LAW NOTES

FALL 2010

ILLINOIS POWER OF ATTORNEY ACT UNDERGOES MAJOR CHANGES

          A Power of Attorney (POA) gives one person, called an agent, the authority to make decisions on behalf of another person (called the principal) when the principal can’t make decisions for him or herself due to disability, age, or other circumstances.  Executing a POA now is a way to make sure there is someone who can make decisions for you if and when you reach a point where you need help controlling your affairs. There are two types of POA. The health care POA gives the agent the ability to make health care decisions for another person. The property POA gives the agent the power to deal with a wide array of financial transactions.

          Effective July 1, 2011, the Illinois Power of Attorney Act (Act) has been amended in several ways. The most significant overall effect is POA forms that are more understandable, and there are increased protections for the principal.

          The language in the health care POA has been revised to clearly provide for conditions of “incurable or irreversible condition,” “permanent unconsciousness” and “terminal condition.” Previously, provisions in the health care POA did not specifically make provision for these situations.

          The powers granted to a health care agent are more clearly defined. The authority of the agent to authorize an autopsy and to direct the disposition of remains is binding on funeral directors, crematories, and other cemetery organizations. Another notable change is that the healthcare POA authorizes the agent, under the Health Insurance Portability and Accountability Act (HIPAA) to have the same right to receive and access the principal’s medical records and information as the principal receives. Finally, the amended POA allows the principal to give specific direction to the agent regarding organ donation, if desired.

          For property POAs, the amended Act creates a notice to principals and agents explaining their rights and responsibilities under the Act. This serves to give more guidance about their respective roles, which can help avoid problems before they happen. The Act more specifically states the responsibilities for the property agent, such as the duty to keep records of all receipts, disbursements and other significant action conducted on behalf of the principal. These records can be requested by other persons acting for the principal and by state agencies investigating complaints of abuse, neglect, or financial exploitation of the principal.  If an agent fails to provide these records, a court can order the agent to do so and can assess costs or attorneys’ fees against the agent if the delay is unreasonable.

          Another new provision allows the agent to sign a Certification and Acceptance of Authority form, which, when provided to any person or organization, allows that person or organization to rely conclusively on the authority of the agent.

          Should the agent fail to carry out his or her duties in taking care of the principal, the agent can be ordered to reimburse the amount required to restore the value of the principal’s property to what it would have been had the agent not violated the Act and could also be liable for any attorneys’ fees and costs paid on the agent’s behalf to resolve the problems. The Act does not place any limits on other legal or equitable remedies that might be available to the principal.

          If you have a POA for health care or property that was executed before the effective date of these amendments, it will still be valid and enforceable as long as it complies with the laws in effect at the time it was created.  Those interested in executing POAs for the first time or amending their current POAs to take advantage of the provisions of the new law should contact an attorney.

EMPLOYEE CREDIT PRIVACY ACT

           Effective January 1, 2011, a new Illinois law makes it unlawful for employers to discriminate on the basis of an employee’s credit history. The Employee Credit Privacy Act (Act) prohibits employers from failing or refusing to hire, discharge or otherwise discriminate against a person because of his or her credit history or report; from inquiring about a job applicant’s or employee’s credit history; and from obtaining a job applicant’s or employee’s credit report. 

          However, there are certain categories of jobs for which a satisfactory credit history is deemed as a job requirement and are, therefore, exempt from the Act. In other words, it is necessary for some jobs that the employee has a decent credit history. Examples include jobs involving access to personal or confidential information, financial information, trade secrets, or State or national security information. There are also jobs in which an employee's or applicant's credit history is otherwise required by federal or state law or pursuant to certain administrative rules.

          In addition, for the purposes of the Act, the term “employer” does not apply to every type of employer. Some employers that are exempt from this new law include banks and other financial institutions; insurance or surety businesses; state law enforcement units; certain government agencies which require the use of employee’s or applicant’s credit history or credit report; or any organization defined as a debt collector under federal or state law.          

          Employers cannot require an employee to waive any rights under the Act, and any agreement by an employee to do so is invalid. Employers who violate this new law are subject to civil lawsuits in which both monetary damages and injunctive relief may be requested. Since there are vast and very detailed exceptions to this new law, employers should consult an attorney to determine whether they are covered by the Act and whether a satisfactory credit history is an occupational requirement of the job positions in their businesses.  Doing so may help avoid unintentional violations of this new Act.

TENANCY BY THE ENTIRETY OR LIVING TRUST?  HOW ABOUT BOTH?

          As of January 1, 2011, a new law allows a husband and wife who have living trusts to enjoy the creditor protections afforded by ownership as tenants by the entirety.

          Tenancy by the entirety is a form of ownership afforded to married couples and is only applicable to real property owned by a husband and wife while the husband and wife reside in it as their primary personal residence. Under this form of ownership, a creditor of one spouse cannot obtain an interest in the couple’s residence due to that spouse’s individual debt. For example, if a creditor gets a judgment against one spouse, the creditor cannot place a lien on the couple’s residence. Upon the death of one spouse, the residence immediately is fully vested in the surviving spouse.

          Property held in joint tenancy is quite different. Any judgment obtained against one joint tenant may result in foreclosure of the property, even if the other joint tenant(s) were not responsible for the debt.

          Couples are also often interested in the benefits of creating living trusts, which usually requires titling real property in the name of the trust. Recent amendments to the Illinois Code of Civil Procedure and the Joint Tenancy Act allow spouses to avail themselves of the benefits of living trusts and the creditor protection of ownership as tenants by the entirety. The amendments provide that a primary residence titled in the name of the living trust may also state that title is held in tenancy by the entirety, thereby protecting it from creditors. To take advantage of this change in the law, both spouses have to be trustees of their trusts, and the trusts must be for their benefit.

          It is important to note that these new amendments will not apply to people who transfer property into tenancy by the entirety for the sole purpose of evading creditors. There are also certain exceptions related to creditors’ access to any income generated by the property. Also, tenancy by the entirety does not protect real property after it is transferred to others, protect the proceeds of real property after it is sold, or if one spouse dies or no longer owns the property.

          Couples who are beginning the estate planning process and those who have current living trusts should discuss the creditor protection aspects of tenancy by the entirety, as well as the exceptions of the new law, with their attorney.

TRAFFIC LAW UPDATE 

          The past year has seen many changes to traffic laws. In addition to changes noted in our previous newsletters, even more amendments have been made to the Vehicle Code.

          Effective January 1, 2011, the law provides that if a person is convicted of violating any provision of the Illinois Vehicle Code or any local ordinance regulating traffic which results in the death of a person, the person’s driver’s license will be revoked immediately. The convicted person may request that the period of revocation be terminated or reduced at a hearing before the Secretary of State.  Even something as simple as an improper lane change, for example, if it results in a death, could be cause for revocation of one’s license.

          A second change also effective January 1, 2011, revises the penalties and possible court dispositions for certain categories of speeding. The amended law makes it a Class B misdemeanor to drive 30-39 miles per hour in excess of the speed limit.  If a person drives over 40 miles above the speed limit, it is a Class A misdemeanor, and the person will no longer be eligible for court supervision. Class B misdemeanors carry possible penalties of not more than 6 months in jail and up to $1,500 in fines. Class A misdemeanors carry possible penalties of not more than one year in jail and up to $2,500 in fines.

          As of September 15, 2010, the fines for speeding infractions have increased. Tickets for driving less than 20 miles per hour over the limit (previously $75) are now $120. The fine for going between 20 and 29 miles per hour over the limit can cost up to $140, and the fine for going 30 or more miles per hour over the limit is $160. The fines for not wearing a seatbelt and for driving without a license have also increased, so be sure to have a valid license, buckle up, and slow down!

NO INSURANCE LEFT BEHIND: INVESTIGATE ALL INSURANCE BEFORE SETTLEMENT

          Getting into a car accident is never a good thing. It may be even worse, however, when the person who caused the accident doesn’t have auto insurance coverage or doesn’t have adequate coverage. For this reason, many people purchase Underinsured Motorist (UIM) policies. These policies are intended to cover the cost of any injuries or damage above and beyond the limits of the policy covering the person who caused the accident.

          When an accident occurs, there are often disputes concerning how much should be paid from the UIM policy, if anything. Most insurance policies contain provisions relating to “anti-stacking,” which means that in the case of an insurable event (for example, a car accident), only one policy limit will apply to cover the damages of the accident, even if there are multiple persons involved in the event with auto insurance coverage.

           The application of different types of insurance to an accident was the basis for a recently decided Illinois case. A young woman, Kassandra, was sitting in a Subway restaurant when an underinsured motorist, Roy, drove though the window of the restaurant and struck her. Roy’s car was insured by State Farm, and his policy had bodily injury liability limits of $50,000. Some of that coverage was paid to Kassandra, and the rest was paid to other people injured in the accident. The restaurant’s property insurance also paid Kassandra a large amount of money but still not enough to cover her claimed damages, which she stated were over $900,000.

           Kassandra was covered by an auto insurance policy issued by Farmers Automobile Insurance Association (Farmers), which contained a UIM provision for bodily injury liability limits of $300,000 per person.  Kassandra made a claim for that coverage, which Farmers denied, arguing that it could subtract what Kassandra had already received from Roy’s and Subway’s insurance from Farmer’s $300,000 liability limits. Since Kassandra had already received over $300,000 from Roy and Subway, Farmer’s argued it was not obligated to pay Kassandra anything more for her injuries.

          The court agreed that Farmers was entitled to subtract the amount that Roy had paid Kassandra but not the amount that Subway had paid her. The court’s reasoning was that the type of insurance provided by Subway (property insurance) was not the same type of insurance provided by Farmers (auto insurance), and, therefore, the money paid by Subway was not considered in the setoff calculation. The court also stated that the purpose of UIM provisions was to put Kassandra in the same position as if Roy had been adequately insured. As long as there was no “double recovery” to Kassandra, she could receive the limits of her UIM insurance minus what Roy had already paid.

          Cases involving uninsured and underinsured motorists (and other kinds of insurance coverage) are very fact-specific and depend heavily on the language of the insurance policy. If you are in a collision where inadequate insurance coverage is an issue, contact an attorney to assist you in determining your rights under the insurance policies involved. 

OFFICE NEWS

FIND US ON FACEBOOK AND LINKEDIN!

          Our law firm has recently joined the social media ranks. Please visit our Facebook page by searching for “Law Offices of Ralph E. Elliott” at http://www.facebook.com. The page has information about how to contact us, our practice areas, our attorneys and much more! Click on “Like” to receive notices of updates in the law posted on our page.

          We are also on LinkedIn, a social media site geared toward establishing business connections. Please visit http://www.linkedin.com/pub/bridget-trainor/5/7a7/355 and http://www.linkedin.com/pub/ralph-elliott/20/336/a17 to see our profiles and connect with us.

          As always, information about the firm may be found at our website at http://www.reelaw.com.

COMMUNITY INVOLVEMENT

          Bridget Trainor was recently inducted into the Noon Kiwanis service club. The Noon Kiwanis serves to help children locally and all over the world. The current focus of Kiwanis International is to eliminate Maternal Neonatal Tetanus, a devastating but highly preventable disease that kills mothers and babies all over the world. 

          Bridget also recently joined the Freeport Area Chamber of Commerce Finance Committee which develops and reviews the Chamber’s budget and makes recommendations to the Chamber Board regarding the Chamber and financial decisions.  She also serves on the Policies Committee of the Chamber of Commerce.

          Ralph Elliott is the current chairman of the Stephenson County Bar Association MCLE (Mandatory Continuing Legal Education) Committee. This committee plans and presents seminars for local attorneys to obtain required licensing credit. The seminars are open to attorneys in Stephenson, Jo Daviess and Carroll Counties.