The Family Health Care Decisions Act

On March 16, 2010, the Family Health Care Decisions Act (FHCDA) was signed into law. This act which applies to patients in hospitals and nursing homes sets forth those individuals who will be given the power to make health care decisions for a loved one in the event that the loved one is incapable of making such decisions personally and did NOT previously appoint a health care agent or set forth their wishes in a Living Will.

Upon a finding of incapacity by medical professionals, or in some cases, by a court of law, the following individuals, in order of priority, will be allowed to make health-care decisions for an incapable loved one in a hospital or nursing home:

•        an MHL Article 81 court-appointed guardian;
•        the spouse or domestic partner;
•        an adult child;
•        a parent;
•        a brother or sister; or  
•        a close friend.

Such health-care decisions are to be made based upon the patient’s wishes, including the patient’s religious and moral beliefs, if such wishes are known. If the patient’s wishes are unknown, the health-care decisions are to be made based upon the patient’s best interests.

The FHDCA will not apply when a patient has already designated a health care agent. With a properly executed Health Care Proxy and Living Will, an individual may state his or her wishes and choose the individual whom he or she would like to make his or her health care decisions, in the unfortunate event that, he or she is no longer capable of making such decisions.   

Laidlaw Firm offers free initial consultations. Please contact Laidlaw Firm at (914) 767-0646 or email Moira Laidlaw at mlaidlaw@laidlawfirm.com for more information about appointing a health care agent. 

Dangers of Paying Caregivers “Off the Books”

 Arranging for the care of an elderly parent or a disabled child can be a very taxing experience, emotionally, physically, and financially. Oftentimes, this care will be arranged by the hiring of a domestic worker or aid to provide care and companionship for the loved one in the home environment. With New York’s enactment of the Domestic Worker’s Bill of Rights on November 29, 2010, potential employers of domestic workers must now be aware of many new regulations and the possible consequences that can stem from a failure to abide by these regulations.  The Domestic Worker’s Bill of Rights applies to all domestic workers regardless of their immigration status.

Under the Domestic Worker’s Bill of Rights, employers of domestic workers who work over 40 hours per week must now provide for disability insurance and workers’ compensation for their workers. And if an employer pays cash wages of more than $500.00 in a calendar quarter (3 months), in total, to one or more household worker, they are required to pay New York State unemployment insurance tax. An employer is required to pay this tax regardless of the worker’s immigration status. This tax must be paid even if the worker is an immigrant unauthorized to work in the United States and, therefore, ineligible to receive unemployment benefits. 

Upon the death of an elderly loved one, the domestic worker who cared for them may file for unemployment benefits. If unemployment insurance taxes have not been paid, a state investigation will be triggered. Likewise, an investigation may be triggered if a domestic worker is injured and files a claim for worker’s compensation.  Steep fines can be levied against the person paying the elderly caregiver, rather than the elderly per se.  This means that if you are the child that is arranging for care for a parent, then you will be the one who is personally liable, not your siblings.  We are seeing fines that have been as high as $80,000. 

Additionally, household employees, under the Domestic Worker’s Bill of Rights, must be paid on a weekly basis, an hourly rate that is not less than the minimum wage, and are entitled to overtime pay. Under the bill, time and a half must be paid to any domestic worker working over 40 hours a week (44 hours if the domestic worker is live-in). Again, failing to pay these overtime wages can have drastic and unforeseen financial consequences for the family member who arranged for and paid for the care by the domestic worker. Such person arranging for the care of a loved one will be considered “the employer” and the domestic worker will have 6 years to bring a claim for unpaid wages. If “the employer” is found to be non-compliant with the overtime requirements, they will be liable, not only, for the unpaid wages, but also for 25% in liquidated damages, a potential civil penalty of up to 200% if the commissioner of labor is involved, and could also be subject to potential criminal penalties.

Please contact Laidlaw Firm at (914) 767-0646 if you or a family member have arranged for the care of an elderly parent or disabled child and have concerns regarding how to proceed under the Domestic Worker’s Bill of Rights.

Estate Tax Planning and Asset Protection: Beware of the Reciprocal Trust Doctrine

As spouses consider their estate planning and asset protection needs, it’s very important that they take care not to fall into the “reciprocal trust” trap.

A common strategy for protecting assets and reducing a taxable estate is to create an irrevocable trust for the benefit of another person, commonly your spouse.  However, the IRS will disregard reciprocal trusts if the terms leave the grantors in the same economic position.

Here is an illustration of this point:

Husband and Wife each create separate irrevocable trusts.  The wife funds her irrevocable trust with $5 million dollars and names the husband as the beneficiary, with the remainder to their children upon the husband’s death.  The husband also creates a trust and funds it with $5 million dollars and names the wife the beneficiary, with the remainder to their children upon the wife’s death.  The IRS would maintain that these are reciprocal trusts and would treat the grantor as if he or she still owned the property. There would be no estate tax savings to creating the trust.

There are provisions that can be inserted into each of the trusts that will help defeat the reciprocal trust doctrine.  For example, granting the beneficiary of one of the trusts a limited power of appointment will help defeat this doctrine.  The timing of the creation of the trusts is also important.  Staggering trust creation rather than having trusts executed simultaneously can be persuasive.

It is important to work with counsel in establishing the trust terms in such a way as to defeat the reciprocal trust doctrine.  Laidlaw Firm offers free initial consultations.  Please contact us today for further information. 

New York Supplemental or Special Needs Trusts

Supplemental or Special Needs Trusts are a vehicle that can be used for permanently and severely disabled persons so that they can receive an inheritance or a lawsuit award without being disqualified from governmental benefits. In the old days, parents used to have to disinherit a disabled child. Or worse, the inheritance money received by the disabled child could cause that child to lose needed government benefits, including medical care and housing.

SNTs solve this problem by providing that the money in the trust is not to be used for services already being provided by the government but may only be used for supplemental services ad care, above and beyond what government assistance provides. There are two kinds of SNTs: first party - funded with the disabled person's own money -- and third party - funded with the money of another individual, such as a parent or other relative. Third party SNTs are less heavily regulated and of greater benefit to the family, as any money left over at the death of the disabled beneficiary does not need to be paid to the government, but rather passes instead to the next-named beneficiary. First party SNTs have more requirements -- they must be created and funded before the beneficiary turns 65, they may only be created by a parent or grandparent of the disabled person or by a court (unless using a pooled trust -- which will have to be the subject of another blog). Also, in a first party SNT, anything remaining at the death of the beneficiary must be first used to repay the government the cost of expenditures made on behalf of the disabled person.

For help in creating an SNT for yourself or a loved one, please contact Laidlaw Firm at 914-767-0646; mlaidlaw@laidlawfirm.com; http://www.laidlawfirm.com/

Common Mistakes with a Will

When making a Will, people often don't realize that some of their most important assets, like life insurance and retirement accounts, will not pass under the terms of the Will. Instead, they will pass in accordance with "Designated Beneficiary" forms. After you make a change to your Will, especially if you plan to set up trusts for minor children in your will, you need to make sure that your designated beneficiary forms are changed to name the trusts, and not your children, as the beneficiaries. At Laidlaw Firm, we work with clients to assist not only with preparing Wills, but making sure that designated beneficiaries of the non-probate assets (i.e., the assets that won't pass under the Will), match the terms of the Will. Call or email today for help: 914-767-0646; mlaidlaw@laidlawfirm.com