Outrageous Personal Injury Claims?

Personal injury cases often garner press coverage that focuses on the absurdity of the justice system, from the McDonald's hot coffee lawsuit to the seemingly bizarre tale of a suicidal person suing the subway for not stopping the train. There is always another side to the story.

Read on.

Quite an uproar about abuse of the tort system was excited some time back by a personal injury lawsuit on the part of a man who was struck by a subway train after he deliberately lay down on the tracks.

Outrageous?

Not when you know that the train barreled into the station at full speed even though the operator had been informed of the situation in time to bring the train to a halt without danger to his passengers or to the man on the tracks. The operator had a duty to conduct himself with reasonable care. That duty was not diminished or eliminated by the fact that

If you have been involved in a personal injury, it's important to examine the whole case. the plaintiff had put himself on the tracks on purpose. The operator had ample time to bring the train safely to a halt. He did nothing to avoid contact with the man on the tracks. Result? Liability.

Consider the issue from the opposite direction.

A visitor to a hospital who slipped and fell on a wet spot in its cafeteria erroneously assumed that the hospital was liable just because it owned the building.

Not so.

Unless the hospital created the hazard, the liability case against it would entail a failure to act reasonably to remedy the hazard in the face of actual or "constructive" knowledge of it: If in the exercise of ordinary care a reasonable person would have known of the hazard, the lack of actual knowledge will not operate as a defense.

FAQs About Trusts

Is property in trust beyond the reach of creditors of the beneficiary of the trust?
As a rule property held in a spendthrift trust for the benefit of a judgment debtor is beyond the reach of the creditors if the trust was created and funded in good faith by a person other than the debtor. The rule does not apply when the trust is so set up or funded as to hinder, delay, or defraud creditors. Nor does it apply when the debtor created the trust for the debtor's own benefit: Put another way, a "self-settled" trust is invalid as a spendthrift trust in Illinois. And even a legitimate spendthrift trust is liable for the unpaid child support obligations of a beneficiary-debtor. Are there tax benefits to trusts.

Are there tax benefits to trusts?

Transferring property into trust does not make tax obligations disappear. Income generated by trust assets will be taxable to the trust, to the person who created it (known as the settlor or the grantor), to the beneficiary, or to some combination thereof. Any doubt that many people have erroneously thought otherwise over time is dispelled by the treatment which the Internal Revenue Service has given to this subject. (See "Abusive Trust Arrangements" in 2011 Instructions for Form 1041 at p. 3).

In theory, trusts are subject to other taxes, too, among them the so-called "death taxes" and "inheritance taxes." In practice, those taxes are relevant only to the few: the current exemptions are $5.25 million in the case of the federal estate tax, gift tax, and generation-skipping transfer tax; $4 million for the Illinois estate tax; and double that for married couples.
There are many good reasons for establishing a trust, but they do not have much to offer in terms of reducing or eliminating income tax liability.

Why should I create a trust?

 

One good thing a trust can do is reduce or eliminate the risk of guardianship proceedings. In a typical "living trust" the settlor will designate himself or herself the trustee, and will designate a successor trustee in case he/she dies or becomes disabled. Should the initial trustee become disabled, a simple resignation is all it would take to put the "back-up" trustee in charge; and the fees, the paperwork, the trips to court, the delay and all the rest of what goes into obtaining a guardian of the estate could be avoided.

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.

 

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 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)