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March 2017

On February 10th of this year the Connecticut Banking Commission introduced a bill to the Connecticut Legislature entitled An Act Concerning the Protections of Elderly Persons from Actual or Suspected Financial Abuse.

          What does this Bill say?  Subsection (b) of the Bill states the following:

·       If a financial institution or any of its employees has reasonable cause to believe that a transaction or disbursement involving an account of an elderly person may involve, result in or contribute to the financial exploitation of an elderly person, then the financial institution may delay - or even refuse – to execute the transaction or disbursement.

In the Statement of Purpose under the proposed legislation, the drafter of the Bill states that this legislation is for the purpose of protecting elderly persons from actual or suspected financial abuse. 

On the face of it, this Bill seems well-intentioned.  After all, the title of the Bill is An Act Concerning the Protections of Elderly Persons from Actual or Suspected Financial Abuse.  However, if this Bill were to become law, it could have the effect of negating certain provisions in the Uniform Power of Attorney Act that lays out a process that should be followed by a financial institution, when refusing to accept a Power of Attorney.  So rather than follow the procedure laid out in the Uniform Power of Attorney Act for deciding whether to accept a Power of Attorney, this proposed legislation would give the banking industry more discretion in determining whether to accept or refuse someone’s Power of Attorney.  So this legislation could lead to a situation where someone’s Power of Attorney is not given effect when in fact, that may not have been what the principal intended.

What does the Uniform Power of Attorney Act say in this regard?

§ 1-350s(a)(1) of the Connecticut General Statutes states that a person – such as a financial institution or its employee - shall either accept an acknowledged Power of Attorney or request a certification, translation or an opinion of counsel, not later than 7 business days after it is presented for acceptance.  Subsection (a)(2) of that statute states that if a person requests a certification, translation or an opinion of counsel, then the person shall accept the Power of Attorney not later than 5 days after receiving it.  And subsection (a)(3) of that statute states that a person may not require an additional or a different form of the Power of Attorney.  These are the protections afforded financial institutions when it comes to accepting Powers of Attorney.

The only time a financial institution is not required to accept of Power of Attorney is when the principal under the Power of Attorney is not eligible or qualified to enter into the transaction with the financial institution; the transaction itself is inconsistent with state or federal law; the financial institution or employee has actual knowledge of the termination of the agent’s authority under the Power of Attorney; a request for certification, translation or an opinion of counsel is refused; the financial institution/employee has a good faith belief that the Power of Attorney is invalid; or the financial institution/employee has actual knowledge that someone has made a report to an entity - like the Department of Social Services - that the principal may be subject to some sort of physical or financial exploitation at the hands of the agent.  CGS § 1-350s(b)(1 – 6).  The bottom line is that these are the procedures that financial institutions must employ when deciding whether to accept or reject a Power of Attorney. 

I submit that H.B. 7029 seeks to do an end run around the current law and to broaden the powers of the Banks, by giving them the ability to refuse every “elderly” customer access to their own money.  The question is, do we want to give financial institutions this kind of power or are the protections under the existing law sufficient? 

The last thing that is worth mentioning is that under the current law, if a financial institution refuses to accept a valid Power of Attorney, that financial institution is subject to an order from a court that mandates the acceptance of the power of attorney and the court may award reasonable attorney’s fees and costs incurred to the party who prevailed in seeking the enforcement of the Power of Attorney.  CGS § 1-350s(c).  The proposed legislation would effectively grant immunity to financial institutions from any civil, criminal or administrative liability that might otherwise exist for delaying a transaction or disbursement or for refusing to execute a transaction or disbursement with the use of a Power of Attorney. 

So does this legislation seek to protect elderly persons from actual or suspected financial abuse?  Or is the banking industry seeking to broaden its powers and absolve itself from any responsibility for refusing to honor Powers of Attorney under the proposed law?  The Legislative Committee of the Connecticut Bar Association is urging the Elder Law Section to oppose the Bill.  Stay tuned.

 

While the vast majority of Wills pass through probate without problems, it is hard to predict whether a family member will challenge your Will upon your death. Any “interested party” - anyone who could potentially gain or lose something if the will is carried out as written - can contest a Will. A Will contest  can drag out the probate process and cost your estate thousands of dollars. Fortunately, there are things you can do to make it more difficult for someone to contest your Will.

State the Reason for a Reduced Share in a Letter of Intent

If you are leaving someone out of your Will or if you are giving that person a reduced share of your estate (as compared to another beneficiary), write a letter of intent to your Executor stating the reason why that person is receiving nothing or a reduced share.  Delve into as much detail as you are comfortable divulging to explain the disposition of your estate. Make sure the attorney drafting the Will reviews the letter of intent. Keep the letter of intent with your Will. 

Include a No Contest Clause in the Will

Another strategy to avoid a Will contest includes a “no-contest” or “in terrorem” clause in your Will.  A typical “no-contest” clause states that if an heir challenges your Will and loses, then he or she gets nothing.  Whenever our estate planning attorneys include a no contest clause, we typically advise leaving the heir enough of a gift so that any challenge they make to the Will  would not be worth the risk of forfeiting the gift under the Will. Read my article “Avoiding Will Disputes with ‘No Contest’ Clauses”  for more information on what a “no contest” clause is and how they work.

Obtain a Physician’s Evaluation Report

One of the most common grounds for challenging a Will is for the person challenging the Will to argue that the testator was mentally incompetent at the time of signing the Will.  To avoid a Will contest, the testator can visit with a doctor - preferably a psychiatrist, geriatrician or psychologist - to complete a competency evaluation report.  While this strategy is admittedly difficult, expensive and time-consuming, there’s nothing like a report from a psychiatrist  to show that the testator was competent.  Obviously, such an examination and report should be performed during the same time period the Will is being written and signed.   

Videotape the Will Signing

A video recording made during the actual Will signing can go a long way toward proving that you signed your Will freely and voluntarily. It would also be powerful for you to explain in your own words the reasoning behind the disposition of your estate. Yet, videotaping does entail some risks. The video can inadvertently show that the testator lacked capacity or another person unduly influenced the estate plan. Any practice sessions with the attorney would be subject to discovery in court. Consequently, this strategy is rarely used except when the testator (the signor of the Will) is clearly competent and comfortable in front of a video camera.

Keep Intended Beneficiaries Away from the Preparation and Signing of the Will

In order to avoid a Will contest, you should do everything in your power to remove any appearance of undue influence, not only while the Will is drafted but especially when it is signed.  That means you should not involve anyone who stands to inherit under the Will during the drafting and execution process.  In other words, do not have any beneficiary of the Will present when (i) the structure of the Will is discussed with the attorney drafting the Will, (ii) you travel to the attorney’s office, or (iii) you sign the Will. 

Avoid Using a Will to Transfer Your Property 

The best strategy to avoid a Will contest is to avoid formal probate. How do you avoid formal probate? Here are some ways you can do that: 

  1. Give property during your life to the intended beneficiary while you are clearly independent and competent. 
  2. Have beneficiary designations for all of your investment accounts, retirement accounts, and retirement plans. 
  3. Put real estate in a trust or hold it with the intended beneficiary as Joint Tenants with Rights of Survivorship. 
  4. Assign tangible personal property like artwork, jewelry, coin collections, antiques, and other such property to a trust.  
  5. Designate the beneficiary of your car on the back of your car registration. Own your valuable boat jointly with its intended beneficiary. 

Avoiding formal probate will mean the Will controls no property. If the Will controls no property, then disgruntled heirs will have nothing to fight over.  With nothing to fight over, your executor will simply file an estate tax return, distribute the property to the intended beneficiaries and close the estate.

Ultimately, you should consult with an experienced estate planning attorney to help you draft your Will and prepare your estate plan.  The attorney will know the best way to protect your estate and he or she can advise you on strategies to make your estate plan as rock-solid as possible.  If you have questions about how best to avoid a Will contest, please don’t hesitate to call the estate planning attorneys at Cipparone & Zaccaro, PC.