Denice Gierach | Dupage County Estate Planning Attorney

Author Archives

Use of Powers of Attorney for Your Children Who Are Over 18

Jan 23 2012

When your children go to college, they are generally at least 18 years of age. In Illinois, they are considered to be adults at that time. This means that you, as their parents, are not legally entitled to their school information which includes grades (despite the fact that you are footing the bill for the tuition). It also means that if there is a medical issue or if your child has a psychological or emotional issue, you are not entitled to know what it is. The hospital, doctors, nurses, school psychologists, etc. will not talk with you to tell you what the problem is, unless your child specifically authorizes you to do so at that time. At the time that you are needed, your child may not wish to tell you about the situation in the case of a psychological issue, an emotional issue or a drug issue. In the case of a physical infirmity, your child may not be able to tell you about it. In any event, that leaves you, as the parent, unable to give proper assistance to or for the benefit of that child.

One way to deal with this is to have your child sign a financial Power of Attorney, naming you as their agent to deal with financial matters for them or health care matters, as well. With this document, you should be able to receive their full tuition and room and board bills, reconcile their bank accounts, if needed, receive their grades to see that your money is going for good use, and most importantly, to get medical information about them, especially in the event of an accident or other medical need. It is important that the Power of Attorney contain the necessary HIPAA authorization language in the document so that you will be able to access their medical information.

There are times that the child does not feel comfortable naming you, the parent, as their agent. They are just beginning to live on their own and feel that their independence is threatened. In that event, it is important that they name someone, perhaps an older sibling or another family member to be there to offer assistance when needed.

Using a Power of Attorney for your child over 18, who is legally an adult, is one of those things that you don’t think about until the need arises and then it is too late to obtain the document that would protect your child. Don’t wait until it is too late! If you have questions contact an experienced Illinois Estate Planning attorney today.

When Should Owners Develop An Exit Strategy?

Jan 23 2012

Business —

Many times an owner of a business, particularly a family owned business, will question when they should develop an exit strategy from that business. It may sound counterintuitive, but the time to develop the exit strategy is when you acquire or go into the business, not at a later point in time when you have to sell due to health issues, and the like.

Most business brokers will tell you that most business owners have only a vague notion about what may happen to the company after they leave. They have no idea how to value the company and no idea what it is worth. They also have no idea of the tax consequences of a potential sale of the business.

An exit strategy may be an outright sale of the company or it may be the sale to key employees. If you have children involved in the business, it may involve some gifting of the shares over time or allowing the children to purchase shares.

However, if you do not know where you are planning to go or how you are going to get there, you are really operating in the dark. You will have no protection in place in the event that you die or are incapacitated and there is no protection for your family members that you may leave behind either. Without a strategy, would your family know if it is appropriate to sell your business or keep it? If selling the business is appropriate, whom do they approach to offer the business to? Do they use a business broker or not? Do they seller finance the deal or not? Is there anything to sell if you are no longer here? What is the most favorable tax method to sell the business?

These are some of the questions that your family would have answered if you developed an exit strategy. An exit strategy should be in writing and needs to be prepared at least five to seven years before an owner (or his or her family) decides to sell the business. This strategy involves shaping the business into a business that will sell and allow you to maximize your return from the business. The plan usually is done with your business lawyer, CPA, estate planning attorney, financial planner and business broker. Each can give you input that is invaluable to plan ahead, especially if you are forced to sell because of unexpected health issues or problems outside of your control.

If protecting your family does not give you the impetus to develop your exit strategy, remember that if you do not have an exit strategy in place, you (or your family) will most likely get much less than they expect for the business or may not be able to sell the company at all.

For the Love of the Land

Jan 17 2012

Real Estate / Tax —

Sometimes a person owns some acreage that they may have either purchased or inherited. This acreage is really special, as it is beautiful, natural or untouched. If you are that person, you may want to preserve its beauty and make sure that it does not just become another subdivision. What step can you take now that will help you to preserve that land and its purpose?

One of the things that you can do is to give a conservation easement to a not for profit, such as The Nature Conservancy, who will make sure that the property is maintained in its current state. Sometimes the easement is located along the perimeter of the property where the potential development might occur. If the property is ever sold, it is sold subject to that easement so the next owner would not be able to develop that property where the easement is located. This does diminish the value of the overall property, but the owner of the property who granted the easement can get an income tax deduction for the difference between what the property was worth before the easement and what it is worth after the easement.

Sometimes the easement is more extensive. For instance, a Libertyville man had visited an area in the northern part of Wisconsin for years. His family spent many of their summer vacations near this land. He had watched for the day that he could buy the land and make sure that it was preserved. Eventually, he bought over 3,000 acres. He negotiated a conservation easement with the Gathering Waters Conservancy and Northwoods Land Trust to limit its use, which means that while the property may have cottages located on the property, it will not have a large scale development on it. Instead, the handful of cottages on it will allow skiers and nature lovers to have access to the property. In the conservation easement, he created the Winter Park Pines Nature Preserve that will be overseen by the Northwoods Land Trust. The easement also allowed for the management of the forest on the property, but no clearcutting of the trees on the property. If this is of further interest to you, feel free to read the rest of the story in the December 30, 2011 issue of the Chicago Tribune.

There is no doubt that this man will receive a tax deduction for the gift of the conservation easement, but he really did it for the love of the land. If you have questions contact the Business and Tax attorneys at the Gierach Law Firm today.