have to tell you the rest. It is too late, and the home is lost.
Don't be my old classmate. Please don't wait to do what you need and someday find out it's too late. Get a Living Trust estate plan while you have the legal capacity and are still here.
Comprehensive Benefits of America
For an expanded presentation of asset protection and financial wellness strategies and to receive regular updates on strategies to protect what you have earned, visit and register with CBAPlan at the link below. Registration is free.
Visit www.cbaplan.com or call 1-312-559-8444 for assistance with registering.
Tom Tuohy is the founder and CEO of Comprehensive Benefits of America, LLC, and Tuohy Law Offices.
The information being provided is strictly as a courtesy. When you link to any of these websites provided herein, Comprehensive Benefits of America, LLC does not represent the completeness or accuracy of the information provided at these sites. CBA does not provide professional financial, investment, tax, or legal advice. You should seek certified financial planners, CPAs, and attorneys for advice about your personal needs. See complete Disclosures and the CBA Security and Privacy policies.
Are Your Assets Protected?
Asset protection is more important than ever before. Today, you have risks at every turn. Lawsuits, high cost of long-term care, auto and home accidents, or years of Probate. We often settle and fail to consider the importance of comprehensive protection. In other cases, we only need the best legal document to protect what we own. It is not worth rolling the dice and sacrificing your savings or your hard-earned assets. And it is next to impossible to keep up with what you need for protection. Many changes you need come without warning.
Homestead Real Estate
Suppose you are married and currently working as the police. In that case, your principal place of residence should be titled in Tenants by Entirety. This form of legal title protects your marital property from the creditors of one spouse.
Firearms
With the growing availability of concealed carry laws, more citizens are choosing to carry firearms and to keep them accessible for defense in their homes.
However, even for justifiable acts of self-defense, a claim for monetary damages can be made against you by your assailant or innocent bystanders. You can also be held liable for gun-related incidents while hunting, in gun clubs, or while shooting at commercial or private ranges.
Check out the Benefits Plan website for more information.
Asset Protection with Automobile Insurance
The most common auto policy written today is the same as it was 25 years ago – $100,000/$300,000. It means you have $100,000 in individual protection for damages caused by you or a covered driver on your policy. Similarly, you have $300,000 total coverage for all injured parties.
Consequently, you are personally responsible for damages that exceed these amounts. Even a minor accident can result in hospitalization, extended medical care, or death. However, Umbrella Insurance only costs an average of $250 per year. The policy provides an additional $1 million in liability protection for each covered vehicle and your residence.
Investment Real Estate
If you own commercial property, your renters can sue you for various reasons. For example, claims were made for injuries resulting from property defects inside and outside the residence. First, be sure you have the right coverage and are not overpaying. Secondly, eliminate any personal liability concern for excess claims by holding title to any investment property in either a Corporation or an LLC. Moreover, a Series LLC allows you to separate liabilities from each property if you own more than one investment property.
Long-Term Health Care
Will you need it? Of those who live longer than age 65, 70% will need some long-term health care. To clarify, only 40% of people will require inpatient nursing care. However, all long-term health care is expensive. Fortunately, a hybrid insurance policy is offered exclusively to Benefits Plan members. This policy provides long-term care insurance; if not accessed, it can be converted to life insurance at your death.
Living Trusts and Asset Protection
At the end of your life, or if you become incapacitated, property or bank accounts in your name are at risk of Probate.
- A Will must be probated. The rule is no one can legally sign your name. Therefore, all assets in your name are subject to the complete probate process at your death or incapacity. This court process averages 18 months and is costly.
- A Living Trust completely avoids Probate.
- A Living Trust estate plan includes both Health Care and Financial Power of Attorney documents and a Last Will and Testament for guardianship of minor children and to “pour over” any assets still in your name at your death, out of Probate.
A Revocable Living Trust is a written, legal document that allows you to privately pass your assets to your family, friends, or charities after your death. Assets in a properly funded Trust are not subject to Probate. These include real estate, bank accounts, stocks, and minor beneficiary policies and accounts. Your life insurance policies and deferred compensation accounts can name your Living Trust as beneficiary, subject to essential tax considerations. However, it is often recommended that adult beneficiaries be named as beneficiaries without legal or other restrictions.
Comprehensive Benefits of America
For an expanded presentation of asset protection and financial wellness strategies and to receive regular updates on strategies to protect what you have earned, visit and register with CBAPlan at the link below. Registration is free.
Visit www.cbaplan.com or call 1-312-559-8444 for assistance with registering.
Tom Tuohy is the founder and CEO of Comprehensive Benefits of America, LLC, and Tuohy Law Offices.
The information being provided is strictly as a courtesy. When you link to any of these websites provided herein, Comprehensive Benefits of America, LLC/does not represent the completeness or accuracy of information provided at these sites. CBA does not provide professional financial, investment, tax, or legal advice. You should seek certified financial planners, CPAs, and attorneys for advice relative to your personal needs. See complete Disclosures and the CBA Security and Privacy policies.
Do You Have Umbrella Insurance?
Umbrella Insurance the Most Important and Least Expensive Liability Insurance
The chances are you have the average vehicle policy coverage limits of liability - $100,000/$300,000.
Those figures represent the limits of your insurance protection for damages due to injuries you cause to others in an accident. However, if the damages exceed $100,000 per person or $300,000 per accident for all persons injured in the accident, you must pay the excess.
Umbrella Insurance Coverage
A standard umbrella policy covers all vehicles on your policy and your home for injuries caused to guests or visitors on your property. An umbrella policy also may cover libel or slander claims. For instance, posting a bad review or social media comment. You may also have coverage for malicious prosecution claims and overseas travels. Importantly, the policy limits begin at $1,000,000,00 and average only $230 annually.
Consequences of Inadequate Insurance Coverage
A few years ago, someone I represented in my law practice neighbor's child tripped on a Play Station cord while visiting his home and struck her head on a table. Tragically, the child suffered brain damage. However, my client had only $100,000 liability coverage on his home. Consequently, nearly everything my client earned over 20 years on the job was lost.
Another client came to my office to discuss an accident. She was stopped at dusk at a stop sign in Park Ridge, Illinois. This suburb has few street lights and short concrete posts for street signs. Moreover, while inching forward to see the street name, she did not notice an older woman who stepped off the curb simultaneously. As a result, my client bumped the woman who fell and struck her head on the sidewalk. The woman died that evening. My client had a 100/300 policy and approximately $600,000 net worth. There was nothing we could do to protect her savings or the equity in her family home.
The Other Drivers
Consider the flip side of you not having adequate coverage - the thousands of uninsured or underinsured drivers you drive alongside daily. You must protect yourself from damages another driver with too little or no insurance might cause you or someone in your household.
Whether it is your home or vehicle, the time to ensure you are adequately protected is now - before you drive again or invite a guest into your home.
Learn More
Contact CBA today for help finding the right Umbrella Insurance coverage.
Learn more about Umbrella Insurance by viewing this short video or reading this brief article.
Comprehensive Benefits of America
For an expanded presentation of asset protection and financial wellness strategies and to receive regular updates on strategies to protect what you have earned, visit and register with CBAPlan at the link below. Registration is free.
Visit www.cbaplan.com or call 1-312-559-8444 for assistance with registering.
Tom Tuohy is the founder and CEO of Comprehensive Benefits of America, LLC, and Tuohy Law Offices.
17W220 22nd St.
Suite 300
Oakbrook Terrace, IL 60181
admin@cbaplan.com