New Year, New Laws

Wishing you a very happy and prosperous New Year!

For a full list of new Illinois laws click on 2013 Illinois Laws courtesy of Illinois Senate President John Cullerton.

Do's and Don'ts in Mortgage Foreclosure

"Mortgage foreclosure defense" is a misleading term. It suggests the delinquent borrower (morgtgagor) can have it both ways, that is, get a court order that he does not have to pay back the money but he can keep the house. It is not so (with a possible exception in a so-called "lost note" case.)

Despite those limitations, foreclosure "defense" has a lot to offer. It can buy time and often avoid the "worst case" scenario, namely: loss of the house, entry of a "deficiency judgment" for the difference between the unpaid balance on the loan and the value of the house, and devastation of the credit rating of the borrower.

Most borrowers do not fight foreclosure at all. That is a mistake that can lead promptly to the "worst case" outcome just described. Any number of outcomes which are better than that may be available through the use of foreclosure defense, e.g., forbearance, loan modification, and a short sale.  

Basic do's and don'ts for the borrower in foreclosure or headed that way:

One, do not ignore the lender. Nothing is worse than doing nothing, to quote the U.S. Department of Housing and Urban Development. Read and keep everything sent by the lender. Respond promptly to the lender in person, by an accredited housing counselor, or both. Visit the HUD website. Consult an attorney.

Two, stay in the house. You are doing the lender a favor by protecting the collateral. Many of the concessions and allowances which the lender might be inclined to make will require continued occupancy. You've got to live somewhere. You might as well live at home. So stay put.

Three, call me.

Try telling those who are drizzling Worcestershire sauce on dog food for dinner that the recession has been over for years. This is the worst economy since Herbert Hoover was in the White House. That's a good thing, not a bad thing. If you're up against it financially, you've got lots of company. That means that law and politics are at work on the problem, which would not be the case if it were "Fat City" for your neighbors and only you had a problem.

"Mortgage foreclosure defense" will not let anyone keep the house yet avoid repaying the loan. But it can buy time and lead to a number of outcomes that are happier than loss of the house, loss of the credit rating, and a "deficiency judgment" for the difference between the amount due on the loan and the value of the house.

 

#

 THE LIVING TRUST IS RIGHT FOR YOU

by David McCarthy 

Natalie Wood's death has been cited as an argument for having a so-called "living trust" because when her estate was in probate an inventory of her property was on file and open to public inspection. Privacy is only one of the advantages of having a "living trust" (also known as an inter vivos trust).   

• Do you have children who are minors, or have special needs, or are spendthrifts?
• Are you in retirement, up in years, starting to slow down?
• Would you like to reduce the amount of taxes you pay?
• Are you philanthropically inclined?  

If you answered yes to any of those questions, a "living trust" is right for you.

You can use a trust to provide for minor children after you die, to provide for a special-needs child of any age throughout the child's life, to provide for children who just don't know how to handle money by establishing a trust that cannot be reached by the creditors of a spendthrift.

A trust permits easy transfer of your property to the beneficiaries after your death. It takes six months, minimum, to get through probate in Illinois, and as a rule, distribution of property to the heirs and beneficiaries occurs at the end of the probate process. If you want your beneficiaries to have your property without the wait, the trust can be drawn accordingly.

A trust and its creator (called the settlor) are two different persons in the eyes of the law and two different taxpayers. This can produce significant tax savings.

In our judgment, one should have a trust in addition to having a will rather than in lieu of having a will. One of the challenges of having a trust is making sure that all your property gets into the trust, and that whenever new property is acquired, it, too, is placed in trust. This is often easier said than done. And the next thing you know, the person who established the trust (the settlor) personally owns property that did not make it into the trust and which, therefore, is subject to probate.

Understand this about probate. Whether it does or does not live up to its nightmarish reputation will depend almost entirely on whether the heirs and beneficiaries do or do not get along with one another. The expense, the time, and the emotional toll will increase as the level of contest and hostility increases. Illinois has long had a form of probate known as "independent administration." Had Natalie Wood's case undergone "independent administration" in Illinois, the inventory of her property would never have become a matter of public record. However, if the heirs and beneficiaries are at each other's throat, and one of them asks for "supervised administration," then the inventory would become a matter of public record.

The upshot: Have a will and a trust. You won't regret it.

           

Right to Privacy - Social Networks

Prospective employers would be prohibited from asking job applicants to provide access information (e.g., user name, password) for social media outlets such as Facebook if legislation pending in the Illinois General Assembly becomes law. Maryland has already enacted a law which prohibits that practice, and bills now pending in Springfield would amend the Right to Privacy in the Workplace Act to ban requests for access information to social media. (HB3782, HB 5713).

Disclosure of Mental Health Records 

Some mental health records may now be disclosed without the consent of the patient. Those authorized to disclose without consent are county jails, insurance companies, integrated health systems, State agencies (including the Department of Corrections and the Department of Children and Family Services, to name two). Those authorized to receive the disclosures are hospitals, physicians, therapists, emergency medical personnel (and the members of an “interdisciplinary team“ treating a patient.

Those whose records may be disclosed without consent -- in common parlance: patients -- are “recipients in a program administered or operated by the Department of Healthcare and Family Services or the Department of Human Services.

The records that may be disclosed (and disclosed solely for purposes of treatment and coordination of care) are: services rendered, providers rendering the services, pharmaceuticals prescribed or dispensed, and diagnoses.

All this appears in a new section (section 9.4) added in August of 2011 to the Mental Health and Developmental Disabilities Confidentiality Act. (See PublicAct 097-0515)

 

Tobacco Use Cessation Programs

Insurance coverage for “quit smoking” programs is now mandatory in Illinois by virtue of an amendment to the Illinois Insurance Code that went into effect earlier this year. That is, insurers who provide group accident and health insurance plans must now offer (for additional premium) coverage for the expense of participating in a “tobacco use cessation program.”

Tobacco use is the number one cause of preventable death and disease in Illinois, costing $4.1 billion annually in direct health care costs and another $4.35 billion in lost productivity. (See Public Act 097-0592)

Serving Our Seniors: Living Wills

Narrated by Bill Kurtis

FUNDAMENTAL DO'S AND DON'T'S OF THE HIRING PHASE

The hiring phase is complicated. Here are some of the basics of what may and may not be asked about and required during the hiring process.

Race, Sex, Age, Disability

Inquiries about race, gender, birthplace, religion, marital status and disability are prohibited with these exceptions. It is all right to identify the essential functions of the job and ask how the applicant would perform them, and also to ask whether the spouse of the applicant is an employee of the employer.

It is permissible to ask for the full name of the applicant and whether he or she has ever worked for the company under a different name, but impermssible to ask for a maiden name.

The applicant may be asked how long he or she has lived in the state or the city but not whether he/she owns or rents. The only question that can be asked about age is whether the applicant is at least 18 years old, and then only to determine whether the applicant is of legal age for employment.

A LEGITIMATE BUSINESS INTEREST ON THE PART OF AN EMPLOYER IS A PREREQUISITE FOR ENFORCEMENT OF A COVENANT NOT TO COMPETE AFTER ALL.

An employer who would enforce a covenant not to compete must establish that enforcement is necessary to protect a legitimate business interest. That has been the law in this State for a long time. But there had been some doubt about it since 2009, when the appellate court in Sangamon County held that all that mattered was that the covenant be reasonable in time and area. (Sunbelt Rentals Inc. v. Ehlers, 394 Ill.App.3d 421 (4th Dist. 2009)). The Illinois Supreme Court has just set the record straight about that. (Reliable Fire Equipment Company v. Arredondo et al., Docket No. 111871).

In so doing, the Court announced a totality-of-circumstances doctrine: The enforceability of a covenant not to compete must henceforth be determined on a case by case basis evaluating the totality of circumstances in the given case. The presence or absence of a legitimate business interest had hitherto turned on two questions: One, was there a misuse of confidential information? Two, was there a "near permanent" relationship between the employer and the customer?

The answer to both those questions was "no" when the Reliable Fire case was in the trial court (DuPage County) and the Appellate Court (Second District). So both of those courts refused to enforce the pertinent covenants not to compete.
Why, then, a different result in the Supreme Court? Because the Illinois Supreme Court may ignore its own precedents but our lower courts may not. Although there were no trade secrets and no "near permanent" customer relationships in the case, there was flagrant competition on the part of the defendants: While they were still in the employ of the plaintiff-employer, they were using company time and company resources to sell competing product to their employer's customers for their own account.