Your Personal Legal Checkup -- 10 Items You Should Review

In my last blog post I reviewed questions that business owners should ask at the beginning of the new year to insure that their interests are protected.  In this blog post I will review important considerations for individuals. 

  1. Have you filed a homestead with the registry of deeds?  The Massachusetts homestead provisions are some of the most generous in the country.  Under the Massachusetts homestead law you can protect up to $500,000 in equity in your home from certain unsecured creditors.  This protection is essential in helping to protect one of your major assets.  If you don’t know if you have  properly executed a homestead NOW is a good time to check.
  2. If you employ household help, are they properly classified as either employees or independent contractors?  Massachusetts, like most other states, is aggressively conducting audits to see if workers are being classified as employees vs. independent contracts.  If you don’t know when a person should be classified as an independent contractor or an employee then you need to find out.  There are significant tax liability issues for treating someone as an independent contractor when they should be considered an employee.  Another issue in the employee vs. independent contractor classification is liability if that person is injured while working in your home.  If someone is working in your home and they are injured you may be liable.  If that person is an employee and you are paying workers compensation insurance, the workers compensation system should cover the employee and protect you from a lawsuit.  If you treat that person as an independent contractor and no workers compensation insurance is being paid on that person, you may have personal liability for any injuries they suffer.   You should request proof that workers compensation insurance is being paid by anyone who does work in your home if you do not treat them as an employee and pay workers compensation insurance.  You should also contact your insurance company to verify when a person providing services in your home is covered by your homeowner’s insurance policy. 
  3. Have you given a power of attorney to someone to manage your financial affairs?  A power of attorney allows someone to manage your financial affairs if you are alive but are not able to manage your own financial affairs.  You should never give a power of attorney to anyone unless you trust that person completely.   If you are unable to manage your financial affairs and you have not given a power of attorney to someone, then the only option for the person who needs to deal with your affairs (e.g. your spouse, siblings or parents) is to go to court and request that he or she be appointed your legal guardian.
  4. Do you have a power of attorney from a loved one or family member to allow you to manage their financial affairs?   If you are the primary caretaker for your parents, or if something were to happen to your spouse, do you have a power of attorney to allow you to manage their financial affairs?  If not, your only option would be to petition the court to be appointed his or her legal guardian. 
  5. Do you have a will?  For everyone who lives in Massachusetts, the answer to this question is yes.  The reason, if you did not execute a will, Massachusetts has written one for you.  The better question is, do you have a will you have written?  If not, the Commonwealth will determine where your assets will go and more importantly, who will be the guardian of your minor children.  If you don’t have a will you executed, you should prepare one. 
  6. Have you prepared a health care proxy?  If you are not able to make your own health care decisions, who do you want to make those decisions for you?  If you know the answer to this question but have not prepared a health care proxy then that person may not be the one to make those decisions.  A health care proxy naming the person you want to make your health care choices will help make sure that your wishes are observed.  Failure to prepare a health care proxy may lead to chaos and could prevent your health care wishes from being followed. 
  7. If you have a trust, has it been implemented to carry out your wishes?  Many people set up trusts to avoid probate or provide a way to control what happens to their money after they die (e.g. distribution to their children over a period of time instead of all at once).  However, having a trust without making sure it has been properly implemented may prevent your wishes from being carried out.  Have assets been transferred into the trust?  Have your insurance policies and investment accounts been changed so that the trust is the beneficiary after you die?  If this has not been done or you don’t know if it has been accomplished, now would be a good time to check. 
  8. Are you operating your business in a way that risks your personal assets?  If you operate your own business is it incorporated?  Does it need to be?  Is your business one that could result in a significant liability exposure – e.g. are you a general contractor, electrician, excavator, do you send your employees into the homes of your customers?  If you answered “yes” to any of these questions then you should take steps to protect your personal assets if something bad happens in your business. 
  9. Do your loved ones know where all of your important papers are located?  If something were to happen to you tomorrow, could the people who need to locate your important documents find them?  You should have a file, a shoe box, a safety deposit box, a drawer (or whatever works for you) that contains a listing of all your important documents (e.g. will, power of attorney, health care proxy, trust, list of investment accounts, list of life insurance policies, etc).  The next step is to make sure that the person who would need to locate these documents can find them.  When my wife and I went out of the country a few years ago (with 3 young children at home), I left a sealed envelope with instructions “just in case.”  If someone cannot find your will the result would be the same as never having written one.  If you go to the trouble (and you should) of having a will prepared – please make sure it can be found. 
  10. When doing a good deed be sure to protect your interests.  There is an old expression – “No good deed goes unpunished!”  If you are kind enough to provide assistance to others, make sure that this good deed does not create a problem for you.  For example, if a niece, sister, brother or other family member needs a car and you are in the position to buy a car for them, be careful who you list as the legal owner on the title for the car.  If that person were ever to be involved in an accident and you are listed on the title as the legal owner of the car, you would likely be named in any lawsuit.  Make sure that when you take steps to help others (and you should help others) that you do not open up personal liability for yourself. 

The above ten items are important to consider on a regular basis to make sure that your legal interests are protected.  The beginning of the year is a great time to make sure your legal house is in order!

Comments are closed.