COMING THIS SUMMER: THE NEW ILLINOIS POWER OF ATTORNEY ACT

Effective July 1, 2011, changes in the Act create new statutory Power of Attorney (POA) forms for property and healthcare.  A Power of Attorney is a legal document that gives another person (your agent) the authority to make financial and other legal decisions on your behalf.

The revised act provides more guidance to the agent in the performance of his duties.  For example, the agent will now receive a notice describing his responsibilities.  As before, you, the principal, must decide whether the agent is granted the power immediately or at a later time.

The property and healthcare POA forms are essential estate planning tools for adults.  The forms allow your wishes for medical and financial decisions to be carried out by someone trustworthy if you were to become incapacitated.

THE CONTRACT – HAVE IT IN WRITING

A written document to memorialize terms of an agreement between two or more persons minimizes confusion and possibility of litigation. Even though an oral agreement is usually sufficient to form a legal binding contract, a written contract provides proof of the intentions of the parties.

To demonstrate a breach of contract, the aggrieved party must first show that a contract exists.  An offer and acceptance is the starting point for a contract to exist.   Since a written contract explicitly spells out the obligations of all the parties to the contract, a breach by one of the parties is easier to establish.  Then under the terms of the contract, the aggrieved party must have performed its obligations while the other party did not.  Finally, there must be damages resulting from the breach.  A written contract also allows the parties to stipulate specific damages upon the occurrence of a breach of the contract.

A START-UP BUSINESS MIGHT BE WISE TO CHOOSE THE LLC AS ITS ENTITY FORM

Since tax considerations are of utmost importance in choosing an entity form, entrepreneurs should determine the advantages of beginning their business as a LLC. In particular, the applicability of the LLC structure must be examined when the entity plans to go public or merge with a public corporation.

While enjoying the benefits of a LLC prior to “going public”, the conversion of a LLC to a corporation is quite seamless.

An incorporation of an LLC can follow three forms:
1. the LLC can transfer its assets to the corporation in exchange for stock;
2. the LLC can distribute its assets to its members who then contribute those assets to the corporation in exchange for stock and;
3. the members can contribute their interests to the corporation in exchange for stock.

Of course, the incorporation of the LLC can also take place as part of the initial public offering under Section 351.

Also, the LLC’s conversion to a corporation should not prevent a subsequent tax-free reorganization under Section 368 when the corporation is acquired by a public company.

AMENDING PLEADINGS IN ILLINOIS COURTS

Section 2-616 of the Illinois Civil Practice Law provides for amendments to pleadings on just and reasonable terms before final judgment.

Loyola Academy v. S & S Roof Maintenance, 146 Ill.2d 263 provides the standard for amending pleadings in Illinois. The Loyola Academy court looked to four factors in determining the appropriateness of allowing leave to file an amended pleading:

The four factors are the following:

  1. Whether the proposed amendment would cure the defective pleading;
  2. Whether other parties would sustain prejudice or surprise by virtue of the proposed amendment;
  3. Whether the proposed amendment is timely; and
  4. Whether previous opportunities to amend the pleadings could be identified.