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ILLINOIS
LEGAL UPDATE
WINTER 2008 ISSUE
POWER
OF ATTORNEY FOR HEALTH CARE AND LIVING WILL
Under Illinois
law, two methods for protecting your rights and wishes are available when you
are unable, due to medical reasons, to make decisions yourself. The Power of
Attorney for Health Care (POAHC) and the Living Will allow you to specify, in
advance, the medical measures to be taken to preserve your life should you become
unable to yourself. While both methods ensure that your wishes will be respected,
there are significant differences between the two.
Power
of Attorney for Health Care
The POAHC
allows you to designate an agent to make medical decisions or to take care of
your affairs on your behalf should you be unable to do so. The POAHC has a broader
scope of available options than does a Living Will. You designate a trusted
individual, usually either a family member or a close friend, to make decisions
on your behalf.
In drafting your
POAHC, you can designate the power of attorney to take effect when you sign
it or at some future time, such as a specific date or upon the occurrence of
a specific event. For example, you could designate your power of attorney to
take effect on your 70th birthday, or when you are unconscious or otherwise
unable to make decisions regarding your medical treatment.
The POAHC also
allows you to designate the specific powers granted to your agent. You can designate
as little or as much power as you want. Some people may only be comfortable
allowing their agent to make decisions on the appropriateness of medical treatment
to be administered, while others may want their agent to be able to pay their
bills and take care of their children.
Once it becomes
effective, your POAHC will continue to grant your agent the powers you designate
until your POAHC indicates that you wish those powers to cease. Generally, a
POAHC is effective until your death. You may also include a clause to allow
your agent to arrange for and carry out the disposition of your remains. In
some cases, the POAHC may terminate the agent's power upon some specific event,
such as when you become able to conduct your own affairs again. Just as you
can designate when the agent's powers begin, you can also designate when they
end.
Living
Will
A Living Will
gives specific instructions to your doctor. The Living Will dictates that the
doctor should not use life-saving resuscitation when your condition is terminal.
When your condition is incurable or irreversible, making your death imminent,
a Living Will assures that your wish not to have your life prolonged is respected.
The Living Will does not create an agent to make decisions on your behalf, but
instead directs the doctor to respect the decision you have already made. A
Living Will does not allow input from your family and friends, but saves them
from having to make the decision not to resuscitate you, should that be necessary.
A Living Will
complements your POAHC. The POAHC allows you to decide the powers to give your
agent to act on your behalf, while the Living Will allows you to decide how
far your doctor should go to sustain your life when death is imminent.
Always consult
a qualified attorney when making a Living Will or a Power of Attorney for Health
Care.
VACATION HOME TAX
TREATMENT
An owner of a second home
that is both rented out and put to personal use at different times in any given
year should bear in mind the considerable differences in income tax liability
that flow from how the two types of uses are allocated. Each year, for tax purposes,
the home will be considered as either a residence or rental property, with important
differences in the resulting tax calculations. The bottom line is that treatment
of the home as rental property is advantageous for the owner, and keeping down
the personal use of the property allows it to be so characterized.
If personal use of the second
home is less than the greater of 14 days or 10% of rental days, the home will
be considered rental property. Flowing from this classification is the ability
to deduct repairs, maintenance, insurance, and depreciation costs. In addition,
if the expenses exceed the income from the property, the taxpayer can deduct
the loss, subject to passive loss rules. Generally, passive losses up to $25,000
may be deducted if the adjusted gross income (AGI) is under $100,000. The ability
to deduct passive losses declines as the AGI increases, eventually phasing out
at an AGI of $150,000.
If the owner exceeds the
personal use threshold for treatment of the home as rental property, the home
is treated as a "residence." In that case, the owner can deduct expenses
only up to the amount of rental income, and no loss deductions are allowed.
In addition, before there can be any deduction for operating expenses, the owner
must use up the property's share of mortgage interest and property taxes to
offset the rental income, which effectively wastes deductions.
In short, if as an owner
of a second home you rent the home for a substantial part of the year, but you
also just cannot stay away from the place (that's why it's called a vacation
home, isn't it?), enjoy the time away but be prepared for tougher treatment
by the IRS.
A SIGN DOES NOT
AN EMPLOYEE MAKE
Employer Not
Liable for After-Hours Collision
Employers are generally
liable for injuries caused by the employees working for them. However, this
liability is not unlimited. Usually, employers are only liable for injuries
caused by employees who are within the scope of their employment when the injury
occurs. A recent Illinois case illustrates the limitations on an employer's
liability.
The case involved an automobile
collision caused by an employee of a home builder. At the time of the collision,
the employee was "off duty" and was running an errand in his personal
truck. However, his truck had magnetic signs with his employer's name and telephone
number on them.
The people whom he injured
sued the employer, claiming that he was responsible for their injuries. According
to the plaintiffs, the evidence showed that the employer required his employees
to keep signs on their vehicles even when they were not working, and that the
purpose of these signs was to advertise the builder's business. This advertisement
benefited the builder and, therefore, the employee was acting for his employer
at the time of the collision.
The Illinois court disagreed.
Although it assumed that the employer had told the employee to keep the signs
on his truck even when he was not working, it found that any benefit the employer
received from advertising while the employee was off duty was a benefit occurring
outside the "time and space limits" of the employee's employment.
Unwilling to make employers liable under these circumstances, the court ruled
that any benefit the employer received was too incidental to support his liability
for the negligence of his off-duty employee.
ILLINOIS COURTS
INCREASE WARRANTY PROTECTIONS
Today, almost any product
you purchase--a car, a computer, a television--comes with a warranty. However,
a warranty is not worth a thing if it is not honored when you need it. Thanks
to two recent decisions, both involving warranties given by DaimlerChrysler,
more Illinois consumers will be protected by the warranties they bought.
The first case involved
a used car that the plaintiff purchased. The car had about one year left on
the factory warranty. When the car had problems, the new owner took it to be
repaired, but the dealer was unable to correct the problems. Three years later,
the owner sued.
DaimlerChrysler argued that
the plaintiff had waited too long to file a suit. In Illinois, a complaint about
a warranty usually must be brought within four years from the time that the
complaint arises. DaimlerChrysler argued that this time period is measured from
the date that a car was purchased as new, and that the plaintiff's suit was
too late.
The Illinois Supreme Court
rejected this argument because the warranty involved promised future action--repairs
if a warranted part failed--and, therefore, the claim did not arise until the
dealer tried and failed to make the necessary repairs. The court ruled that
the lawsuit was valid because it was filed within four years from the time that
the promised repair actually failed. This sensible decision means that a person
who receives a "10-year, 100,000-mile" warranty on a car can bring
a warranty claim even after the first four years of ownership.
In the second case, a buyer
purchased a new truck, but it had to be returned to the dealership for repairs
12 times in 18 months. The truck owner sued the manufacturer, DaimlerChrysler,
for breach of warranty. He eventually traded in the truck for a new one, and
he was paid more than the market value of the truck as part of the trade.
The manufacturer argued
that the owner was not damaged, because he received more for the truck than
it was worth. The Illinois court rejected this argument, finding that the question
was not what was the truck worth when the owner got rid of it but, rather, what
it was worth when he bought it.
The evidence showed that
the truck was defective when it was sold and that these defects caused it to
be worth less than the owner paid for it. As a result, his damages were the
difference between what a truck in good condition would have been worth and
its actual value at the time.
Both of these decisions
increase the practical protections that warranties provide in Illinois, and
should ensure that more Illinois consumers will get what they pay for.
GOOD GUYS CAN FINISH
FIRST
Twelve crew members who
worked for the Overseas Shipholding Group (OSG) were awarded $437,500 each for
reporting illegal dumping by OSG oil tankers. OSG is one of the largest oil
tanker firms in the world. The company pleaded guilty to dumping thousands of
gallons of waste oil and sludge into the ocean and systematically altering its
logs to hide the activity.
The 12 "whistleblowers"
were appalled by the illegal activity and took steps to report the crimes. One
crew member, who was threatened with firing if he did not participate in the
polluting, kept a secret record of the dates of the polluting. Another crew
member called the Coast Guard and described how an oil sensor was being "tricked"
to appear as if no oil were being discharged. OSG agreed to pay a fine of $37
million for the dumping.
Sometimes, the good guys
do win.
SMALL BUSINESS--MAINTAINING
A SAFE WORKPLACE
In theory, and often in
practice, the safety of the workplace is a top priority for any business. But
while large companies may have personnel devoted exclusively to the subject,
safety is but one of many responsibilities for the owners of small businesses.
In some cases, the matter of keeping workers safe slips down the list of priorities.
There to make sure the issue is not neglected is the federal Occupational Safety
and Health Administration (OSHA).
OSHA has written very detailed
standards for maintaining workers' safety. It also has an expansive mandate
to enforce those standards and the various provisions of the Occupational Safety
and Health Act. Removing dangerous conditions is only common sense from any
point of view, including employer-employee relations and a calculation based
solely on dollars and cents.
The first step for any small
employer is to be informed and educated as to workplace dangers, not all of
which may be obvious. OSHA maintains an extensive website (www.osha.gov) that
includes information that is especially pertinent to small businesses and guidance
about specific threats to safety. Insurance companies provide another good source
of information, since these companies have a vested interest in enhancing workplace
safety and thereby minimizing insurance claims.
While exotic threats such
as anthrax or legionnaire's disease capture headlines, the leading causes of
serious workplace injuries are more ordinary. They include overexertion, such
as excessive lifting, pushing, pulling, holding, carrying, or throwing an object;
falls on the same level (as distinct from falls from a height); and "bodily
reaction," which covers injuries from bending, climbing, slipping, or tripping
without falling. Regular inspections and repairs, not to mention a vigilant
workforce, can head off many such injuries.
Apart from monetary penalties
that may follow an OSHA investigation, many billions of dollars each year are
paid by employers in medical costs, wage payments, and insurance claims management
as a result of workplace injuries. Small businesses get some breaks from OSHA,
in the form of smaller monetary penalties and some exemptions from recordkeeping
requirements for employers with 10 or fewer employees. Still, given their smaller
financial reserves, small businesses, in particular, are well advised to live
by the truism that an ounce of prevention is worth a pound of cure.
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