Important Changes to Powers of Attorney Laws

A Power of Attorney is an important estate planning tool that allows a person, referred to as the “Principal,” to designate another individual to act as an “Agent” on their behalf for financial and other matters without involving the probate court.  The Principal can still act on their own behalf, and at the same time the Agent can act on the Principal's behalf as well.  Having a well-drafted Power of Attorney can avoid the need to have a Conservator appointed by the Probate Court if someone becomes legally incapacitated. 

A recent Connecticut law, the Uniform Power of Attorney Act (the “Act”), went into effect on October 1, 2016, bringing many needed updates from the previous law.  Powers of Attorney Executed Prior to October 1, 2016 remain valid and in effect under the new Act. However, it may be highly beneficial for you execute an updated Power of Attorney to take advantage of the Act’s new features and expanded authority.

• New Verification Procedures for Banks and other Financial Institutions.  Previously, Agents sometimes experienced difficulty in using a Power of Attorney.  Some financial institutions took the position that a Power of Attorney was “stale” (and therefore not acceptable) if they thought it was too old, measured by their own arbitrary period of time since the Principal executed the document.  The Act provides procedures Agents may use to enforce the bank’s acceptance of a valid Power of Attorney through the Probate Courts.  

• Accounting and Recordkeeping Requirements for Agents.  The Act clarifies the Agent's accounting and recordkeeping responsibilities. The Agent is required to keep a record of all receipts, disbursements, and transactions.  In addition, the Agent may be required to provide an accounting at the request of family members, Elderly Protective Services, or anyone who demonstrates a “sufficient interest” in the Principal’s well-being.  A Principal has the option to decide to waive some or all of the recordkeeping and accounting requirements of their designated Agent.

• New Estate Planning Powers in the  standard Statutory Form.  The new statutory form includes several optional estate planning powers that may be given to the Agent.  These expanded estate planning powers may include the authority to change a beneficiary designation on a retirement account, authority to create and fund an inter vivos trust, and authority to make gifts. This flexibility is a broad power that should br granted carefully, but it can be crucial if you need to enter a nursing home and do asset protection planning for Medicaid Title XIX purposes. You may want to review your current Power of Attorney and consider including new powers or expanding any existing estate planning powers that you have already granted.

• Digital Assets.  The Act does not automatically give Agents access to and control over digital assets of the Principal, such as social media and online banking accounts.  However, Connecticut’s Revised Uniform Fiduciary Access to Digital Assets Act, which also went into effect on October 1, 2016, provides that in order to allow Agents to access the Principal’s digital assets, customized provisions must be included in a Power of Attorney document. 

Call us today to review your old Power of Attorney or assist you in preparing updated documents.