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La3100 week 9 lecture
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La3100 week 9 lecture

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  • 1. *LP8: Agents & Employees Four subjects relating to Agency: •1. Authority of Agent •2. Termination of Authority •3. Relationship between Agents & Principals •4. Relationship with Third Parties
  • 2. * *An agent is a person who has the authority to act for a principal. *The scope of the authority is determined by the agency relationship and may be express, implied, or apparent.
  • 3. * Express Authority * Principal grants an agent authority to act on behalf of the principal in writing. * * Either limited or general in nature. Limited authority can be granted to act for the principal in a particular situation or transaction.
  • 4. * Implied Authority * Agent possesses implied authority to carry out powers expressly granted * For example, an employee who is expressly authorized and directed to deposit funds in the employer’s bank account, is impliedly authorized to endorse any checks, so that they may be deposited.
  • 5. * Apparent Authority * * Agent appears to possess authority. A third person would reasonably believe that the agent has the authority by the principal’s conduct.
  • 6. * Authority to act for the principal may be terminated by: *Agreement *Revocation *Completion of purpose *Death or mental incapacity of the principal
  • 7. * Agent's Duties Owed to Principal Principal's Duties Owed to Agent • Loyalty to the principal • Obey instructions of the principal • Use reasonable skill and judgment Communicate with the principal Account for funds received • Compensate the agent according to terms of agreement • Reimburse the agent for expenses • Indemnify and hold the agent harmless if a claim is made against the agent for actions taken with the scope of the agent’s authority on behalf of the principal
  • 8. * Independent Contractor As a general rule, a person is an independent contractor if: *The person or organization for whom the service is performed has the right to control or direct only the result of the work done by the person and does not the means and methods of accomplishing the result.
  • 9. * Common Law Employee *An employee must perform duties as instructed by the agent, even if the employer gives the employee freedom of action. *What matters is that the employer has the right to control the details of how the services are performed.
  • 10. * Statutory Law Employee * Some persons are defined as employees by statute, such as: * A full-time traveling or city salesperson who solicits orders from wholesalers, restaurants, or similar establishments on behalf of a principal. The merchandise sold must be for resale (e.g., food sold to a restaurant) or for supplies used in the buyer's business. * A full-time life insurance agent whose principal business activity is selling life insurance and/or annuity contracts for one life insurance company. * An agent-driver or commission-driver engaged in distributing meat, vegetables, bakery goods, beverages (other than milk), or laundry or dry cleaning services. * A home worker performing work on material or goods furnished by the employer.
  • 11. * Subject Summary: * * * * Dying without a Will Dying With a Will Creating a Trust Other Estate Planning Tools
  • 12. * If a person dies without a will, the person is said to have died intestate. Consequences: •State statutes will determine how the person's estate is distributed. •A guardian may be appointed for the decedent's children. • Large estate: an administrator will be appointed to distribute the assets.
  • 13. * Consequences, cont’d *State statutes usually divide a person's estate among the surviving spouse and children, if any. *If the decedent was not married and died without children, then state laws will often direct that the decedent's property be distributed to the person's surviving parents. *If no parents living, then to the decedent's surviving brothers and sisters.
  • 14. * Write down the following familial relations: 1. Your parents (as stated on your current birth certificate). 2. The parents of your parents. If any person has already passed, place a box around their name. Write in any married step-parents. 3. Any biological siblings (including ½ siblings). 4. Any stepsiblings (underline these names). 5. Any aunts and uncles.
  • 15. * Volunteer to complete an intestate distribution “tree”?
  • 16. * *A "Last Will & Testament“- direct distribution of assets to designated beneficiaries upon a person's death. *The person who makes a will, called the testator, can also name the personal representative (often called the executor) who will distribute the assets. *If the testator has minor children, then he/she may also be able to designate a guardian for the children, if the other parent has previously died.
  • 17. * *Creates a separate legal entity (a trust), that has the legal authority to own property. *The person who creates the trust is called the trustor or grantor. *Property is then transferred to the trust and administered by trustee, a person or entity, such as the trust department of a bank, designated in the trust document. *The trustee administers the trust in accordance with the provisions of the trust document. *Usually, the trustee of a living trust is directed to manage the property in the trust for the benefit of the designated beneficiary during the beneficiary's lifetime.
  • 18. * *Joint checking and savings accounts * Real estate owned in joint tenancy *Life Insurance *Gifting prior to death *IRA or other retirement plan with a designated beneficiary *Living Wills & Health Care Powers of Attorney

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