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.
Your Summer Checklist
A checklist helps to ensure no gaps in your health care, financial, insurance, or estate plan documents.
Power of Attorney Checklist
- Are your agents outdated because of age, disability, or residence?
- Is a minor now old enough to be your agent?
- Update your Health Care Power of Attorney to include authority for your agent to access health care workers remotely and to visit you via Zoom or Facetime.
Health Care
Whether a trip to the hospital is sudden or planned, you will need a current Health Care Power of Attorney document. You will be asked for this legal document, and if you do not have one, you must sign something you do not understand while in the hospital, under stress, and with plenty of other things on your mind.
A Health Care POA appoints a person to make all health care decisions for you if you cannot do so. This person can access your medical records to accept or withdraw treatment, admit or discharge you from the hospital, and make decisions on life support. If you have arrived at the hospital unconscious, it is chaos with your family and medical personnel. This isn’t a situation you want to be in or one you want for your family.
Take a minute to review your existing Health Care POA and ensure your agent is correct and that the document is current. If you do not have one, now is the time to get one.
Financial
The law holds that no one, not even a spouse, can legally sign your name unless you have a valid Financial Power of Attorney that designates an agent.
Your Financial POA agent has the legal authority to manage your financial affairs if you can no longer make these decisions yourself. A Financial POA is an important document to ensure that your financial matters are handled efficiently in an unfortunate occurrence.
Now is the time to review or obtain a Financial Power of Attorney document.
Beneficiary Designations Checklist
- Were any children born after you opened your insurance policies or tax-deferred accounts?
- Have any beneficiaries died?
- Has your marriage ended, or are you separated from your spouse?
- Do any beneficiaries have a legal disability? Name your Living Trust to avoid government reimbursement from your estate.
- Are any beneficiaries minors under the age of 18? Name your Living Trust to avoid Probate.
Living Trust or other Estate Plan Checklist
- What has changed in your family? Have you moved?
- If something happens to you, does your estate plan reflect your current wishes?
- Are your beneficiaries the same? Do you need to remove a beneficiary or add a new one?
- Are any changes needed on the timing of transferring your assets to your beneficiaries?
- Do your beneficiaries require asset protection because of disability, legal trouble, or a failing marriage?
- Is your Trustee or Executor still appropriate?
- Are all your assets titled in the name of your Living Trusts?
Real Estate Deeds Checklist
- Did you remember to retitle your property deed into the name of your Living Trust after the refinance closing?
- Have you moved your residence? Did you take the title of your new property in the name of your Living Trust?
- Are you still working? If so, as the active police and married, the title to the deed of your principal place of residence should be in Tenants by Entirety for maximum asset protection.
- Have you gotten married?
Living Trusts, if Not Now, When?
We all know that we need an estate plan, and we should take care of it sooner rather than later. However, almost everyone procrastinates when it comes to this essential task.
At the end of your life or incapacitation, they risk Probate if you have property, investments, or bank accounts in your name.
Advantages of a Living Trust
- A Will is Probate. The rule is no one can legally sign your name. Therefore, all assets in your name are subject to the Probate process, which averages 18 months and is costly.
- A Living Trust completely avoids Probate.
- Your financial accounts, life insurance policies, and deferred compensation accounts can name your Living Trust as the beneficiary. This is subject to essential tax considerations.
- A Living Trust estate plan includes Health Care and Financial Power of Attorney documents. It also consists of a Last Will and Testament. A Will is necessary for guardianship of minor children. It also transfers assets in your name out of Probate.
- A Living Trust contains a No Contest provision and beneficiary Asset Protection clauses.
Comprehensive Benefits of America
For an expanded presentation of asset protection and financial wellness strategies and regular updates on strategies to protect what you have earned, visit and register with CBA on the link below. Registration is free.
Tom Tuohy is the founder and CEO of Comprehensive Benefits of America, LLC, and Tuohy Law Offices.
312-559-8444
17W220 22nd Street
Oakbrook Terrace, Illinois, 60181
The information being provided is strictly as a courtesy. When you link to any of these websites, 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.
POD and TOD Account Disadvantages
POD and TOD Accounts
What are POD and TODs? They are an increasingly popular method of providing for the distribution of financial accounts at your death. They are helpful in certain situations; however, there are critical limitations and risks associated with using them.
Payable of Death (POD)
A Payable on Death (POD) designation is commonly available at banks and used for checking and savings accounts and CDs. Other financial institutions usually use a Transfer on Death (TOD) designation. A POD and TOD are both used to name a beneficiary for which the account balance transfers on death.
- Advantages
- Useful for transfer on death in smaller estates of less than $100,000 in total assets with no particular circumstances. (see below)
- Appropriate for many checking accounts, particularly those held at Chase Bank, to avoid inconveniences.
- Avoids Probate, but comes with risks.
- Disadvantages
- Disinheriting: Regardless of the size of your estate, you might unintentionally disinherit a child or other intended beneficiary. Or the beneficiary might not share the funds with your other children as you had hoped. The account ownership automatically transfers to the only person(s) named on TOD or POD. These funds now become part of the named beneficiaries’ family estate if that person dies simultaneously with you or shortly after your death.
- Creditors: Since the funds are owned by your beneficiary immediately, they are also subject to any creditor claims, lawsuits, or divorce filed against the beneficiary.
- Minors: The same as with life insurance policies and deferred compensation accounts and IRAs or other beneficiary designations. If the beneficiary is under 18 at the time of your death, the proceeds or funds go to Probate.
- Disability: If your beneficiary has a disability now or acquires one from an accident or illness before your death. In that case, the POD and TOD funds could end up with the government or jeopardize their Medicaid and SSI.
- Predeceased Beneficiary: If your beneficiary dies with you or before your death, the funds are subject to Probate. There are no alternate beneficiaries on TOD/POD accounts.
- Squandering Inheritance: Statistics show that most inheritance is spent within18 to 36 months. I am confident the time shortens, the younger the beneficiary.
POD vs Living Trusts
I write about Living Trusts frequently because they are much more than an estate plan. Living Trusts organize your assets now and safeguard them after your death. They also can avoid all of the above disadvantages of POD/TOD designations.
Living Trusts also protect your assets from Guardianship Court if you acquire a disability. Additionally, if you are contemplating a second marriage, a Living Trust is essential to segregate your assets from future marital funds acting as prenuptial protection.
Living Trusts, if Not Now, When?
We all know that we need an estate plan, and we should take care of it sooner rather than later. However, almost everyone procrastinates when it comes to this essential task.
At the end of your life or incapacitation, they risk Probate if you have property, investments, or bank accounts in your name.
Advantages of a Living Trust
- A Will is Probate. The rule is no one can legally sign your name. Therefore, all assets in your name are subject to the Probate process, which averages 18 months and is costly.
- A Living Trust completely avoids Probate.
- Your financial accounts, life insurance policies, and deferred compensation accounts can name your Living Trust as the beneficiary. This is subject to essential tax considerations.
- A Living Trust estate plan includes both Health Care and Financial Power of Attorney documents. It also consists of a Last Will and Testament. A Will is necessary for guardianship of minor children. It also transfers assets in your name out of Probate.
- A Living Trust contains a No Contest provision and beneficiary Asset Protection clauses.
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 on the link below. Registration is free.
Tom Tuohy is the founder and CEO of Comprehensive Benefits of America, LLC, and Tuohy Law Offices.
312-559-8444
17W220 22nd Street
Oakbrook Terrace, Illinois, 60181
The information being provided is strictly as a courtesy. When you link to any of these websites provided herein, Comprehensive Benefits of America, LLC/ makes no representation of 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.
George Halas Prince, and a Chicago Cop
What could those three people possibly have in common?
Horrendous estate planning.
Not Having an Estate Plan
Prince
Let's dispense with Prince first and then find out why George Halas and a Chicago police officer have unofficially ranked #1 and # 2 as the two worst estates the decades-long Chief Judge of Cook County Probate ever heard.
The musician Prince died on April 21, 2016. He had no estate plan. Six years later, his estate, valued at hundreds of millions of dollars, is still in the predictable mess of the Probate Court system. Because Prince left no estate plan, the state is left to determine how much his estate is worth and who will receive it.
Having a Plan, but not a Good Plan
If it sounds unimaginable that someone with assets, royalties, and a legacy eventually worth billions didn't plan for the inevitable day he wouldn't be here, the list of well-known people who did the same can fill a book. The court ordered Jackie Onnasis's personal property sold to pay otherwise avoidable estate taxes. James Gandolfini, "Tony Soprano," had a Will, but not a Marital Trust, and because of that mistake, his estate paid the IRS $30 million, and his 13-year-old son ended up in the center of, you guessed it, a Probate battle.
Aretha Franklin, Elvis, Tony Hsieh, founder of Zappos (that estate may never settle), Kobe Bryant; the list goes on.
George Halas
On October 31, 1983, George Halas died without a Living Trust or a workable succession plan for the Chicago Bears. He wanted his son, Mugsy Halas to take over the Bears, but Mugsy died suddenly in 1979 and George never created an alternate plan. For over a dozen years the children of Mugsy and the children of his daughter Virginia McCaskey battled in Cook County Probate Court to the extent ownership shares of the Bears had to be sold to pay for the legal fees. The Halas kids weren't even invited to the Super Bowl. Today many fans wish the McCaskeys sold all their shares.
Most importantly, this mess is not what George Halas wanted, for his family and for the Chicago Bears.
The Chicago Cop
A Chicago Police Officer died leaving a Will as his estate plan to provide for his seven children. His kids fought each other in Probate Court for 18 years until there was nothing left in their father's estate. One day I stood before the chief judge who told me he hated this case as much as he did George Halas' case.
Whether it was the grandchildren of George Halas and the future of the Chicago Bears or the children of a Chicago Police Officer and a family's entire savings and legacy, none of it should have happened, and all of it avoided.
Having a Will or no Will as an Estate Plan = Probate
If there's a Will, there's relatives. And if there isn't a Will, there are even more relatives.
A Will is merely your wishes that a Probate Court follows to distribute your assets. A Last Will and Testament must be probated. This rule comes from the law that no one can legally sign your name. Therefore, if you die with assets in your name, a Probate Court judge must appoint an Executor to sign your name for the asset transfers to your named beneficiaries. If you do not have a Will, the court determines who receives your assets.
The system cannot handle everyone's estate. Therefore, it can take years to get through the process. And that is if no one contests, which is very easy to do. It doesn't matter if you are a celebrity or not, Probate is not the way to go.
The police officer's kids fought with each other because they could. Every example I gave above was easily avoidable.
Living Trust Estate Plan Avoids Probate
I have spent more time in Probate Court than I ever want to remember. So, I dedicated my career to helping people avoid the system, keep their affairs private, and their families at peace with each other, and grateful for you and your memory. No matter who you are, that is a legacy you deserve.
The first hurdle of planning is just getting it done. Estate planning is not high on anyone's list. But we all know how uncertain life is, and none of us are getting out of this thing alive. And none of us know when we will go.
To avoid massive headaches and expenses for your family, and give yourself peace of mind now, what you need today is a Living Trust estate plan.
How does a Living Trust Work?
Your real estate titles (in all states) transfer from your name to your Trust name. Life insurance policies and deferred compensation accounts can name your Living Trust as beneficiary, subject to essential tax considerations.
A Living Trust estate plan includes both Health Care and Financial Power of Attorney documents. It also consists of a Last Will and Testament. A Will is necessary for guardianship of minor children. It also transfers assets in your name out of Probate.
And finally, a Living Trust contains a No Contest provision, as well as beneficiary asset protection clauses.
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 on the link below. Registration is free.
Tom Tuohy is the founder and CEO of Comprehensive Benefits of America, LLC, and Tuohy Law Offices.
312-559-8444
17W220 22nd Street
Oakbrook Terrace, Illinois, 60181
The information being provided is strictly as a courtesy. When you link to any of these websites provided herein, Comprehensive Benefits of America, LLC/ makes no representation of 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.
17W220 22nd St.
Suite 300
Oakbrook Terrace, IL 60181
admin@cbaplan.com