Guest Post
Author: Denise A. Mortati

As an estate planning attorney, I have worked with many clients who do not know what a Power of Attorney is, and why they should execute one as part of their estate planning documents.  In this post, I am happy to explain the ins and outs of this important document, and why it’s necessary to any estate plan, for those of all ages.  I’ll also explain the difference between a Financial Power of Attorney and a Medical Power of Attorney.

What is a Financial Power of Attorney and Why Do I Need One?

If you were unable to handle your own affairs as a result of illness, accident, or even absence, the Power of Attorney gives your agent the power to handle your affairs as you would handle them yourself.  You might not be able to execute a Power of Attorney at a time when you are disabled due to an accident, so it’s important to have this in place prior to any crisis. If you are unable to handle your own affairs and have no Power of Attorney, your spouse or family may have to petition the Probate Court to appoint a Conservator of the Estate (COE) for you. The Conservator would have to post bond, file an inventory, and prepare accountings.  Sometimes this is unavoidable.  However most people prefer to avoid the expense of probate court by naming their own agent and signing a Power of Attorney.

In October 2016, the new Connecticut Uniform Power of Attorney Act came into effect.   The changes made were designed to make powers of attorney easier to use.

Some important provisions that were included:

1. Since many people were having trouble with banks and other institutions honor their POA, the new law states that the POA must be honored, or else a specific reason must be named within a specific timeframe as to why it is not being honored. It also grants new authority to the Probate Courts to compel these institutions to accept POAs.
2. The new POA better protects vulnerable individuals from POA abuses and financial exploitation by providing remedies through the Probate Courts.  It will give more responsibility and also protection to the fiduciary/agent, holding them accountable if they do something wrong, but also providing protection to an agent who acts with care and diligence. Agents are required to act in on the principal’s behalf; to act in good faith; and to act only within the scope of authority granted. If the agent violates his or her duties, they may be required to restore the value of the property to the principal, and also reimburse the principal’s costs, including attorneys’ fees.
3. The new law applies retroactively, meaning its safeguards extend to existing valid POA documents. My recommendation to my clients is to update your POA every two or three years anyway, so if you have one that was executed prior to October 2016, it’s just about time to update it anyway.
4. The new law provides more customization of the document, including the right to have authority over retirement plans, to prepare, sign and file tax returns, to create, amend, revoke or terminate a living trust, including a self-settled trust for a disabled person; the power to make gifts; the power to create or change rights of survivorship; the power to create or change a beneficiary designation. All of these customizations should be explained thoroughly by an attorney, as each provision may or may not work for each individual.  The standard form can be found within the Connecticut General Statutes (https://www.cga.ct.gov/2016/sup/chap_015c.htm#sec_1-352), but I always change and amend the document according to my client’s needs.
5. It is presumed to be durable now, unless it specifically states otherwise. This means that if you becoming ill, incompetent or in any respect need assistance using the POA, it is still valid.
6. Important: just to make matters more confusing, some of the powers listed in the form are automatic, unless you cross them out, while others are only in effect if you initial them and make them operative.  Again, that’s another important reason to go over each item with your attorney.

What’s the Difference Between a Financial POA and a Medical POA?

A financial POA, as discussed above, allows you to appoint someone to act on your behalf to handle matters regarding finances, property, etc.  A medical POA appoints someone to make medical decisions for you when you are no longer able to do so.  Combined with a Living Will, which expresses your wishes with regard to treatment, it is also known as a Health Care Directive.  A Healthcare Directive can also include an appointment of a Conservator, an agent who would be appointed by the probate court to act on your behalf in the event you are unable to do so.

 

**Denise A. Mortati is an attorney licensed in the state of Connecticut, and specializes in:

–Estate planning, including the drafting and execution of wills, trusts, advanced healthcare directives and powers of attorney;

–Probate matters, including decedents’ estates, conservatorships and guardianships;

–Elder law issues, including Title XIX applications and asset protection.

She can be reached at 203-913-3010.  Website:  www.denisemortati.com