The main benefit of forming any type of corporate entity is limiting your personal liability. This means that if the company generates a liability, the corporate entity traps the liability within itself so that creditors cannot touch the assets of the Owner. Take, for example, a rental house. If the rental house is owned by Mr. and Mrs. Smith and someone gets injured on the property, it is possible, and likely, that Mr. and Mrs. Smith would be sued personally and their home, car and bank accounts could be at risk. In the alternative, if they had formed an LLC and someone had been injured on the property, a properly formed and operated LLC would protect their personal assets and limit the liability to only the property inside the LLC.

There are a couple of things to look out for when you are going to set up an LLC. A lot of non-attorneys are setting these up for people. They go online and file Articles of Organization for the individual, charge them a little bit of money, and send them on their way. The Articles are only the first step in properly setting up an LLC. The “guts” of the company is its Operating Agreement. In my opinion, an LLC without an Operating Agreement is worth less than the cost of the paper the Articles are printed on. If the LLC was ever sued, the first thing a Judge would look at to see if the LLC was properly formed and operated would be to review the Operating Agreement. I recently had a client that told me his banker set up an LLC for him. This was a national bank with multiple locations in most cities. The customer service representative filed the Articles of Organization for him, opened the LLC’s bank account, and sent him on his way. He left thinking that he was completely protected. Might have saved him a buck up front, but could have cost him his and his family’s home.

One last thing I tell all of my clients. Having an LLC is great, but your first line of defense is insurance. Talk to your agent. Make sure he completely understands your business and informs you of what potential risks you have. You want to make sure that if sued, any potential plaintiff’s attorney looks at your LLC, combined with your insurance, and sees that it is cheaper, easier and more effective to take the insurance check and run versus trying to come after your personal assets.

Please feel free to contact me if you have any questions about LLCs and how they can protect you and your family.

Following are some tips on things to think about before heading out of town:

Durable Powers of Attorney for Finance

This document allows you to name someone as “attorney-in-fact” to make financial decisions on your behalf, and stays effective until your passing. Many people have these documents in place, but even more do not. If you have them, are they up to date? Most people travel with their spouse; if something happens to both of you, do you have someone else named to act as a backup? Powers of Attorney for Finance can come into play much more often than you would imagine, i.e. suppose you are in China and your wallet/purse gets stolen. Do you have anyone here that can act on your behalf with your bank to get you money to get home?

Powers of Attorney for Health Care

This document allows you to name someone “attorney-in-fact” to make health care decisions on your behalf in the event you become incapacitated. Again, most people do not even have this document in place. It is one of the most important documents that you need. Who do you want making health care decisions for you if you become incapacitated? It can very easily become the Public Administrator of the county in which you live.

Power of Attorney to Care for Child

This little known document is very important if you are leaving town without your children. This document allows you to name someone to make health care decisions for your minor child in the event of your absence. Almost no one thinks to have these put into place before traveling, but I have seen situations where the parents are out of the state, or even in another country, and cannot return within 24 to 48 hours. If a child needs health care, or a serious decision needs to be made regarding his or her health, this document is a must.

If you are one of the few who have the above documents in place, does someone you are in contact with on a regular basis know where they are located? Having these documents is essential, but they do not do you any good if the person you have named “attorney-in-fact” does not know about the powers granted to them and/or where the documents are located.

Here’s hoping you enjoy your travels this summer! If I can be of any assistance, please feel free to contact me at 417.887.4949.

A Durable Power oí Attorney for Finance allows you to name someone to make financial decisions on your behalf. It is ‘durable’ which means that the power stays in effect even if you become incapacitated. One thing that most people do not realize is that the Power of Attorney loses power once the person granting it passes away. The Power of Attorney only works during the grantor’s lifetime.

A Durable Power of Attorney for Health Care allows you to name someone to make health care decisions for you in case you become incapacitated. This Power of Attorney only takes effect once you become incapacitated. It lets you choose the person(s) to make health care decisions for you to ensure your wishes are granted concerning your health care needs. A Health Care Directive goes along with a Power of Attorney for Health Care. The Health Care Directive allows you to state your end-of-life options concerning health care, i.e. Do you want a respirator? Feeding and/or water tubes? To what extent do you want life support?

Without these documents in place, your loved ones would have to spend valuable time and money and petition the Probate Court to name someone as your Guardian and/or Conservator. A Guardian is someone named by the Probate Court to make health care decisions for someone who has been legally declared incapacitated. A Conservator is someone named by the Probate Court to make financial decisions for someone declared legally incapacitated. The process of petitioning the Probate Court for someone to be named as Guardian and Conservator is expensive and time consuming. In the event that you are in an emergency/crisis situation, the last thing you want to have your family worrying about are the hassles of a court appearance and how they will pay for the legal fees involved.

Powers of Attorney are inexpensive and do not take much time to have prepared. They are an integral part to any estate planning – even if they are the only documents involved.