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ILLINOIS
LEGAL UPDATE
SUMMER 2009 ISSUE
Traffic Court in Illinois
The
police pulled you over and gave you a traffic ticket--now what? The answer: Your
next stop will usually be Traffic
Court.
So What Did I Sign?
When you
receive a ticket, you are required to sign an affidavit agreeing to appear in
court on the day and at the time fixed for your case to be heard. You are not
being asked to admit that you did anything wrong, just that you will show up in
court.
Do I Really Have to Go to
Court?
Not
necessarily. In some cases, it is possible to admit that you are guilty and pay
the ticket. If you do so, a conviction will appear on your driving record, but
you will not have to go to court. However, if the charge is a serious one, or if
you are unwilling to plead guilty, you have to go to court.
Do I Need a Lawyer?
Perhaps.
You have a legal right to have a lawyer represent you, and if the charge is
serious (such as DUI), you should probably retain a lawyer. If you are facing
the possibility of jail time and cannot afford a lawyer, the court will appoint
one to represent you. Be prepared to prove that you cannot afford a lawyer:
W-2s, current pay stubs, proof of public assistance, and other such documents
are useful.
What Are My Rights?
You have
all of the rights of anyone accused of a crime. You have the right to a lawyer.
You have the right to confront and examine witnesses, such as the officer who
wrote the ticket. You have the right to remain silent and not be forced to
testify at all (although you may choose to do so). If you are dissatisfied with
the result of your hearing, you may appeal, although the time to do so is
limited.
What Might Happen to Me?
It
depends on the charge. In most cases, traffic citations carry the threat of only
a fine, ranging from $1 up to $1,000. More serious charges (such as DUI,
speeding far above the limit, and reckless driving) carry the threat of both a
fine and jail time. Also, if you have 3 or more convictions in a 12-month
period, your license can be suspended.
It is
also possible to avoid a conviction entirely if you are placed under
"supervision." A court may grant supervision if you are guilty but have a
relatively clean record. The court will issue a fine and often require you to go
to traffic school. Afterwards, you are placed on supervision for a fixed period
of time. If, during that period, you keep a clean record, no conviction will
appear on your driving record.
New Identity Theft Rules Affect Businesses
Faced
with the reality that identity theft continues to cause billions of dollars in
losses for individuals and businesses each year, the Federal Trade Commission
(FTC) has issued "Red Flag Rules" that are intended to fight the problem by
requiring businesses to implement procedures designed to detect and respond to
identity theft. The rules are currently scheduled to go into effect on August 1,
2009.
Covered Accounts
The
rules apply to financial institutions and creditors with "covered accounts." The
category of financial institutions includes entities such as banks, savings and
loans, and credit unions holding "transactional accounts," meaning a deposit
account or other account from which the owner makes payments or transfers.
The
creditor category has raised some eyebrows because it embraces some businesses
that in everyday parlance may not have been considered to be creditors.
Basically, a "creditor" is broadly defined as any entity that regularly extends,
renews, or continues credit. For example, this means finance companies,
automobile dealers, mortgage brokers, and utilities, but it also means
nonprofits and governmental entities that defer payment for goods or services.
An
account is a "covered account" for purposes of coverage of the new rules if it
is used mostly for personal, family, or household purposes, or if it is an
account for which there is a foreseeable risk of identity theft, such as small
business and sole proprietorship accounts.
Entities
subject to the rules must develop a written policy to identify and detect the
warning signs--the "red flags" of identity theft. Detection should involve the
regular review of accounts, at a minimum. The plan must describe appropriate
responses to prevent or mitigate the effects of the crime. There also must be
training for staff members, oversight for any service providers, and overarching
management of the plan by the board of directors or senior employees of the
financial institution or creditor. How extensive a plan must be will vary
depending on the size of the entity and the kind of credit accounts it
maintains. The new rules also mandate an annual update of the plan.
Red Flags
So just
what are those red flags for possible identity theft? An exhaustive list may not
be possible, but a supplement to the Red Flag Rules identifies and describes 26
separate red flags. They fall into five broader categories: (1) alerts,
notifications, or warnings from a consumer reporting agency; (2) suspicious
documents, including any that have signs of having been altered or forged; (3)
suspicious personal identifying information, such as personal information that
does not match information from external sources; (4) unusual use of, or
suspicious activity relating to, a covered account, such as the use of an
account that has been inactive for a long time or, more generally, any sudden
and unexplained change in the patterns of activity for an account; and (5)
notices from customers, victims of identity theft, law enforcement authorities,
or other businesses about possible identity theft in connection with covered
accounts.
The
consequences for not complying with the Red Flag Rules are significant. The FTC
itself has provided for the potential imposition of monetary sanctions and an
FTC enforcement proceeding. An even more far-reaching incentive for compliance
is not to be found in the fine print of the rules but is no less real: The Red
Flag Rules are likely to become the prevailing standard of care for what
preventive measures companies are expected to take if they hope to be able to
defend themselves successfully in civil lawsuits arising out of identity theft.
Duties of Guardians
When a
person is unable to look after his or her own affairs, a court will often
appoint a guardian. The two basic kinds of guardian are a guardian of the person
and a guardian of the estate.
The job
of the guardian of the person is to take care of the ward by (1) deciding where
the ward lives, (2) seeing that the ward is fed and clothed and that he or she
receives medical care, and (3) helping the ward be independent, as far as he or
she is able. Although not responsible for paying for the ward's needs from the
guardian's own pocket, the guardian must seek any assets that are needed from
the ward's assets. These assets are managed by the guardian of the estate. The
guardian of the estate is responsible for determining what assets the ward has,
reporting these assets to the court, and then managing the ward's financial
affairs for the ward's benefit. Often, this involves seeking public assistance
(such as Social Security or Medicaid) for the ward.
Most
guardianships continue until the court brings them to an end, and guardians are
subject to the control of the court that appoints them. However, in every case,
the guardian's paramount duty is to the ward. A guardian of the person will be
held strictly responsible for the ward's well-being, while a guardian of an
estate must manage the ward's assets with great care--solely for the ward's
benefit--and is limited in the kinds of investments he or she can make.
A
guardian assumes important responsibilities toward his or her ward. Given the
importance of these obligations, it is usually wise for a guardian to seek
experienced legal help.
Federal Laws Trump State Laws
Nursing Home Resident Must
Arbitrate Dispute
In yet
another victory for arbitrators over courts, an appellate court in Illinois recently held
that federal laws governing arbitration trump state laws protecting nursing home
residents.
The case
involved an Illinois
woman who was injured while at a nursing home. She sued, but the nursing home
argued that she had given up her right to do so when she signed a contract
requiring that all disputes about the quality of her care be arbitrated rather
than heard in court. The family of the injured woman responded by arguing that
state laws protecting nursing home residents did not allow injured residents to
give up their right to a jury trial and that the arbitration provision could
therefore not be enforced.
In
finding for the nursing home, the court applied a federal law known as the
Federal Arbitration Act (FAA). It is possible to avoid an agreement to arbitrate
that is subject to the FAA for only two reasons: (1) if the agreement to
arbitrate is not part of a contract involving "commerce," or (2) if there is
some legal or equitable basis to revoke the contract. In examining the
transaction, the court found that the family of the injured nursing home
resident waived the right to argue that the contract did not involve commerce,
and it held that there were no grounds for revoking the contract and, therefore,
that it would have to be enforced.
The
court also rejected the argument that the provisions of state law precluded
enforcing the agreement to arbitrate. When Congress passes a law relating to a
matter of federal concern, a state law that conflicts with the federal law is
"preempted," i.e., trumped by the federal law. Based on prior Supreme Court
precedent, the court found that the FAA (which strongly favors arbitration)
preempts conflicting state laws that would prevent arbitration and, thus, even
though Illinois
law might have guaranteed the injured woman a jury trial, the FAA did not allow
it.
Preemption is a concept that has been around for a long time, but, as Congress
passes more and more laws (and as arbitration under the FAA gets to be more and
more common), we are likely to see more cases where rights guaranteed by a state
law are preempted because they conflict with a federal law.
Estate Planning for Vacation Homes
Whether
it is a palatial estate where Rockefellers and Vanderbilts would feel at home or
a rustic cabin in the woods complete with an outhouse, a family vacation home
often carries sentimental value that doesn't show up on financial ledgers. That
is all the more reason why owners of such homes should plan for the orderly
transfer of the home for future generations. With the help of some professional
guidance, owners can choose from a variety of options tailored to particular
situations and priorities.
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Outright sale
of the property to a third party is simplest, but be prepared
for substantial capital gains if the property has been in the
family long enough to appreciate in value.
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A simple
bequest can be used to keep the home in the family, but, by
itself, it may not address issues such as use and maintenance.
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A trust, in
particular a Qualified Personal Residence Trust, has some tax
benefits. The grantor gifts the property but retains a right to
use it for a definite term. The value of the gift is calculated
as the value of the property, less the retained interest.
However, if the grantor does not outlive the retained term, the
property will be included in the grantor's estate.
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A limited
liability company (LLC) has the benefit of protecting assets
generally. If someone is injured on the property, the owner's
liability would be confined to the ownership interest in the
property.
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A partnership
has the advantage of a formal structure, but each partner would
have to contribute.
The
issues that arise most often for second and subsequent generations concern how
to allocate both the benefits and the burdens of the vacation home, that is, the
use of the home and the expenses of the home, including maintenance, insurance,
and taxes. The benefits and burdens can be spelled out in writing in as much
detail as is desired, but it is not advisable to leave these matters to chance.
There is the potential for discord and bruised feelings in even the most
congenial families if, for example, one sibling is left out of the prime
vacation times while shouldering more than his or her share of the costs for
maintenance and repair. Parents might head off at least some of these issues by
setting up an endowment to cover ongoing expenses for the home.
Looking
a bit farther down the road, whatever legal forms are used should provide a
means by which one or more of the family members can sell his or her interest in
the home to the remaining family members. Considering that there may be honest
disagreement as to the property's value, it makes sense to look for consensus by
using two separate appraisals, one arranged for by the selling family member and
one by the remaining owner or owners.
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