How to Sell or Transfer a Vehicle After the Owner Dies (Illinois)

Law Office of

Michael J. Fleck, P.C.

-Illinois Legal Topics-

by Michael J. Fleck, Esq.

WARNING: THIS IS NOT LEGAL ADVICE. CONSULT YOUR ATTORNEY FOR INFORMATION CONCERNING YOUR PERSONAL SITUATION. This is a series of discussions on legal issues in Illinois. Topics covered include Real Estate, Estate Planning and Administration (wills, trusts, probate and guardianship), Business Law, Employment and Civil Litigation.

by Michael J. Fleck, Esq.

HOW TO SELL OR TRANSFER A VEHICLE AFTER THE OWNER DIES (ILLINOIS)

Many clients are tasked with the sale or transfer of a vehicle after a loved one dies.  The steps are a bit complicated, and vary depending on the circumstances.  Below is a list of steps one should take to make a sale or transfer of title.

1. LOCATE THE TITLE, INSURANCE AND
   IF APPLICABLE, LOAN INFORMATION - If the vehicle has no lender lien, then the owner should have the title.  It is critical to find and secure the title.  Insurance policies should be located and as noted below, the insurance carrier should be notified.  If there is a loan on the vehicle, it is important to notify the lender of the death, and to make sure any payments due are made to secure and maintain the vehicle.  Since the loan is secured by a lien on the vehicle, current payments may be appropriate to make so as to avoid a default and repossession of the vehicle.
   
2. JOINT OWNERS - the Illinois Vehicle Code makes it clear that if two or more persons are on title and one dies, the ownership is presumed to be joint tenancy with a right of survivorship.  See, 625 ILCS 5/3-107.1 "Presumption of tenancy. When a certificate of title is made out to 2 or more persons, it shall be presumed that the title is held as joint tenants with right of survivorship."  The surviving owner has the authority to sell or trade in the vehicle.  A death certificate is required to transfer title.  If the surviving owner intends to keep the vehicle, it is required that within 120 days of the date of death, a new title be obtained, transferring title into the surviving owner's name only.  Some will not take this step unless and until they sell or trade in  the vehicle in the future.  While this is common practice, it can be a paperwork issue if time passes and the death certificate cannot be found.
   
3. INSURANCE - Notify the insurance carrier regarding the death of the insured driver.  While the personal representative of an estate is covered to drive a vehicle for the purposes of maintaining and protecting the vehicle, or to transfer title, the vehicle is not necessarily covered for personal use.  If the policy lists other drivers, then those drivers may use the vehicle as long as the policy is in force.  Many mistakenly think that because the deceased insured gave permission for others to drive the car (and there would be coverage during the decedent's lifetime), permission cannot be given after death.  The better option is to make sure the vehicle has the right coverage, and if title is to be transferred to another family member, that should be done as soon as possible so the estate is not liable for any uninsured liabilities.
   
4. LIEN HOLDERS - The vehicle title may have been issued to the lender (the "lien holder") to hold until the loan is paid in full.  Title may not transfer until the lien is satisfied.  If the estate has sufficient assets to pay the loan and release title to the owner, then a payoff request can be made to obtain the title.  If the intention is to sell or trade in the vehicle, this can get more complicated.  Most car dealers are equipped to make such a transfer, but the personal representative will have to be prepared to bring in certain documents to assure the dealer that they have authority to sell the vehicle.  These documents are listed below.
   
5. DOCUMENTATION NEEDED TO TRANSFER TITLE - Since the deceased owner is no longer available to sign title over to a new owner or buyer, the personal representative will have to sign.  But the Secretary of State will need documentation to assure that the person signing this title indeed has authority to transfer title, and that the vehicle isn't subject to liens or claims against the estate.  How is this accomplished?  The short answer is "it depends".  The longer answer is below:

• Official Information - Consult the Secretary of State's website for more details:
  
  http://www.cyberdriveillinois.com/publications/pdf_publications/vsd275.pdf
  
• Bill of Sale - If a sale is to be made, it is recommended that the Seller make out a Bill of Sale that evidences a sale between buyer and seller, including the name and address of buyer and seller, the date, a description of vehicle, the VIN, mileage on the odometer (or if the odometer is not a true mileage reading, notation of that fact), and a statement that the vehicle is sold AS IS-WHERE IS, no warranties of quality fitness and merchantability.
  
• Joint Owner - As stated above, title in the names of two or more persons is considered a joint tenancy. By law, upon the death of one of them, the surviving joint  tenant(s) becomes the owner(s) of the vehicle. Within 120 days after the decedent’s death, the surviving joint owner(s) must apply for a title in their own name(s) unless transferring the title to someone else. In either case, the following must be submitted:
  
  
  • Copy of death certificate or abstract; 
  • Original title (jointly owned) must be surrendered and need not be assigned.
  • Application for Vehicle Transaction(s) (VSD-190) marked “CORRECTED TITLE” to have the decedent’s name removed from the title. The current odometer reading must be indicated on the application and the appropriate box marked either “actual,” “not actual” or “in excess of mechanical limits” (odometer rolled over). 
  • If the applicant plans to operate the vehicle, an Application for Vehicle Transaction(s) (VSD-190) to correct the registration must be submitted in addition to applying for a corrected title. A current registration can be assigned to the surviving joint owner.
  • $95 title fee and, if applicable, $3 corrected registration fee payable to Secretary of State.  Note: Corrected title applications involving the removal and/or removal and addition of an owner’s name due to death require a special $15 corrected title fee.
    
• Probate - If an estate is being formally probated in the Courts, whether a sale or transfer, the following must be submitted:
  
• Certified copy of letters of administration, or testamentary showing the name of the legal representative of the estate.
• Decedent’s title assigned by the legal representative of the estate to the buyer.
• Application for Vehicle Transaction(s) (VSD-190). The current odometer reading must be indicated on the application and the appropriate box marked either “actual,” “not actual” or “in excess of mechanical limits” (odometer rolled over).
• $95 title fee and applicable registration fees payable to Secretary of State.
• Proof of compliance with the Motor Vehicle Use Tax (RUT-50) and appropriate taxes payable to Illinois Department of Revenue but submitted with the above documents and fees to the Secretary of State.
  
• Small Estates - If the value of the personal estate does not exceed $100,000 and there is not real estate in the probate estate, then an administrator may proceed under Article XXV of the Probate Act (Small Estates).  The following must be submitted:
  
• Small Estate Affidavit indicating the vehicle’s year, make and vehicle identification number. The affiant does not have to be an heir or legatee. If there is a will, a certified copy also must be submitted. While the Probate Act has a form that ought to be accepted by the Secretary of State, experience has shown that this can cause problems with the clerk who is handling the transfer.  The Secretary of State has its own form, and this may be used to alleviate any confusion. 
  
  CAUTION:  Care should be taken in filling out this form and the affiant should understand the liability of signing this Affidavit.  Also, a certified copy of the filed will, if the owner dies with a will, should be made as well.  NOTE:  Many sellers are not comfortable with giving this often private information to a third party buyer or a car dealer (even though a filed will and a death certificate can be obtained as public records).  In that case, it is recommended that the seller either accompany a buyer to the Secretary of State to make the transfer, and hand the private documents to the clerk, or title be transferred BEFORE a sale or trade is made, so that simply signing title is helpful.
  
  http://www.cyberdriveillinois.com/publications/pdf_publications/rtopr31.pdf
  
• Decedent’s title, which does not need to be assigned.
• Copy of death certificate or abstract.
• Application for Vehicle Transaction(s) (VSD-190). The current odometer reading must be indicated on the application and the appropriate box marked either “actual,” “not actual” or “in excess of mechanical limits” (odometer rolled over).
• $95 title fee and applicable registration fees payable to Secretary of State. 
• Proof of compliance with the Motor Vehicle Use Tax (RUT-50) and appropriate taxes payable to the Illinois Department of Revenue but submitted with the above documents and fees to the Secretary of State.
  
• Attorney's Affidavit - If the estate is not being probated and the Small Estate Affidavit procedure is not applicable or appropriate, the transfer may be accomplished through the Attorney's Affidavit procedure.  This procedure is rarely used.  The following must be submitted:
  
• Attorney’s Affidavit on the attorney’s letterhead stating:
       (a) Name and last address of the decedent;
       (b) Date of death;
       (c) Year, make and vehicle identification number (VIN) of the vehicle;
       (d) Who the vehicle is being transferred to and the relationship to decedent, if                any; and
       (e) Other pertinent facts relating to the transfer of the vehicle.
• Copy of death certificate or abstract.
• Decedent’s title.
• Application for Vehicle Transaction(s) (VSD-190). The current odometer reading must be indicated on the application and the appropriate box marked either “actual,” “not actual” or “in excess of mechanical limits” (odometer rolled over).
• $95 title fee and applicable registration fees payable to Secretary of State.
• Proof of compliance with the Motor Vehicle Use Tax (RUT-50) and appropriate taxes payable to Illinois Department of Revenue but submitted with the other documents and fees to the Secretary of State.

Experience has shown that while these procedures are set forth by the Secretary of State, when transfer of title is attempted, the clerk at the driver's facility may require different documentation.  While this makes no sense, it does happen, and the transferor needs to be prepared to deal with these inconsistencies.  Having a copy of the checklist and the Secretary of State's own publication (link above) to refer to may assist in a more smooth transaction.

It is indeed best to consult an attorney if you have any questions.

INITIAL STEPS TO TAKE UPON THE DEATH OF A LOVED ONE

Law Office of

Michael J. Fleck, P.C.

-Illinois Legal Topics-

by Michael J. Fleck, Esq.

WARNING: THIS IS NOT LEGAL ADVICE. CONSULT YOUR ATTORNEY FOR INFORMATION CONCERNING YOUR PERSONAL SITUATION. This is a series of discussions on legal issues in Illinois. Topics covered include Real Estate, Estate Planning and Administration (wills, trusts, probate and guardianship), Business Law, Employment and Civil Litigation.

by Michael J. Fleck, Esq.

INITIAL STEPS TO TAKE UPON THE DEATH OF A LOVED ONE

Below is a list of some steps that a family may take upon the death of a loved one.  The list is by no means exhaustive, and there may be some steps that are inapplicable to a particular situation.  However, it may be helpful to give a family some actions to consider that may have not been considered previously.  If you have any questions concerning this list, please do not hesitate to contact your attorney.

• Disposition of Remains – Organ donation, burial wishes, cremation (for or against), pre-arranged or pre-paid funeral plans
• Notifications to newspaper, professional or fraternal organizations, other interested parties
• Dealing with property that requires immediate attention, such as pets, livestock, crops, etc.
• Dealing with minor or adult disabled children or others under the care of the decedent
• Locate the original will (and other wills, if exist) and read it, including determining whether it appears to meet the requirements of a valid will
• Secure and protect real estate (including weather related issues such as freezing, flood)
• Protect chattel against losses
• Locate risk insurance policies – review and ascertain coverage and term (in case of need to renew or replace if void due to death or vacancy, etc.)
• Locate life insurance and related instruments and assess claims process – notify insurers
• Secure valuable personal property and determine if there is a risk of any property being taken by those who may have access to the premises (such as family members, personal staff, neighbors or friends who are not entitled to the property)
• If the decedent had a business or other employees, arrange to secure the business operations and if necessary, arrange for the termination of employment and payment of wages of personal staff no longer needed, if any
• Assess the need for immediate access to cash for those family members that need to continue to cover expenses
• Contact credit card companies and other financial institutions of the death
• If certain accounts (phone, gas, electric, etc.) are in the decedent’s name, take steps to transfer these accounts
• If the decedent was a veteran, contact the VA for any benefits
• Consider changing locks on property if it is possible that certain people should no longer have access to the property
• Secure valuable personal property (take inventory, take pictures and secure certain items) as these items tend to “go missing” during funerals and soon after if a friend or family member lays claim to the item.
• Contact your attorney, accountant (or tax preparer) and financial counselor for any other steps that may need to be taken.
• DO NOT agree to pay any bills of the decedent until you have obtained advice on whether the claim is valid, if it is owed by the decedent’s estate or another family member, and in what priority order it would need to be paid or settled.

State of Washington v. Trump - A Post-Game Analysis of the Ninth Circuit's Opinion

State of Washington v. Trump - 

A Post-Game Analysis of the Ninth Circuit's Opinion

Michael J. Fleck, J.D.

Fleck & Meyers, P.A.

Huntley, Illinois

Introduction

There is a lot of controversy surrounding President Trump's Executive Order  #13769, "Protecting the Nation From Foreign Terrorist Entry Into the United States".  This Order has sparked numerous court challenges, has garnered significant media coverage, and has lit up social media more than any Executive Order in the history of the Office of the President of the United States.  In the words of the the President, this is "Huge"!

Despite what one thinks of the Order as policy, as Constitutional, as effective, I wanted to take a look at the particular action in the Ninth Circuit Court of Appeals from the standpoint of breaking down what the specific appeal was about, what the legal issues were that needed to be examined, and why the Court ruled the way it did.  My analysis is limited to the Oral Arguments and the Court's published opinion.  No written briefs or amicus briefs were examined or considered.

Links to the Case

If you want to hear the oral arguments, here are the the links:

Audio Link

Video Link

As the case was heard telephonically, the video link does not provide much more than the audio, other than providing a video image of who is speaking.

The Published Opinion constitutes the Court's Opinion and Order. 

So how did this case end up before the Court?

The Order

The Executive Order has the stated purpose of temporarily banning travel to the United States by non-citizens from seven specific countries, identified in the Order as having "[d]eteriorating conditions in certain countries due to war, strife, disaster, and civil unrest increase the likelihood that terrorists will use any means possible to enter the United States."  The seven countries are Iraq, Iran, Libya, Somalia, Sudan, Syria, and Yemen.

The January 27, 2017 Order is to suspend the entry of aliens from these seven countries for a period of 90 days.

The Order suspends the Refugee Admissions Program for a period of 120 days.  Once the refugee program is re-instituted, those refugees whose claims for refugee status are based on being in a minority religion in their country of origin are given priority.

The Order fully suspends refugees from Syria indefinitely.

(It should be noted that the Order covered more ground, but these are the particular issues in this case)

The Order was implemented without notice and took effect immediately, creating, as the attorney for the States stated, "chaos".  Because of this, three days after the Order was executed, the State of Washington sued the President, the Secretary of Homeland Security, the Secretary of State and the United States.  Washington State alleged that that the Executive Order unconstitutionally and illegally stranded its residents abroad, split their families, restricted their travel, and damaged the State’s economy and public universities in violation of the First and Fifth Amendments, the INA, the Foreign Affairs Reform and Restructuring Act, the Religious Freedom Restoration Act, and the Administrative Procedure Act. 

And Washington State was more blunt than that.  It claimed that the Order was simply a "Muslim Ban" as President Trump had boldly stated during the Presidential Campaign.

What relief Washington State is seeking and how Minnesota got involved

In its Complaint, Washington is asking the trial court to declare that the challenged sections of the Executive Order are illegal and unconstitutional and to enjoin their enforcement nationwide.

To accomplish this, Washington filed an emergency motion for a temporary restraining order (TRO) seeking to enjoin the enforcement of the sections of the Executive Order that instituted the temporary and indefinite bans as stated above.

Minnesota joined in, adding a Tenth Amendment claim for good measure.  The TRO Motion was amended to include this, and the United States opposed the TRO.  A hearing was held the following day.

The trial court granted the TRO, effectively stopping the temporary bans.  This TRO had a nationwide effect, not just for Washington and Minnesota.  The reasoning that the trial court gave was that the Court "preliminarily concluded that significant and ongoing harm was being inflicted on substantial numbers of people, to the detriment of the States, by means of an Executive Order that
the States were likely to be able to prove was unlawful." 

The trial court specifically put a halt to the 90 day and 120 bans.  And to the extent that the indefinite ban “purports to prioritize refugee claims of certain religious minorities”, this was halted as well.

To keep the case on a fast track, the trial court directed the parties to propose a briefing schedule for a hearing on the preliminary injunction, that would be the next step after a TRO.

For a primer on TROs and preliminary injunctions - click here.

Rather than move forward with the briefing and hearing on the preliminary injunction, the United States elected to file an appeal to have the Ninth Circuit review the TRO for error.

Some thoughts on the Oral Argument

Having listened to the oral argument that evening, I made some basic notes on my first impressions of the proceedings, and of the panel's questions. To be fair to this analysis, I wanted to share these thoughts that I had prior to the Opinion coming down, to see if these thoughts were touched on by the Court in its Opinion.  And whether my thoughts are right or wrong in the end (i.e. after the Opinion, I want to share the impressions hot off the argument).  In no particular order my thoughts were:

• I was a bit surprised that the panel focused on the hypothetical of "What if the order said banning all Muslims?"  The panel brought it up to the US at the beginning of the proceedings and then again in rebuttal.  Mr. Flentje (who argued for the US) tried to get away from that each time stating that is not what the order says, but the panel seemed to really want to go there.  To be fair, another judge in response argument hammered Mr. Purcell (who argued for the States) on the fact that this apparently affects only 15% of all Muslims and there seems to be no doubt that radical terrorism is coming from these countries.

• The States seemed to be arguing a lot of ill intent based on the President's campaign statements - that since he said that he wanted to ban Muslims, that this Executive Order is really about his true intentions, not that which is expressly stated in the Executive Order.

• I found it interesting that the States opened with an emotional statement, “to throw this country back into chaos”.  I believe that this was intentional and in stark contrast to the US being rather matter of fact in its presentation that the Order says what it says and the President is tasked with the authority to make such an Order.  I believe that this was done for the fact that it is an emotionally charged case, and some critics very bluntly assert that Ninth Circuit will consider emotional appeals (rightly or wrongly) more than other courts in an effort to reach a decision that addresses this emotion, even if the cold adherence to the law would not necessarily support it.   

• That being said, the Court did challenge both sides on the legal issues, especially standing.  The Court asked about why the States have a right to even bring the case.  My guess is that the issue of parens patriae was a non-winner for the States, but they seemed to want to find standing on the slimmest of reasons.  Basically, if the State can claim harm, such as a professor not being able to lecture, or be with family, then standing could be found.  My issue with this is that almost any State could make this argument for any Order that effects national security and travel bans of any nature.  So, this would open the door for any State to challenge any Order of the President.

• The Court seemed interested in the argument that Presidential campaign statements are accountable to the winning candidate.  Despite the four corners of the Order, the States claim that this is really a Muslim Ban because of what the President said during the campaign.  Tey are trying to enjoin the President’s National Security Decision based on newspaper articles. Query - Is this political puffery or policy that can be used against the President for future Executive action?  If the latter, this can have a chilling effect on the campaign trail.

• I thought that Mr. Flentje could have done a better job in my opinion of whether the Court had any right to review what is in the purview of Congress and the President.  His rebuttal did a better job of standing on this as it was more of a forceful argument.  Having been before appellate panels, it is not easy to be confident in making arguments with three judges challenging you along the way (i.e. it's not easy to tell a learned judge that they are wrong).  I think the US made a more confident argument in the end on this issue. 

• I note that this argument is whether the TRO should remain in effect.  The press and the general public will likely not see or care about the subtlety of this and simply view the decision as whether the order is Constitutional or not, and that is not what is before the Court at this time. In order to get to that, the Court has to look at issues such as Jurisdiction, Standing, whether the Executive Order can be reinterpreted to exclude those who were already lawfully here, and as noted above, whether ill intent can be gleaned from political campaign statements by the President and by his staff. 

• If I were simply judging the attorneys on their presentation to the Court, as if they were law students, I’d say Mr. Purcell for the States did a better job, but Mr. Flentje had a strong rebuttal. I think the judges were equally tough on both of them in various aspects.

What is Per Curiam?

The Opinion was issued per curiam.  Essentially, it means it was a 3-0 decision, with no dissent from any judge, and no concurring opinion (i.e. reaching the same result but for different reasons).  This does not bode well for the US if it is to try and have the US Supreme Court hear the case.  With a currently unfulfilled Court of 8 Justices, a 4-4 tie would simply uphold this 3-0 decision.  

There is a possibility that the US could ask for the full panel of the Ninth Circuit to rehear the case (known as en banc), but strategically, the US is not in a favorable Court to have any luck with this, even if they agreed to hear it as a full panel.

So what did the Appellate Court Decide?

Now onto the Opinion.  The Court analyzed several factors in reaching its conclusion.

• Jurisdiction - Does the Court have the right to hear the case and rule on it?
• Standing - Do the States have a right to bring the case at all (do they have a dog in the hunt?)
• Reviewability of the Executive Order - Does the Judicial Branch have a right to review the Executive Order at all?
• Legal Standard - Who has the burden and what do they need to show to succeed?
• Likelihood of Success
• Due Process
• Religious Discrimination
• Balance of Hardships Test

Is there Jurisdiction to hear the Appeal?

The State did challenge whether the appeal should even be heard.  As noted above, the US could have simply licked its wounds having lost the TRO and regrouped for a more complex and detailed hearing on the preliminary injunction.  But instead, it took its chances with the appellate court.  If the States win on this issue, then the Court would not even bother to rule, and send it back to the trial court for the hearing.

But the Court addressed this issue by finding jurisdiciton.  The State, rightly, noted that TROs are normally not appealable.  But as with every aspect of law, there are exceptions, and here there is one that applies.  If the TRO walks and talks more like a preliminary injunction (which usually has a more detailed legal challenge), then it will be appealable.

Do the States have a right to bring this case at all - Standing?

 The US argued that the States are not proper plaintiffs here, and this was discussed at length by both sides in oral argument.  The court concluded that at this preliminary stage of the proceedings, that the States have shown standing.  Specifically, the States could assert standing in two ways:  (1)  Parens Patriae; or (2) whether the States themselves have a personal stake in the outcome of the controversy.

Parens Patriae quite literally means "parent of the country".  If this was the basis for standing, then the State would be essentially representing the individuals who suffered the actual harm and bring the suit in their stead.  For example, if a minor suffered a personal injury, they parents or guardians could bring the suit on the minor's behalf, even though the parents themselves were not the truly injured party.  Personally, I found this argument quite interesting and hoped that the Court would address it.  But as we shall see, the Court found standing the old fashioned way (via direct injury to the State itself), so it chose not to discuss it at all.  Note:  sometimes an opinion will discuss an issue like this first, explain why or why not it succeeds, and then move on to the next issue.  But if a court can avoid having to rule on a point, it can address the first, which dispenses with the second as essentially moot. 

So why did the Court find standing via direct injury?  In short, the States argued that the Executive Order causes a concrete and particularized injury to their public universities, which is a branch of State government.  The Executive Order prevents nationals of seven countries from entering Washington and Minnesota; (2) as a result, some of these people will not enter state universities, some will not join those universities as faculty, some will be prevented from performing research, and some will not be permitted to return if they leave. 

This sounds a bit like Parens Patriae, but it isn't.  The harm is to the universities, not to the professors or their families.  So Standing is met in this manner.  However, to cloud the issue, in its footnote 4, the Court stated "the States are asserting the rights of their students and professors" which seems to sound exactly like Parens Patriae.  It then goes on in footnote 5 to say it is not reviewing this as Parens Patriae.

Policy Analysis on this issue:  In my opinion, this is potentially dangerous territory in terms of Executive or even Legislative authority.  Practically every Executive action or Congressional Act results in some harm to the functions of a State, whether it be lost tax revenue, having to reschedule an event, costing revenue, etc.  Indeed, this same standing argument could have been made after September 11 when all flights were grounded for days.  Imagine if a State challenged that Order at that time because a professor could not get back to speak at a lecture.  Would every Executive action involving National Security come to a grinding halt because a judicial challenge can be made to it? 

Nevertheless, standing was found, so we move on to the next issue.

Can (Should) the Court Review this type of Executive Order?

The US took the position that this type of Executive Order is unreviewable by the judicial branch, as it is in the purview of the authority of the Chief Executive.  It appears that the Court felt that this argument went way too far and that it is unsupported by a substantial body of case law.  The Court noted that the US didn't say that the courts owe substantial deference to the Executive Branch in this regard, i.e. there is a really high hurdle to surpass.  The US said there is no hurdle at all, but perhaps a wall if you will.

The Court listed a body of case law that basically told the US why this contention was untenable, even in issues of National Security.  The Court devoted almost 5 1/2 pages of its 29 page opinion to this issue, and in rather convincing fashion.  If this case indeed goes the Supreme Court, I do think that US will have a hard time taking this firm position on reviewability.

On to the Legal Standard

Now that have concluded that the Court has Jurisdiction, that the States have Standing to bring the Case, and that the Court has the authority to review such an Executive Order involving National Security, we get to the substance of the Appeal - should the Court stay the TRO?

The Court stated that its decision is guided by four questions: 

(1) whether the stay applicant (i.e. the US) has made a strong showing that he is likely to succeed on the merits; 
(2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and 
(4) where the public interest lies.

Looking at each of these, the Court in its opinion gave a spoiler alert on page 19 - "We conclude that the Government has failed to clear each of the first two critical steps. We also conclude that the final two factors do not militate in favor of a stay."  So at this point, we know that the US will not succeed.  But as to why:

Due Process Not Met.  The Court stated that the Government has not shown that the Executive Order provides what due process requires, such as notice and a hearing prior to restricting an individual’s ability to travel.  

Policy Analysis on this issue:  In my opinion, this is the inherent part of the Order.  My reading of the Executive Order indicates that the purpose is that the Executive Branch finds that there is a clear and present danger, and that this is a temporary (90-120) day ban on travel (conceding that the Syrian refugee portion is indefinite).  The language of the Order suggests that the whole point of the Order is to take a step back and put in procedures (i.e. Due Process) that works both to vet those coming in (colloquially to keep the bad guys out) and to allow those who can and should come in have the right process.  Whether one agrees with this, or even buys it as the legitimate purpose, that is the stated purpose of the Order.  The Executive Branch is saying that things have devolved so badly in these seven countries that current procedures are ineffective to ensure the safety of our land, and during this period, new and better procedures are to be implemented.

Also note that the US tried in vain to salvage its argument to the extent that it modified its Order several days later to exclude the ban from lawful permanent residents.  The Court was unpersuaded by this, essentially stating that the Court "cannot rely upon the Government’s contention that the Executive Order no longer applies to lawful permanent residents. The Government has offered no authority establishing that the White House counsel is empowered to issue an amended order superseding the Executive Order signed by the President and now challenged by the States, and that proposition seems unlikely."  This would seem to be legally accurate as this is the legal version of "what I meant to say was . . ."

Religious Discrimination.  From the Opinion:  "The States argue that the Executive Order violates the Establishment and Equal Protection Clauses because it was intended to disfavor Muslims. In support of this argument, the States have offered evidence of numerous statements by the President about his intent to implement a “Muslim ban” as well as evidence they claim suggests that the Executive Order was intended to be that ban, including sections 5(b) and 5(e) of the Order. It is well established that evidence of purpose beyond the face of the challenged law may be considered in evaluating Establishment and Equal Protection Clause claims."

The Court is at this point in the Opinion teeing up the issue of whether President Trump's campaign rhetoric can be considered in looking beyond the language of the Executive Order - that may not on its face be a Muslim Ban, but underneath it is.

But alas, and perhaps rightfully so at this point in the litigation, the Court did not address this issue in the Opinion.  Rather it stated:

"The States’ claims raise serious allegations and present significant constitutional questions. In light of the sensitive interests involved, the pace of the current emergency proceedings, and our conclusion that the Government has not met its burden of showing likelihood of success on appeal on its arguments with respect to the due process claim, we reserve consideration of these claims until the
merits of this appeal have been fully briefed."

As it did in the standing issue, having already shown that the US failed to meet its burden on the Due Process issue, it chose to not go there.  

Analysis:  The Court spent some time in oral argument on this issue.  It is indeed a highly charged hot potato.  As noted earlier, this is an interesting and potentially dangerous issue to explore, in my opinion.  The question of when does campaign puffery become formal Presidential policy is at stake here.  Regardless of what may think of the President and his words on the campaign trail and how that translates to formal decisions can be an issue on other matters in the future.

The free speech of politics can be seriously quelled if the Court eventually binds the Presidents campaign rhetoric to the meaning of any action beyond the four corners of a document.  What a candidate knows while campaiging versus what a President actually knows after taking the Oath of Office may indeed change one's view of what can, cannot, should, should not, and must, must not be done with respect to many issues.

Imagine, for example. that a campaign issue regarding unions, or social security or healthcare, which may be polarizing, come back to haunt a President post-election, who is trying to issue regulations or orders on that topic.  Would the Courts be able to ignore that language of those official documents and bind the President to something said in the heat of a campaign speech?  What will that do to the First Amendment on the campaign trail?  The potential implications are indeed chilling, as this can be problematic for any candidate of any stripe.

Balance of Hardships - the Problem of Irrreperable Injury

Finally, the Court looked at the issue of who would be harmed more if this TRO is stayed.

The Court bluntly stated that the US has not shown that if the stay is not implemented on the TRO, that it would suffer irreparable harm.  The main contention of the US, that "the Government’s interest in combating terrorism is an urgent objective of the highest order" was not backed up with any specifics.  In other words, the US simply kept stating that this Order is to fight terrorism, but didn't put any meat on the bones of that obvious and important goal.

Indeed, in oral argument, the Court was inviting the US to explain this further ("our own repeated invitations to explain the urgent need"), the US offered no evidence to support this contention.  Rather, the US fell back on the contention that this is unreviewable, and clearly, the Court rejected that for 5 1/2 pages.  The Court was equally unimpressed by the contention that this is an erosion of the separation of powers (by having its Order concerning National Security reviewable by the Judiciary).  While this case may indeed have that effect in the end, it apparently is not cognizable as irreparable harm.

The last aspect of the case - the public interest - the Court gave brief analysis to, stating that it was a push in that the public interest favored both sides as the case has garnered massive attention, even at this early stage.

But it is important to recall that this case is indeed in its early stages, and although this is a significant win for the States (and perhaps a more significant loss for the Executive Branch), the case is far from over and this is but a small but significant aspect of this entire litigation process.

We shall see how this case will progress.  It is likely that the US will seek review in the Supreme Court, even though it is likely that this will not be successful.  But the US has chosen to proceed down this path and essentially needs to finish the route it chose.  Had it simply continued in the trial court, this ruling would not be there to establish a huge hole for the US to crawl out.  But it's much easier to review this after the Opinion is published, than to make these decisions in the heat of litigation.

- Michael J. Fleck is an attorney in Huntley, Illinois with Fleck & Meyers, P.A.  He received his J.D. with High Honors from IIT - Chicago Kent College of Law and is a member of the Order of the Coif.  He is licensed to practice in the Illinois Courts, the Federal District Court for the Northern District of Illinois (Trial Bar), the Seventh Circuit Court of Appeals and the U.S. Supreme Court.  The opinions stated here are his own and do not reflect that of Fleck & Meyers, P.A., or of any other entity with which he is affiliated.

  

Don't Lose Your Will - Seriously, Don't Misplace Your Last Will and Testament

Law Office of

Michael J. Fleck, P.C.

-Illinois Legal Topics-

by Michael J. Fleck, Esq.

WARNING: THIS IS NOT LEGAL ADVICE. CONSULT YOUR ATTORNEY FOR INFORMATION CONCERNING YOUR PERSONAL SITUATION. This is a series of discussions on legal issues in Illinois. Topics covered include Real Estate, Estate Planning and Administration (wills, trusts, probate and guardianship), Business Law, Employment and Civil Litigation.

Thursday, September 22, 2016

Don't Lose Your Will - Seriously, Don't Misplace Your Last Will and Testament

(And Make Sure it Gets Filed When the Time Comes)

by Michael J. Fleck, Esq.

Law Office of Michael J. Fleck, P.C.

Huntley, Illinois

www.flecklawoffice.com

If you have bothered to prepare a Will, Trust Agreement, Powers of Attorney, Advanced Directives and other estate planning documents, it is important that you keep and maintain the originals in a safe location. This can be especially critical with a Will.

FILE THE ORIGINAL WILL WITHIN 30 DAYS OF DEATH

WHETHER OR NOT FORMAL PROBATE IS INTENDED

In Illinois, when a person dies, the Probate Act has a provision that there is a duty to file the Will. Immediately upon the death of the person who made the will, any person who has the will in his or her possession shall file it with the clerk of the court of the proper county. See, 755 ILCS 5/6-1. This section goes on to state that any person who wilfully alters or destroys a will without the direction of the testator or wilfully secretes it for the period of 30 days after the death of the testator is known to him, the person so offending, on conviction thereof, shall be sentenced as in cases of theft of property classified as a Class 3 felony by the law in effect at the date of the offense.

Clearly, this sounds terribly harsh. The intent of this section is to make sure that the final will of a decedent is secured with the Office of the Circuit Clerk, so that in the event it is necessary for Probate, the unaltered original is there to be considered against other wills, to ensure that it complies as a valid will, and that the provisions of the will are carried out.

Occasionally, clients will come in with a will from a loved one well beyond the thirty days after the death of the testator. They usually are unaware of the obligation to file the original within 30 days of the date of death, and panic when they fined out that it can be a Class 3 felony. We will assist in filing the Will, and they can rest assured that unless there was clear intention to hide the will, alter or destroy it, no charges will be brought.

The statute is intended to go after those, for example, who may find the Will, discover that they are disinherited or are not happy with their share, and either destroy it or change it to better suit their needs.

WHAT IF THERE ARE MORE THAN ONE ORIGINAL WILL?

In the event that one finds more than one original Will, it is highly recommended that all original Wills be filed. The reason for this is that although the language of a Will and the Act suggest that the last valid Will is the controlling document, in the event that there is a challenge to that last Will (such as incapacity of the testator at the time the Will was made, or that it was invalid, or signed under duress), then the Will prior to that may be considered the last valid Will.

IF YOU MAKE A NEW WILL, DESTROY THE OLD ONES

Also, it's good practice to destroy all prior Wills in favor of the last Will, so that loved ones may file only the Will that's intended. Indeed, if a loved one finds an old Will and files it, unaware that there exists a valid newer Will, this could create real problems with how the estate is administered.

WHAT IF I CAN'T FIND AN ORIGINAL WILL, BUT I HAVE A COPY?

It is presumed that if an original Will cannot be found, then the testator intended to revoke it. Therefore, although it is possible to file and probate a copy of a Will, the person who is trying to do so has to overcome the strong presumption that the Will was revoked. AS thoroughly discussed in In re Estate of Strong, 194 Ill. App. 3d 219, 226, 141 Ill. Dec. 155, 160-61, 550 N.E.2d 1201, 1206-07 (1990):

The law is well established regarding lost or missing wills. It is established: "Where a last will and testament, after its execution, is retained by the testator and cannot be found upon his death, it is the well-settled rule of this and of the majority of jurisdictions that it will be presumed to have been destroyed by him animo revocandi. The same cases establish that the presumption is subject to being rebutted by circumstances which tend to show a contrary conclusion, and that the burden is on one seeking to probate such a will to prove that it was unrevoked at the testator's death." (In re Estate of Moos (1953), 414 Ill. 54, 57, 110 N.E.2d 194, 195, noted in In re Estate of Millsap (1979), 75 Ill. 2d 247, 250, 388 N.E.2d 374, 376-77.)

(See also, In re Estate of Weir (1983), 120 Ill. App. 3d 18, 20, 458 N.E.2d 134, 136; In re Estate of Netherton (1978), 62 Ill. App. 3d 55, 57-58, 378 N.E.2d 800, 802.) Factors to be considered in addressing the rebuttal of the presumption include evidence as to statements from the testator that he did not intend to revoke the will, evidence that he entertained a kind and loving attitude toward the proposed beneficiary under the will up to the time of death, and evidence of other individuals' access to the will prior to death. (See, Moos, 414 Ill. 54, 110 N.E.2d 194; In re Estate of Morgan (1945), 389 Ill. 484, 59 N.E.2d 800; Holler v. Holler (1921), 298 Ill. 418, 131 N.E. 663; In re Estate of Deskins (1984), 128 Ill. App. 3d 942, 471 N.E.2d 1018; Jackson v. Jackson (1971), 132 Ill. App. 2d 66, 268 N.E.2d 62.) In cases where the issue is raised whether some person has unlawfully destroyed a missing will, however, it will not be presumed that a missing will has been destroyed by any other person, without the knowledge of or authority of the testator, although such person may have had the motive and the opportunity, as that would be presuming a crime. Moos, 414 Ill. at 60, 110 N.E.2d at 197; Holler, 298 Ill. at 432, 131 N.E. at 669; St. Mary's Home for Children v. Dodge (1913), 257 Ill. 518, 526, 101 N.E. 46, 49.

Our supreme court has noted that because the evidence with respect to any rebuttal will vary from case to case, other cases "constitute little assistance in [making] the determination" whether the presumption has been overcome. (Morgan, 389 Ill. at 487, 59 N.E.2d at 801; see also Moos, 414 Ill. at 60-61, 110 N.E.2d at 197.)

Therefore, one can see that to lose an original Will can be a rather large problem for loved ones and for the proper administration of one's estate.

WHAT CAN ONE DO TO ENSURE THE ORIGINAL WILL IS NOT LOST OR DESTROYED, AND IS PROPERLY FILED?

Here are some suggestions on ensuring that the Will is safe and secure, and can be found at the right time and timely filed, without loss or alteration:

• Make an instruction sheet for a trusted loved one on what to do in the event of your death. This can be a note or a checklist, and can advise them where the original Will is located, what date it was made, and if an attorney assisted, who that attorney is and how that attorney may be contacted. NOTE: Some lawyers will keep the original Wills for their clients in their safe. While this has been a common practice over the years, and there is strong debate and good arguments for keeping client Wills or for not keeping them, it is my opinion that this practice is trending toward giving the client the Will and therefore, it is the client's responsibility to ensure that it is safe and secured.
• Consider giving a note to your attorney as to where the original Will is located, that can be placed in your client file.
• Keep the original in a sealed envelope, identifying it as the Last Will of [Testator].
• Put the Will in a safe location, such as a safe, fireproof locked storage, safety deposit box, or other location.
• If you have a copy, keep that in another secure location.
• Consider a sticky note on the envelope indicating that the Will must be filed within 30 days of the date of death in the County where the decedent resided at the time of death. NOTE: This may be a different requirement in other states under that state's Probate Act.
• Also, bear in mind that only trusted persons should have this information. Sadly, some may not honor your wishes, or be disappointed with what you have in the Will. Another consideration is to have more than one trusted person have that information such that there is a "check and balance" between these two to make sure that your Will is filed properly and not altered, lost or destroyed.
• Naturally, these are just suggestions. Ultimately, you need to do what you think is best for your particular situation, and as always, consult your attorney for more information.

-Michael J. Fleck is an attorney in Huntley, Illinois with the Law Office of Michael J. Fleck, P.C.

WARNING: THIS IS NOT TO BE CONSTRUED AS LEGAL ADVICE.

CONSULT YOUR ATTORNEY FOR INFORMATION

CONCERNING YOUR PERSONAL SITUATION.

Estate Planning (courtesy of the Illinois State Bar Association and reprinted with permission)

Law Office of

Michael J. Fleck, P.C.

-Illinois Legal Topics-

by Michael J. Fleck, Esq.

WARNING: THIS IS NOT LEGAL ADVICE. CONSULT YOUR ATTORNEY FOR INFORMATION CONCERNING YOUR PERSONAL SITUATION. This is a series of discussions on legal issues in Illinois. Topics covered include Real Estate, Estate Planning and Administration (wills, trusts, probate and guardianship), Business Law, Employment and Civil Litigation.

mfleck@flecklawoffice.com

The following is courtesy of the Illinois State Bar Association

reprinted with permission

Estate Planning

Estate planning is a process whereby a person's objectives for management and disposition of his property are analyzed and action is taken to accomplish those objectives. Here are some of the areas that estate planning addresses:

Who should get my money and property when I'm gone? The needs of one's spouse, children and others must be weighed against one another. This can be particularly difficult if there are children by prior marriages or a property settlement agreement with a current or former spouse.

Is there enough money to provide for my family? Particularly the young people, the adequacy of one's life insurance program should be reviewed.

Who will manage the estate? This is a critical problem if there are handicapped or minor beneficiaries. Who should be guardian of minors or handicapped beneficiaries?

Are there tax-saving opportunities?

Is there a problem of succession to ownership and control of a family business or farm? Do I need a buy-sell agreement with my partner? Do I have enough liquid assets to pay the taxes on my farm or business?

When the objectives have been defined, documents are prepared and property transferred to put the plan into effect. A Will is almost always part of the plan. Other documents used may include trust agreements, beneficiary designations for life insurance and deferred compensation benefits, powers of attorney for health care and for property, buy-sell agreements and living wills. Sometimes the basic structure of a business will be altered through corporate recapitalizations, the creation of partnerships or the establishment of a pension or profit-sharing plan.

Professional Help

In most cases, lay people shouldn't do their own estate planning without legal help. Few persons are experienced in solving the problems outlined above. Even fewer are skilled in drafting with precision and clarity the documents needed to put the plan into effect. One's attorney should certainly be involved in preparation of the estate plan. Many other people -- accountants, life insurance underwriters, trust officers and financial planners -- may also assist in this planning. For certain estates, bankers, business consultants and farm managers may be consulted as well.

There should be close coordination among the advisors. If a trust company is named as executor or trustee, your attorney will work closely with it. Coordination of life insurance with your overall estate plan may involve your insurance agent. Finally, all advisors should remain in contact with the family and review the estate plan from time to time, because many events can occur that call for changes in the plan. In addition, changes in the laws may necessitate a change.

It's beyond the scope of this pamphlet to

discuss the fees and costs of professional help to estate planning and probate work -- there are too many factors to make it generalized. Your attorney should be willing to discuss with you (in advance, if you wish) the basis on which the fees will be calculated.

A Word About Taxes

A discussion of the specifics of the income and estate tax obligations imposed on decedents and their assets and the various planning techniques to minimize taxes is beyond the scope of this pamphlet. However, in general, other than income taxes, there is in effect only one tax now applicable to decedents who were resident of Illinois and whose property was located in Illinois (property located in other states and countries may be subject to additional taxes.) This tax is the Federal Estate Tax.

In effect, every person may give away during life and upon death a certain amount without incurring any tax obligation (see schedule below for the exemption level in effect for a given year or set of years). Any person whose estate exceeds the amount listed below may need to use special estate planning techniques to take advantage of tax saving opportunities available through careful planning with the advice of your attorney.

YEAR 2011 2012 2013 2014

EXEMPTION LEVEL $5 million $5.12 million $5.25 million $5.34 million

What Information Do I Need To Prepare A Will?

It will be helpful to your attorney if you fill out information sheets, which most attorneys have available, in advance of the visit. This will not only assist the attorney in properly advising you with the type of estate plan that will best suit your needs but will also assist in helping to keep the expense at a minimum.

Finally, you are urged to review your estate plan periodically so that it is kept current. You should contact your attorney for a complete checkup at least every five years, and more frequently if there are changes in the family (birth, death, marriage, divorce), changes in assets, or changes in tax laws.

Wills

A Will is a document that controls the disposition of a person's property at death. Each state has formal requirements for a Will. In Illinois:

• The maker of a Will must be 18 years old and be of sound mind and memory.
• The Will must be in writing.
• The Will must be signed by the maker and must be witnessed in the special manner provided by law. Two witnesses are required in Illinois. (Persons who are beneficiaries under the Will should not serve as witnesses.)

After death, the Will is presented in court and, after being proven valid, is put into effect and its provisions are carried out.

A Will may be revoked or changed at any time before the death of the maker. To be effective, changes must be made strictly in accordance with legal requirements. A change in a Will is often made by an addition called a "codicil."

What Are Some Important Considerations In Making Or Reviewing A Will?

Who should receive your property, and, if children, at what age?

Who should be named as guardians of minor children, and what are their duties?

Should a trust be created for your spouse, children or others?

If a trust is created you must name a competent individual or trust company to manage the trust.

Should charitable gifts be made?

Should life insurance proceeds be payable to a

trustee or executor named in your Will or to individuals directly?

Who should be named executor?

Can taxes be saved?

Has your marital status changed since you made your last Will?

Have any beneficiaries of your estate died or have you had important changes in circumstances or assets?

Generally, a person may give away his or her money in any way in a Will. However, Illinois law does not allow one spouse to disinherit the other without the consent of the one who is disinherited. A surviving spouse, whether or not named in the Will, may renounce the Will and receive a third of the deceased spouse's estate if there are surviving descendants of the deceased or one half if there are no surviving descendants. A spouse may renounce a Will for any reason.

Does A Will Make For More Court Expense?

No. If a person dies leaving an estate, a court determines who is to receive the estate, and makes sure that all debts and expenses are paid. This must be done whether or not there is a Will. However, a Will can save expense by eliminating the need for sureties on bonds, expediting the sale of property, avoiding guardianship for minors when not really necessary and otherwise providing the executor of the Will with clear directions on the handling of the estate.

If there is no Will the court appoints an administrator to settle the estate and make distribution as provided by law, after all debts and expenses have been paid.

An individual without a Will has no voice in the selection of the administrator. If there is a Will, the executor named by the maker of the Will takes the place of an administrator, and is the one who handles the estate. A person making the Will may name as executor any individual in whom he has confidence provided the execution meets statutory requirements. A bank or trust company also may be named as executor.

Illinois has adopted independent Administration for estates of all sizes. This process increases family privacy; for example, no inventory or accounting is usually filed. Independent Administration also reduces the time required in the courts because unless there are disputes between the beneficiaries or with third parties, the court is involved only for opening and closing the estate.

Why Write A Will?

Illinois law establishes the right to make a Will, but it is not compulsory. If there is no Will, the court distributes the property to the legal heirs of the deceased according to law.

Just how the property will be distributed depends on the circumstances of each situation. For example, if there is a widow and one or more children, the widow gets half and the children get half. In all cases the law is rigid and makes no exception for those in unusual need or to other circumstances.

The value of a Will lies in the difference between:

A planned distribution of your estate as you have chosen

or

Having your property distributed (arbitrarily) under a fixed statutory distribution.

A Will gives you the choice of distributing your estate to take care of your particular needs and goals.

Does A Good Life Insurance Program Take The Place Of A Will?

No. Life insurance is simply one of the kinds of property you can own. Life insurance trusts are popular devices to assure proper use of insurance proceeds. Another way of bringing insurance proceeds into a trust is by creating a trust in your Will. The insurance is then made payable to the trustee named in the Will. The designation of life insurance beneficiaries may affect the creditors of a decedent as well as the

decedent's taxes, all of which should be considered and integrated into estate plan.

"Death Bed" Wills

It's human nature to procrastinate -- to put off until tomorrow what should be done today. In the case of a Will, this tendency can be disastrous. A Will should be prepared while a person is in good health and in a position to carefully consider its provisions.

Too often, the hastily-contrived "Death-bed" Will fails to carry out accurately the wishes of the maker or is found to be invalid for some technical reason that could have been avoided.

Probate Administration

What Is A Personal Representative?

A personal representative is the person or entity who manages the decedent's estate. Executors and administrators are types of personal representatives.

If the decedent left a Will (referred to as dying "testate"), the person who administers the estate is called an executor if the decedent left no Will (referred to as dying "intestate"), the person is called an administrator.

Who Serves As Personal Representative?

An executor is nominated by the decedent in his or her Will. An administrator is nominated, generally by the decedent's family. One or more individuals or a bank or trust company, or a combination may be named. An administrator must be a resident of Illinois. An executor must be a resident of the United States of America, but need not be a resident of Illinois. Each executor or administrator must be approved and appointed by the court.

What Are The Responsibilities Of A Personal Representative?

The duties and responsibilities of a personal representative, either an executor or administrator, are defined primarily by the Illinois Probate Act and the Internal Revenue Code. Here are some highlights:

Opening The Estate

If the decedent left a Will it is responsibility of the person in possession of the Will to file it with the circuit clerk within 30 days. It is then the responsibility of the person nominated as executor to ask the court to probate the Will. A Will need not be probated in every instance.

Duties With The Court

Publish or provide required legal notices.

Prepare an inventory listing real estate and both tangible and intangible personal property.

Approve or contest claims filed against the estate. Petition the court as necessary in the management of the estate's assets.

File periodic and final accountings reporting receipts, disbursements and distribution.

Note: Many of the obligations for obtaining court approval before and after transacting business on behalf of the estate may be reduced or eliminated under independent Administration.

Duties As To Property

Collect and inventory all assets of the estate including any that may be held in dependent's safe deposit box.

Preserve, manage and insure assets during administration.

Take action to manage the decedent's business.

Secure valuation and appraisal of assets.

Sell property as required to meet the objectives of the estate.

Review the decedent's life insurance policies and help the beneficiaries collect them.

Consider Social Security and other claims.

Determine whether the decedent had any unfulfilled contractual obligations or was the recipient of such obligations by other parties.

Determine the nature of joint tenancy assets, if any, and consider their inclusion or taxability within the estate.

Arrange for transfer of stocks, bonds, bank accounts and other assets.

Distribute the estate in accordance with the Will or, if none, to the heirs, as determined by law.

Financial Duties

Keep records of all transactions.

File or assist in the filing of the decedent's final income tax return.

File the necessary income tax returns as fiduciary for income and expenses generated during the course of administration.

Review decedent's records to determine whether any gift tax returns were or should have been filed.

File federal estate tax return where necessary, making such elections as are appropriate.

File necessary state estate tax returns. Provide for payment of all taxes.

Provide beneficiaries with appropriate tax information.

Joint Tenancy

Joint tenancy with right of survivorship is a useful tool for holding title to property and for planning the transfer of that property after one's death. Joint tenancy is probably the most common form of ownership for residences and bank accounts between husband and wife. It is used less frequently with other family members. The fact that joint tenancy is widely used doesn't mean that everyone fully understands it. This pamphlet highlights the legal and tax implications of joint tenancy.

What Is Joint Tenancy?

Joint tenancy has significant legal effect not only during the lifetimes of joint tenants, but also when one of them dies. Each joint tenant, regardless of which one purchased or originally owned the property, has the right to use and to share in the income from the jointly owned property. A joint tenant's interest in the property terminates upon his or her death, and the surviving joint tenant or joint tenants then own the property free of any claim by the heirs of the joint tenant who died. This may not be the intent of the original joint tenants, because it bars descendants, heirs or beneficiaries and all but the surviving joint tenants from receiving any interest in the property.

Joint tenancy shouldn't be relied on as a substitute for a Will. It doesn't cover unanticipated contingencies. While it provides for a successor for a particular piece of property, joint tenancy doesn't provide a comprehensive plan for the disposition of one's entire estate as a Will does. Property held in joint tenancy does not pass under a Will.

Is Joint Tenancy The Only Way To Hold Title To Property With Another Person?

No. Two or more persons may also own property as tenants-in-common or tenants by entireties. Tenants-in-common, like joint tenants, each have the right to use and share in the income from the property. However, when a tenant-in-common dies, his or her interest does not pass automatically to the surviving co-tenant. It passes, instead, as part of the estate to the heirs, or the beneficiaries under a Will. Tenants by the entireties allows a husband and wife to hold their residence free of claims against only one spouse.

How Is A Joint Tenancy Established?

When the ownership is in real estate, the deed normally includes the words "as joint tenants and not as tenants-in-common."

For registered securities (stocks and bonds) the names of the owners are stated followed by the words "as joint tenants with right of survivorship, and not as tenants-in-common."

For bank accounts (both checking and savings) all of the joint tenants sign a signature card. The agreement on the back of the card creates a joint tenancy in the depositors.

U.S. savings bonds and other Treasury obligations, when the owners are listed as "A or B," either one may cash in the bond at any time. When one has died, the survivor is the sole owner.

If an asset is registered to "A payable on death (p.o.d.) to B," the asset is not owned in joint tenancy. Rather, the asset is payable to B on A's death, but B has no rights during A's lifetime.

What Are Some Other Features Of Joint Tenancy To Be Considered?

All joint tenants must agree to the sale or mortgage of real estate and to the sale of registered stocks and bonds.

Any one joint tenant may withdraw all or a part of the funds in a joint bank account.

Any co-owner may redeem U.S. Treasury bonds.

The creation of a joint tenancy has important legal consequences. Estate, gift or income taxes may be affected.

Joint tenancy may have other consequences. For example, 1) if property of any kind is put in joint tenancy with a relative who receives welfare or other benefits (such as social security benefits) the relative's entitlement to these benefits may be jeopardized; 2) if you place your residence in joint tenancy, you may lose your right to advantageous senior citizen real estate tax treatment, and 3) if you create a joint tenancy with a child (or anyone else) the child's creditors may seek to collect your child's debt from the property or from the proceeds of a judicial sale.

Is Joint Tenancy A Good Or Bad Idea?

Joint tenancy is useful in the right case. However, joint tenancies are not a simple solution to estate problems but can, in fact, create problems where none existed. The costs of preparing a Will, tax planning and probate may be of little significance compared with the unintended problems that can arise from using joint tenancies indiscriminately. For a full explanation of the advantages and disadvantages of joint tenancy in your particular situation, you should consult a lawyer. With his or her advice, you will be able to make an informed choice of the best way to accomplish your objectives.

Trusts

Living Trusts

A trust generally, is an agreement where one person (the trustee) holds and manages property for another (the beneficiary). If you create a trust under your Will, it's called a testamentary trust. If you create a trust while you're alive, it's called a living trust, sometimes called an inter vivos trust.

The living trust is a vehicle for managing your property during your lifetime and passing it on to your beneficiaries at death without probate.

The usual living trust works in this way. First you have your lawyer prepare a trust agreement that names the trustee and the beneficiaries, and defines everyone's rights and duties. The agreement usually says that you retain power to amend or revoke it whenever you want. (Because of this feature, these trusts are sometimes called "revocable trusts," or "revocable living trusts.") The trustee (or trustees) may be one or more responsible individuals or a bank or trust company. You transfer property (real estate, securities, cash, etc.) into the trust by placing it in the trustee's name. (You can begin by putting in a small amount, and then add to the trust later.) The trustee has management responsibility for the trust property.

The trust agreement usually provides that you are to receive all of the income of the trust and as much of the principal as you request, but if you are disabled, the trustee may use the income and principal to pay your bills. Upon your death the trust property is transferred to your beneficiaries without probate. A trustee might also continue to manage the trust property for the beneficiaries if they are minors, disabled, or have other special needs.

The main advantages of a living trust are these:

If you want or need to have someone else

manage your property and pay your bills in case of illness, the living trust is by far the best arrangement. One alternative is a probate court guardianship proceeding, which is public, costly and inconvenient. Another alternative is the power of attorney for property which is discussed in the next section of this pamphlet.

Avoiding probate at death may save time and money. However, Illinois probate procedures are very simple especially when independent Administration is used, and the importance of avoiding probate can be exaggerated. Virtually all of the steps outlined in the Public Administration section above under "Duties as to Property" and "Financial Duties" need to be satisfied by the trustee.

Because a trust is not filed in court, its provisions are private, unlike a Will, which must be filed in court at death. However, copies of the trust may be required by persons dealing with the trustee such as, for example, banks, stock brokers, etc.

 The main disadvantages are these: If you use a bank or professional trustee, there are fees to pay during your lifetime that will probably be much more than the potential probate cost savings.

Even if there are no trustee's fees to pay, there will be costs and inconveniences during your life -- the initial cost of setting up the trust and transferring your property into trust, inconvenience of maintaining a separate bank account and books and records for the trust, and the annual filing of fiduciary income tax returns may be required.

A trust only disposes of assets transferred to the trust.

Self-Declaration Trusts

The self-declaration trust is a variation of the living trust discussed above. Its unique feature is that the creator of the trust is also the trustee. The trust document usually includes a procedure for removing the creator of the trust as trustee without going to court -- typically, one or more physicians or family members or a combination have removal power; and then a successor trustee named in the agreement takes over.

Many people of retirement age are concerned about the possibility of a disabling illness, even if they are currently in good health. They don't want to set up a living trust because they want to handle their own business as long as they are able to do so.

The self-declaration trust provides for this contingency -- the creator of the trust has full control until a disability or death occurs, and then the trust becomes fully active.

Taxes

The living trust has essentially no tax significance. While you live, the trust income is reported on your 1040 just as if the trust did not exist. (Unless you are trustee, the trustee must file an annual fiduciary return on form 1041, but this is only an information return.) At death, the trust property is included in your estate for tax purposes as if you owned it outright. Any tax plan that is built into the trust agreement (e.g., the marital deduction gift) also could be achieved through a Will.

Life Insurance Trusts

A word about life insurance trusts is in order. A life insurance trust is technically a living trust (sometimes revocable and sometimes irrevocable) but its function is quite different from the living trust vehicle discussed above. When a life insurance trust is created, the maker doesn't transfer any property to the trustee -- he merely names the trustee as beneficiary of his life insurance policies. The trust is dormant until the maker dies. At that time, the trustee collects insurance proceeds, and thereafter the administration of the trust is like that of a testamentary trust, indeed, the life insurance trust is something like a Will of your insurance proceeds -- it's a way to unify the disposition of your life insurance and the rest of your property without subjecting the insurance to probate or to claims of creditors.

Powers Of Attorney

The living trust is usually the best way to provide for someone to manage a person's

property and the payment of his bills during disability. The power of attorney is a simple device that may serve that same purpose.

In concept, the power of attorney creates a form of agency -- the person named as "attorney-in-fact" has power to act as your agent for whatever purposes are specified in the document that appoints the attorney-in-fact. (The attorney-in-fact need not be a lawyer -- the word "attorney" in this sense means "agent.")

Some powers of attorney are limited in scope. Examples of limited powers of attorney are the deputy cards that you can sign to authorize someone to write checks on your bank account or to authorize access to your safe deposit box. A general power of attorney, on the other hand, gives the agent broad power to manage your property and pay your bills. It may even empower the agent to make gifts on your behalf, to transfer your property to a living trust or to consent to medical or surgical procedures on your behalf, if these powers are specified in the instrument. Even if you have signed a general power of attorney, it may also be advisable to sign one or more special powers, because most financial institutions prefer to work with their own printed forms. A power of attorney that deals with real estate must be acknowledged before a notary public like a deed.

In a long illness, a general power of attorney doesn't work as smoothly as a living trust. For this reason, many lawyers recommend living trusts for clients who are ill or elderly, and use the power of attorney for clients who are younger and healthy, as "insurance" against an unexpected contingency. The power of attorney may also be used to supplement a living trust.

Illinois has adopted a Durable Power of Attorney Law. This Act allows the appointment of an agent and successor agent who can act for you. The power can be conditioned upon the principal's incapacity. These powers survive the disability of the principal.

There are two types of statutory powers: PROPERTY and HEALTH CARE. Both must be executed by the principal. The property power must be witnessed by a notary public and the health care power by one witness.

A property owner allows a principal to appoint an agent who can act for him or her in whatever matters are delegated. It can be as broad or narrow as the principal requires. Also matters such as successor agents, guardianship, and compensation can be specified.

A health care power allows the appointment of an agent to make health care decisions on your behalf. Illinois law allows adults the right to accept or refuse medical treatment as they see fit. A health care power allows the delegation of this right to an agent. The health care power allows specification of medical treatment desired, appointment of successor agents, nomination of guardians of your person. The powers survive disability of the principal. Your health care power of attorney should be consistent with any preferences you may express on a living will (see below).

A WORD OF CAUTION. A power of attorney allows the agent to do anything that a principal could do. You should not provide anyone with a power of attorney unless you place the utmost trust and confidence in that person.

Death automatically cancels a power of attorney, so this device is no substitute for a Will.

For information about living wills, powers of attorney for health care and related subjects, see Living Wills and Health Care Directives.

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2007, 2014 Illinois State Bar Association. If you have questions about the application of the law in a particular case, consult your lawyer. The law is constantly changing. Information on www.ISBALawyer.com (or any site to which we link) does not constitute legal advice.