By Matthew A. Quick In light of the recent holding in Town of Normal v Hafner, when individual sole proprietors construct private residences on privately owned land with financing from private banks are not obligated to pay prevailing wage to laborers working on the project, because they are not considered a public body and private multifamily residences are not considered public works under the Prevailing Wage Act, to wit, Chapter 820 of the Illinois Compiled Statutes, Act 130. The court opined that the purpose of the Prevailing Wage Act is to ensure prevailing wage is paid on public projects, not to interfere with private economic development.
Basics of Non-Profit and Charitable Organizations (Part One)
By Marc F. Herron The Internal Revenue Code breathes life into charitable organizations. For an organization to be recognized as a non-profit or charitable organization it must be limited in its activities to the purposes set out in Section 501(c)(3) of the Internal Revenue Code (26 USC 501(c)(3)). Such purposes are as follows:
-charitable, -scientific, -religious, -educational, -literary, -testing for public safety, -fostering of national or international amateur sports competition, and -preventing the cruelty to children and animals.
Moreover, none of the net earnings of the organization (the profit of the organization after paying salaries and other expenses) can benefit any shareholder or individual and all of its assets must be permanently dedicated to one of the exempt purposes.
Let’s recap: 1. Section 501(c)(3) of the Internal Revenue Code governs. 2. Limit purpose to those set out in 501(c)(3). 3. No net earnings to benefit any shareholder or individual. 4. Assets permanently dedicated to charitable purpose.
Please remember these series of articles are for informational purposes only and to ensure compliance with requirements imposed by the Internal Revenue Service, please note that any tax advice contained in this website is not intended or written to be used, and cannot be used, for the purpose of avoiding tax-related penalties under the Internal Revenue Code, nor for promoting, marketing or recommending to another party any matters addressed herein. For more information please visit www.irs.gov.
Transfer of Vehicle Outside of Probate at Death of Owner (Michigan)
By Matthew A. Quick Michigan law allows for the transfer of vehicles of deceased owners outside of the probate process with Secretary of State Form TR-29. The controlling law, MCL 257.236(2), provides:
If an owner of 1 or more vehicles, which vehicles do not have a total value of more than $60,000.00, dies and the owner does not leave other property that requires issuance of letters as provided in section 3103 of the estates and protected individuals code, 1998 PA 386, M.C.L. 700.3103, the owner's surviving spouse, or an heir of the owner in the order specified in section 2103 of the estates and protected individuals code, 1998 PA 386, M.C.L. 700.2103, may apply for a title, after furnishing the secretary of state with proper proof of the death of the registered owner, attaching to the proof a certification setting forth the fact that the applicant is the surviving spouse or an heir. Upon proper petition, the secretary of state shall furnish the applicant with a certificate of title.
Real Estate and a Certificate of Trust Existence and Authority (Michigan)
By Matthew A. Quick As provided in MCL 565.431, et seq., a certificate of trust existence and authority (referred to as a "certificate of trust") or the entire trust declaration may be filed at a register of deeds office. Filing either a certificate of trust or the entire trust declaration when real property is placed into trust is beneficial and, in some cases, necessary for the orderly administration of the trust (allowing for smoother transfer of real property held by the trust). Filing a certificate of trust over the entire trust declaration is beneficial for several reasons. First, a certificate of trust is a shorter document, which does not cost as much to file with a register of deeds office. Second, a certificate of trust is a much more private option because it only contains excerpts of the actual trust document and does not include distribution provisions, among others. Third, an updated trust declaration must be filed with a register of deeds office if portions of the trust declaration are modified or revoked. If a certificate of trust is originally filed, a new certificate of trust is only required if the excerpted portions contained in the certificate of trust are changed.
The requirements of a certificate of trust are as follows, pursuant to MCL 565.432:
(a) The title of the trust. (b) The date of the trust agreement and any amendments to the trust agreement. (c) The name of the settlor or grantor and the settlor's or grantor's address. (d) The names and addresses of all of the trustees and successor trustees. (e) The legal description of the affected real property. (f) Verbatim reproductions of provisions of the trust agreement, and any amendments to the trust agreement, regarding all of the following: (i) The powers of the trustee or trustees relating to real property or any interest in real property and restrictions on the powers of the trustee or trustees relating to real property or any interest in real property. (ii) The governing law. (iii) Amendment of the trust relating to the trust provisions described in subdivision (a) to (f)(ii). (g) Certification that the trust agreement remains in full force and effect. (h) A list of names and addresses of all persons who, at the time the certificate of trust is executed, are trustees of the trust.
Pursuant to MCL 565.433:
A certificate of trust existence and authority shall be executed by the settlor or grantor; an attorney for the settlor, grantor, or trustee; or an officer of a banking institution or an attorney if then acting as a trustee. The certificate shall be in the form of an affidavit.
On the issue of third-party reliance, MCL 565.435 provides:
A purchaser or other party relying upon the information contained in a recorded certificate of trust existence and authority shall be afforded the same protection as is provided to a subsequent purchaser in good faith under section 29 of chapter 65 of the Revised Statutes of 1846, being section 565.29 of the Michigan Compiled Laws, and shall not be required to further examine the trust agreement, unless an instrument amending or revoking the trust agreement or certificate of trust existence and authority is recorded in the same office in which the trust agreement or certificate of trust existence and authority was recorded.
Powers of Attorney and Living Wills (Illinois)
By Matthew A. Quick A health care power of attorney appoints an agent to act on a patient's behalf when he or she is unable, pursuant to a list of directives. On the other hand, a living will sets out a list of wishes, but does not give anyone the power to act on a patient's behalf (akin to a note to the doctor). Pursuant to Illinois law, if an agent is acting under a health care power of attorney, a living will is rendered inoperative. 755 ILCS 45/4-11.
Mechanic's Liens and Notaries (Illinois)
By Matthew A. Quick In light of the holding in Weydert Homes, Inc v Kammes, No. 2-08-0768, a contractor's statement under oath is not sufficient to fulfill the requirements of the Mechanic's Lien Act if it does not contain a notary's signature and seal. The failure to secure a notary's signature and seal renders a mechanic's lien invalid in an action to foreclose, but does not prohibit contractor from suit for breach of contract or quantum meruit recovery.
Jury Trial and Real Estate (Illinois)
By Matthew A. Quick Pursuant to the holding in Anderson v Klasek, No. 5-07-0390, the Residential Real Property Disclosure Act, Consumer Fraud Act and Real Estate License Act are not actions at common law and provide no right to trial by jury.
Imputed Income and Child Support (Illinois)
By Matthew A. Quick In light of the recent holding in the case of In re Marriage of Gosney, No. 3-08-0718, income is not imputed for purposes of child support calculation unless one of the following applies: the payor is voluntarily unemployed; the payor is attempting to evade the support obligation; or the payor has unreasonably failed to take advantage of employment opportunities.
Electronic Visitation (Illinois)
By Matthew A. Quick Public Act 96-331, which becomes effective January 1, 2010, amends the visitation statute of the Illinois Marriage and Dissolution of Marriage Act, Chapter 750 of the Illinois Compiled Statutes, to define "electronic communication" to facilitate communication between a parent and child when the child is not in the physical custody of the parent. Specifically, the act will affect 750 ILCS 5/607 and 750 ILCS 5/609 to include electronic visitation language.
Fair Housing Act
By Matthew A. Quick In light of the recent holding in Bloch v Firschholz, No. 06-3376, current condo owners may, pursuant to FHA, assert any alleged discrimination that occurred after acquisition of condo under sections 3604(b) and 3617 for post-acquisition conduct.
Trust Subject to Attorney Approval (Illinois)
By Matthew A. Quick In light of the recent holding in Dunn v Patterson, Nos. 3-07-0881, & 3-08-0350, estate planning documents that do not allow amendment or revocation except with the drafting attorney's consent or upon order of court are not void as against public policy. The Court noted that it is reasonable for an attorney to include provisions to be sure requests for amendment or revocation were not based on undue influence or coercion, especially when a client has a special need to to age or disability.
Right of Redemption (Illinois)
By Matthew A. Quick In light of the recent holding in the case of In re Application of the County Treasurer , No. 2-08-0570, one who is under contract to purchase real estate has an equitable interest sufficient to exercise tax redemption. The court noted:
A complete stranger to the property has no right to redeem, but section 21--345 of the Code does not require complete legal title in order to redeem. In re Application of the Cook County Treasurer, 185 Ill 2d 428, 433 (1998) (Loop Mortgage). A party seeking to redeem a property sold at a tax sale need have only an "undefined interest" in the property. People v Hess, 7 Ill 2d 192, 197 (1955). Courts have expanded the class of persons with a redeemable interest to include persons who have something less than legal title, record title, or interests of record. See, eg, Loop Mortgage, 185 Ill 2d at 432.
Courts have held that the following persons have possessed an interest sufficient to redeem: an equitable title holder under an agreement to convey (Franzen v Donichy, 9 Ill 2d 382 (1956)); a beneficial owner of stock owned by a dissolved corporation, even though the property was not listed as an asset in the dissolution of the corporation (People v Hess, 7 Ill 2d 192 (1955)); an adverse possessor (In re Application of DuPage County Collector, 98 Ill App 3d 950 (1981)); a person who had lived on the property for more than 30 years even though he was no longer a record title holder (In re Application of County Collector, 49 Ill App 3d 1048 (1977)); a neighbor who acted as an agent for a mortgagee (Purdy v CH Strong Elevator, Inc, 29 Ill App 3d 894 (1975)); an assignee of a beneficial interest in a land trust (In re Application of the County Treasurer, 16 Ill App 3d 385 (1973)); the executor of an estate (In re Application of the County Collector for Judgment & Sale against Lands & Lots Returned Delinquent for Nonpayment of General Taxes for the Year 1961 & Prior Years, 72 Ill App 2d 272 (1966)); and a grantee of an heir of a contract purchaser who received no deed (In re Application of the County Treasurer of Du Page County, Illinois, for Judgment & Sale of Real Estate for General Taxes for the Year 1960, 63 Ill App 2d 135 (1965)).
It makes no difference whether the purchaser under contract has closed on the property, the contract to purchase itself is sufficient to create an equitable interest (meeting the threshold of "undefined interest" as discussed above) in the property, thus allowing the purchaser under contract the right of redemption.
Real Estate Tax Proration
By Matthew A. Quick For an article more specific to Cook County tax proration go here.
Real estate tax proration is an issue that is normally addressed when transferring real property. Tax proration involves calculating the amount of tax owed on real estate for the time the real estate was owned.
In general, property taxes are for payment of government services. Property taxes are either paid in advance or in arrears and can be subject to different due dates. When property taxes are paid in advance that means government services are being purchased before they are used. An example is when taxes are paid on the first date of a fiscal year for the entire year. When property taxes are paid in arrears, government services have already been expended and the property taxes are intended to reimburse the government. An example is when taxes are paid on the last date of a fiscal year for the preceding year.
If the transfer of a home, thus the transfer of government services, occurs in the middle of a fiscal year, the transferor (the seller) only utilized the government services until the point of transfer and the transferee (the buyer) only utilizes the government services after the point of transfer. Fairness dictates that the transferor and the transferee only pay for government services while owning the property.
Prorating the proper amount of tax involves figuring whether the tax to be prorated is paid in advance or in arrears, then figure the start of the fiscal period. Count the number of days from the start of the fiscal period to the date of transfer (the closing date). Multiply the daily tax rate by the number of days. If the property tax was paid in advance, then the amount yielded is paid to the transferor. If the property tax is to be paid in arrears, then the amount yielded is paid to the transferee.
Successor Trustees and a Limited Power to Convey Real Estate (Michigan)
By Matthew A. Quick Pursuant to Land Title Standard 8.5 of Michigan, "If an express trust contains a power of sale which is not limited to the named trustee, a successor trustee may convey real property pursuant to the trust terms. If a trust does not contain a power of sale or contains a power of sale limited to the named trustee, the probate court may enter an order removing any trust provision limiting the successor trustee's power of sale, thereby permitting the successor trustee to convey real property pursuant to the court's order." The authority for this Land Title Standard is derived from MCL 700.1302, 700.7201 and 700.7402.
In cases where a general, thus unlimited, power to convey real property exists pursuant to a non-testamentary trust declaration, and a successor trustee is appointed by the court, the appointed successor trustee receives the power to convey real property without particular order of the court. However, in the event the power to convey real property is limited to the named trustee in the trust declaration, the court must order that the appointed successor trustee has the power to convey real property. This rule does not apply to situations involving a testamentary trust, because the probate court has jurisdiction to appoint successor trustees after a sole, or other successor trustee, is removed. MCL 700.7201 and 700.1302.
Court Revoking Real Estate Contract for Disabled Person (Illinois)
By Matthew A. Quick In light of the recent holding in Perry v The Estate of Irene Carpenter, equitable considerations are a proper basis for a court to set aside a contract for sale of a disabled person's home, especially where circumstances indicate fraud and unfairness. As held in previous cases, “Courts are under a duty to protect the interests of a minor or a disabled person who is party to the judicial proceedings before it.” Valdovinos v Luna-Manalac Medical Center, Ltd, 328 Ill App 3d 255, 272; 764 NE 2d 1264, 1277 (2002). “Gross inadequacy of price is not of itself sufficient to set aside a judicial sale, yet when such inadequacy is shown, coupled with slight circumstances indicating unfairness or fraud, either upon the part of the officer, the purchaser or the party to the record benefitted by the sale, it will be sufficient for equitable intervention.” Milner v Denman, 21 Ill 2d 182, 190; 171 NE2d 654, 658 (1961); quoting Rogers v Barton, 386 Ill 244, 250; 53 NE2d 862, 865 (1944).
Powers of Attorney and Medical Records
By Matthew A. Quick Pursuant to the Illinois Health Care Surrogate Act and the Illinois Power of Attorney Act, to wit, 755 ILCS 45/4-7(a) and 755 ILCS 40/15, respectively, and the Michigan Estates and Protected Individuals Code, to wit, MCL 700.5506, a Power of Attorney delivered to a person’s physician is made part of the person’s medical record.
When consulting a medical professional, be sure to take a copy of your Power of Attorney for Health Care so that it may be made part of your medical record. Thus, if anything were to happen, your medical professional would have the contact information and the respective powers of your Agents and Patient Advocates.
Housing for Older Persons Act
By Matthew A. Quick Title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988 (also referred to as the "Federal Fair Housing Act"), prohibits discrimination in housing and real estate-related transactions based on race, color, religion, sex, national origin, handicap and familial status (the presence of children under the age of 18 in the household). On the issue of familial status, the Federal Fair Housing Act creates an exemption for discrimination when the housing community is for older persons (also referred to as the "Housing for Older Persons Act" or "HOPA"). 42 USC 3607. That is to say that a housing community for older persons may discriminate against certain families.
A housing community for older persons means housing that is: (A) provided under any State or Federal program that the Secretary determines is specifically designed and operated to assist elderly persons (as defined in the State or Federal program); or (B) intended for, and solely occupied by, persons 62 years of age or older; or (C) intended and operated for occupancy by persons 55 years of age or older, and: (i) at least 80 percent of the occupied units are occupied by at least one person who is 55 years of age or older; (ii) the housing facility or community publishes and adheres to policies and procedures that demonstrate the intent required under this subparagraph; and (iii) the housing facility or community complies with rules issued by the Secretary for verification of occupancy, which shall: (I) provide for verification by reliable surveys and affidavits; and (II) include examples of the types of policies and procedures relevant to a determination of compliance with the requirement of clause (ii). Such surveys and affidavits shall be admissible in administrative and judicial proceedings for the purposes of such verification.
The Estate, Issue Four
By Matthew A. Quick Wills
A Will (also known as a “Last Will and Testament”) is a legally-binding instrument that, in the event of death, directs property and the care and custody of minor children. A Will does not direct all property in a person’s estate while they are living, only the property that remains titled solely in the name of the deceased. For example, a Will does not direct property that is transferred to a beneficiary at death (as is usually the case with life insurance); a Will does not direct property or accounts that are held jointly and remain with the survivor (such as jointly held real estate or bank accounts); nor does a Will direct property that has been placed in a trust during the decedent’s lifetime.
Regarding the care and custody of minor children, a Will can propose a guardian. In most instances, a Guardianship Information Form or Letter of Intent Information Form is incorporated into the Will, thus giving the proposed guardian information regarding the minor children that includes medical and educational history, religious preference, special needs, recreational activities and other helpful information.
Furthermore, a Will makes arrangements for the payment of debts, taxes, expenses and costs, and elects a person to take the necessary legal steps to carry out the instructions put into the Will (referred to as a “Personal Representative” or “Executor/Executrix”).
In order for a Will to function it must be given power by a court through a process referred to as probate. During the probate process, the Will is authenticated; creditors, fees, costs and taxes are paid; and the directions of the Will are followed. Probate can be costly and time consuming, thus an educated analysis of one’s estate should be completed to determine whether probate should and could be avoided. CAVEAT: consult an estate planning professional before changing ownership of property to avoid probate; the consequences of changing ownership could be unintended and detrimental without appropriate consideration.
Regardless of how complex or simple the estate, a Will is always included in an estate plan, whether it is used to dispose of someone’s entire estate, direct the care and custody of minor children or act as a safety-net for property that was accidentally not included in a trust or other arrangement. Rather than a simple form that can be purchased online or at an office supply store, a Will is a document that requires significant thought to include proper detailed instructions and avoid improper taxes and fees.
-Dental Insurance-
This article unfortunately cannot contemplate all types of dental insurance; however, let us consider the two primary dental insurance models: managed care plans and fee-for-service plans. Managed care plans, according to the American Dental Association (www.ada.org), are cost containment systems that direct the utilization of health care. In other words, a managed care plan controls medical costs by (a) restricting the type, level and frequency of treatment; (b) limiting the access to care; and (c) controlling the level of reimbursement for services.
Two main divisions of managed care plans have emerged: a Dental Preferred Provider Organization (referred to as a “Dental PPO”) and a Dental Health Maintenance Organization (referred to as a “DHMO”). A Dental PPO allows the patient to choose a dentist regardless of whether the dentist is in-network or out of network. An in-network dentist under a Dental PPO is contracted by the insurance company to receive a discounted fee for services. Alternatively, an out of network dentist under a Dental PPO does not have a contract with the insurance company; thus, the patient would then likely have to co-pay for services.
According to the American Dental Association, a DHMO is a capitation plan that pays contracted dentists a fixed amount (usually on a monthly basis) per enrolled family or individual, regardless of utilization. In other words, in exchange for a fee, a patient would have access to dentists that are paid by the insurance company. In return, the dentists agree to provide specific types of treatment to the patient at no charge (for other treatments, a co-payment is required). Theoretically, the DHMO rewards dentists who keep patients in good health, thereby keeping future costs low. DHMO models typically offer the least expensive dental plans.
A fee-for-service plan (known as a “dental reimbursement plan” or “DR Plan”) is typically a freedom-of-choice arrangement under which a dentist is paid for each service rendered; and is the insurance plan recommended by the American Dental Association. A DR Plan differs from a managed care plan because the patient pays the dentist directly for each service provided rather than the dentist receiving payment from an insurance company. A patient is reimbursed for the cost of the service by an arrangement with the patient’s employer. The patient can seek service from any dentist under this type of insurance plan and does not have to worry about whether the dentist is in a specific network. Ultimately, a DR Plan offers the patient great freedom and offers both the patient and the dentist broad authority to make decisions that are most beneficial to the patient.
Please visit the American Dental Association’s website, as referenced above, for a list of items to consider before choosing an appropriate insurance plan.
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Adam Winckler, D.D.S., enjoys a general dentistry practice with The Waters Dental Group in Sandwich, Illinois, and Geneva Family Dental in Geneva, Illinois. Dr. Winckler invites any questions or comments via the website of The Waters Dental Group (www.watersdentalgroup.com); the website of Geneva Family Dental (www.genevafamilydental.com); or by phone at 815.786.2146.
-Update-
Illinois has enacted the Banking Convenience Account for Depositors Act. Much like its Michigan counterpart, the Illinois Act permits a convenience account holder to be added to a bank account. In practice, the financial institution may deal with the person that is a convenience account holder as though they were an owner of the account. However, the convenience account holder does not hold title to the money in the account, thus would not be given the money upon the owner’s death. The convenience account holder is not considered to be a joint owner in the deposit account, simply someone that is helping.
The Illinois Secretary of State will act as a depository for wills and trust documents that a lawyer is safekeeping. In order to deposit the Will or trust, however, the attorney must certify that the person who created the documents cannot be located after a diligent search.
Illinois Real Estate Methamphetamine Disclosure. A seller of real estate in Illinois must now disclose whether the property for sale has been used for methamphetamine manufacture.
-Conclusion-
I hope this issue of The Estate has been helpful. Please feel free to contact me with any questions or concerns, or to schedule a complimentary consultation. As a service to all current and prospective clients, I travel at no charge to all meetings and consultations throughout Michigan and Illinois. In addition, informational sessions regarding special needs planning and estate planning are provided free to groups of any size. Please let me know if there is any way I can help.
L.L.C. Members and Fiduciary Duties (Illinois)
By Matthew A. Quick Public Act 96-263 considers a member of a Limited Liability Company a fiduciary, thus owing the company fiduciary duties, to the extent the member exercises management authority. This Act becomes effective January 1, 2010.
Convenience Accounts (Illinois)
By Matthew A. Quick Public Act 96-123 creates the Banking Convenience Account for Depositors Act, which permits a convenience account holder (or someone to accommodate the transfer of funds) to be added to a deposit account. In practice, this means the financial institution may pay out of an account to the convenience account holder without affecting the title of the deposits (the convenience account holder is not considered to be a joint owner in the deposit account). This Act is effect January 1, 2010, but is automatically repealed January 1, 2015.