Property Transfers to Caregivers: A Comparative Analysis

Property Transfers to Caregivers: A Comparative Analysis Adam Hofri -Winogradow * & Richard L. Kaplan ** ABSTRACT: Caregivers are key recipients of property transfers, both inter-vivos and testamentary. The law’s treatment of property transfers to caregivers changes according to the caregiver’s relationship to the person cared for. Where caregivers are related to care recipients, the law generally favors the structuring of property transfers to caregivers as capital, rather than income transfers. While the law accepts that individuals are often not compensated for providing daily care for their relatives, many family caregivers receive bequests larger than their intestate shares of the care recipient’s estate. On the other hand, when caregivers are not related to care recipients, the law approaches the care relationship using the terminology and frame of labor law. Bequests to non-family caregivers can raise a presumption of undue influence. In this Article, we examine how the United States, Israel, and the United Kingdom approach property transfers to caregivers. The United States authorizes the payment of public benefits to family caregivers only in very restricted situations. The U.K. provides modest public benefits to many family caregivers. Israel incentivizes the employment of non-family caregivers but will pay family caregivers indirectly when assistance from non-relatives is unavailable. All three jurisdictions rely on family caregivers working for free or being compensated by the care recipients. We examine the advantages and disadvantages of several approaches to compensating family caregivers, including bequests from the care recipient, public benefits, tax incentives, private salaries paid by the care recipient, and claims against the recipient’s estate. We conclude that while the provision of public benefits to family caregivers clearly needs to be increased, at least in the United States, a model funded exclusively by public money is probably impossible. * Associate Professor, Hebrew University of Jerusalem, Faculty of Law, and Martin Flynn Global Law Professor, University of Connecticut. ** Guy Raymond Jones Chair in Law, University of Illinois. 1998 IOWA LAW REVIEW [Vol. 103:1997 I. INTRODUCTION ......................................................................... 1998 II. COMPENSATING NON-FAMILY CAREGIVERS ................................ 1999 III. COMPENSATING FAMILY CAREGIVERS ......................................... 2002 A. C OST OF C AREGIVING TO THE F AMILY C AREGIVER .................. 2003 B. T ESTAMENTARY P ROVISION FOR F AMILY C AREGIVERS ............. 2007 1. Possible Challenges by Other Family Members ........ 2007 2. Impact on Retirement Benefits ................................. 2010 IV. ALTERNATIVE APPROACHES TO COMPENSATING FAMILY CAREGIVERS .............................................................................. 2012 A. F IRST M ECHANISM : P UBLIC F INANCING ................................. 2013 B. S ECOND M ECHANISM : T AX I NCENTIVES ................................. 2019 C. T HIRD M ECHANISM : F AMILY C AREGIVER A GREEMENTS .......... 2020 D. A DDITIONAL M ECHANISMS ................................................... 2023 V. CONCLUSION ............................................................................ 2024 I. INTRODUCTION Every country with an aging population faces the challenge of caring for older people who require some assistance in performing the essential activities of daily living—such as eating, bathing, getting out of bed, and toileting. This assistance is usually seen as the point of entry into the spectrum of long-term care, a range of services that begins with informal caregiving and might progress to full-time residency in a caring facility. This Article focuses exclusively on the initial stage in the long-term care continuum and examines how caregivers are compensated for their efforts. In particular, this Article addresses the dichotomous treatment of family and non-family caregivers. Family caregivers generally receive no explicit compensation as they provide care, even though this activity is typically a significant time commitment and often imposes health risks as well as major costs on family caregivers. 1 Non-family caregivers, in contrast, generally expect and receive explicit compensation as they provide the required services and stand as employees (either of the care recipient directly or through an independent agency that contracts to provide the required services). 2 This apparent discrepancy is somewhat ameliorated through testamentary transfers to family caregivers when the care recipient passes away. 3 1 . See infra text accompanying notes 46–56. 2 . See infra text accompanying notes 8–16. 3 . See infra Part III.B. 2018] PROPERTY TRANSFERS TO CAREGIVERS 1999 In this Article, we examine approaches taken to property transfers to caregivers in U.S. federal law, several U.S. states, Israel, and the U.K. We review the advantages and disadvantages of the principal mechanisms for compensating family caregivers: testamentary bequests by care recipients, an explicit salary paid by care recipients, public benefits payable to the caregiver or the care recipient, and tax incentives. We also mention a potential further avenue for family caregivers to access compensation: filing claims against the care recipient’s estate, using a variety of doctrinal bases. We show that the United States authorizes the payment of public benefits to family caregivers only in very restricted situations, 4 the U.K. provides modest public benefits to many family caregivers, 5 and Israel incentivizes the employment of non-family caregivers but will pay family caregivers indirectly when assistance from non-relatives is unavailable. 6 All the jurisdictions examined rely on family caregivers working for free or being compensated by the care recipients. 7 Based on our comparative review, we conclude that while a publicly funded solution to family caregivers’ plight may be impossible given today’s increasing lifespans and limited public tolerance for taxes, benefits for family caregivers clearly need to be expanded, at least in the United States. II. COMPENSATING NON-FAMILY CAREGIVERS Employment projections forecast that delivery of home health care and personal assistance services is likely to experience extended growth in the years ahead. 8 In the United States, for example, this sector of the economy has already seen the formation of national agencies like Home Instead, 9 Comfort Keepers, 10 and Visiting Angels. 11 These agencies maintain thousands of individual offices, operating as franchises with established prices for a wide-range of skilled and non-skilled services geared toward persons requiring assistance on a more or less chronic basis. 12 If anything, demand for such services is likely to expand as people live longer but have no family members 4 . See infra text accompanying notes 115–17. 5 . See infra text accompanying notes 118–20. 6 . See infra text accompanying notes 136–42. 7 . See infra Part III. 8 . See, e.g. , Tomio Geron, Elder Care Gets an Upgrade , WALL ST. J. (Feb. 20, 2017, 10:47 PM), https://www.wsj.com/articles/elder-care-gets-an-upgrade-1487646120 (reporting employment in home-based care for the elderly increased 83% in the past decade versus 6% overall). 9. HOME INSTEAD SENIOR CARE, https://www.homeinstead.com (last visited Mar. 13, 2018). 10 . COMFORT KEEPERS, http://www.comfortkeepers.com (last visited Mar. 13, 2018). 11 . VISITING ANGELS LIVING ASSISTANCE SERVS., https://www.visitingangels.com (last visited Mar. 13, 2018). 12 . See, e.g. , Ruth Simon , Senior-Care Business Booms for Franchisers , WALL ST. J. (Aug. 10, 2016, 10:03 PM), https://www.wsj.com/articles/hot-franchising-trend-services-for-seniors-1470821404. 2000 IOWA LAW REVIEW [Vol. 103:1997 to provide care 13 —either because they never had children or because their children live too far away or have other employment and family responsibilities that preclude their assuming the role of caregiver to their aging relatives. The existing legal paradigm for non-family caregivers recognizes that this activity is simply a job despite the necessarily intimate aspects of personal assistance involved and the typical setting for such assistance—the personal residence of the care recipient. 14 Accordingly, formal employment contracts with stipulated payment rates and benefits are the norm, often between the caregiver and home health care agencies or other third-party intermediaries rather than with the care recipient directly. 15 Nonetheless, the caregiver/care recipient relationship is usually characterized as one between employer and employee. 16 All three legal systems we reviewed recognize, however, that the work of many live-in caregivers is fundamentally different from jobs at conventional workplaces. Live-in caregivers spend most, if not all, of their time with the care recipient. While much of the time is spent monitoring that person rather than actually providing care, such care may become necessary at any hour of the day or night. Many live-in caregivers receive benefits beyond their wages, such as accommodation and meals. 17 Accordingly, U.S., U.K. and Israeli law all exempt the work of live-in caregivers from some generally applicable norms that otherwise govern employment relationships—such as the minimum wage, limitations on weekly hours, and overtime pay requirements. 18 Israeli law further facilitates the compensation of non-family caregivers in two distinct ways. First, the long-term care benefits the Israeli National 13 . See Jennifer L. Wolff et al., Supporting Family Caregivers of Older Americans , 375 NEW ENG. J. MED. 2513, 2514 (2016). 14 . See LAWRENCE A. FROLIK, RESIDENCE OPTIONS FOR OLDER AND DISABLED CLIENTS 286–87 (2008). 15 . Id. at 292–94. 16 . For an example of such a contract, see id. at 304–07. 17 . See Using Live in Caregivers as an Alternative to...