Five Things You Should Know About Connecticut’s New Uniform Power of Attorney Act
A Power of Attorney is an important estate planning tool that allows an individual (the “Agent”) to act on behalf of another person (the “Principal”) in financial and other matters without involving the probate court. A new Connecticut law, the Uniform Power of Attorney Act (the “Act”), went into effect on October 1, 2016, bringing many changes from the previous law governing these matters.
Principals and Agents should be aware of these changes and how existing Powers of Attorney will be treated under the new Act.
- Powers of Attorney Executed Under Prior Law. Powers of Attorney properly executed under prior law remain in effect under the new Act. You are not required to execute new Powers of Attorney under the Act. Nevertheless, you may wish to consider having your existing Power of Attorney reviewed and updated to take advantage of the Act’s new features and expanded authority. We will be discussing this with clients as they review and update their estate plans.
- 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 some arbitrary period of time had passed 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. The new statute also includes procedures banks and other financial institutions may use to verify the validity of a Power of Attorney.
- Accounting and Recordkeeping Requirements for Agents. The new Act clarifies the accounting and recordkeeping responsibilities of Agents. Not only is the Agent required to keep a record of all receipts, disbursements, and transactions made on behalf of the Principal, but the Agent may be required to provide an accounting at the request of family members, presumptive heirs or beneficiaries, Elderly Protective Services, or even a nosy neighbor who demonstrates “sufficient interest” in the Principal’s welfare. After consulting an attorney, a Principal may decide to waive certain recordkeeping and/or accounting requirements.
- New “Hot Powers” in Statutory Form. Most notably, the new statutory form includes several optional estate planning powers that may be granted 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. These powers may give the Agent the ability to direct or alter the Principal’s estate plan, and should not be granted without first consulting an attorney. In the past, many clients included similar powers under their Powers of Attorney. You may want to review your current document and consider expanding any 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 likewise 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 Powers of Attorney.
For assistance or advice regarding Powers of Attorney or any other estate planning matters, please contact a member of our Trusts and Estates Department.