hb 0798

CHAPTER 312

HB 798 - FINAL VERSION

AN ACT relative to gifts by fiduciaries.

SPONSORS: Rep. Pilliod, Belk 31; Rep. J. Pratt, Ches 24; Rep. Rowe, Hills 47

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to gifts by fiduciaries.

Be it Enacted by the Senate and House of Representatives in General Court convened:

312:1 Estate Planning by Guardian. Amend RSA 464-A:26-a, III(b) through (g) to read as follows:

(b) The anticipated results including any income, estate, or inheritance tax savings, and, if the gift is being made in order to qualify the ward for Medicaid, any resulting period of Medicaid disqualification;

(d) The ward's financial condition, including present and anticipated future expenses for maintenance, support, and medical care, debts, and support obligations;

(f) The ward's prior estate planning action, including significant life-time gifts, will, beneficiary designations, joint ownership, or trusts; [~~and~~]

(g) The ward's family situation, including the family members who would inherit from the ward if the ward dies intestate;

(h) Whether the gift is intended to reduce the ward's assets or income in order to qualify the ward for Medicaid or other governmental benefits;

(i) The ward's housing situation during the 12 months prior to the filing of the petition; and

(j) A description of the care and services that the ward requires and is currently receiving.

V. Before authorizing the guardian to make lifetime gifts or to plan for the testamentary distribution of the ward's estate, the probate court must find, by a preponderance of the evidence, that[:

~~(a)~~] the proposed gifts and/or testamentary plan are consistent with the ward's wishes[;] or, based on the circumstances as they then exist, that:

[~~(b)~~] (a) The testamentary distribution of the ward's estate will minimize taxation and/or facilitate distribution of the ward's estate to family, friends, or charities who would be likely recipients of gifts from the ward;

(b) The proposed gift is not likely to adversely affect the ward's housing options, access to care and services, or general welfare;

(c) The proposed gift does not create a foreseeable risk that the ward will be deprived of sufficient assets to cover his or her needs during any period of Medicaid ineligibility that would result from the proposed gift; and

(d) The proposed gift is not likely to result in premature or unnecessary nursing home placement or institutionalization of the ward, or compromise the ward's access to care or services in the least restrictive setting in which his or her needs can be met.

VI. The probate court, prior to authorizing a lifetime gift, shall appoint a guardian ad litem if the proposed gift benefits the guardian personally or otherwise creates a potential conflict of interest between the ward's interests and the guardian's personal interests.

VII. The department of health and human services, county attorney, and the department of justice shall be notified and shall have the opportunity to address the court in any proceeding under this section if the court has concerns relative to:

(a) The impact on the ward of any period of Medicaid ineligibility that would result from the proposed gift; or

(b) Whether the ward has been the victim of a crime or has been or is at risk of being abused, neglected, or exploited within the meaning of RSA 161-F:43.

312:3 Powers of Attorney; Disability or Incompetence of Principal. Amend RSA 506:6, V to read as follows:

V.(a) An attorney in fact is not authorized to make gifts, pursuant to the durable power of attorney, to the attorney in fact or to others unless:

(1) The durable power of attorney explicitly authorizes [~~such~~] gifts; and

(2) The proposed gift will not leave the principal without sufficient assets or income to provide for the principal's care without relying on Medicaid, other public assistance or charity, unless the authority to make such a gift is expressly conferred, or the gift is approved in advance by the court upon a determination that the gift is authorized in accordance with RSA 506:7, III(e).

(b) No attorney in fact may make a gift to himself or herself of property belonging to the principal unless the terms of the power of attorney explicitly provide for the authority to make gifts to the attorney in fact, or the gift is approved in advance by the court upon a determination that the gift is authorized in accordance with RSA 506:7, III(e).

(c) This paragraph shall not in any way impair the right or power of the principal, by express words in the power of attorney, to further authorize, expand, or limit the authority of any agent to make gifts of the principal's property.

VI.(a) [~~The following~~] A disclosure statement, signed by the principal, [~~may accompany~~] in substantially the following form, shall be affixed to a durable power of attorney:

THIS IS AN IMPORTANT LEGAL DOCUMENT. BEFORE SIGNING THIS DOCUMENT YOU SHOULD KNOW THESE IMPORTANT FACTS:

Notice to the Principal: As the "Principal," you are using this Durable Power of Attorney to grant power to another person (called the "Agent" or "Attorney in Fact") to make decisions, including, but not limited to, decisions concerning your money, property, or both, and to use your money, property, or both on your behalf. If this written Durable Power of Attorney does not limit the powers that you give to your Agent, your Agent will have broad and sweeping powers to sell or otherwise dispose of your property, and to spend your money without advance notice to you or approval by you. Under this document, your agent will continue to have these powers after you become incapacitated, and unless otherwise indicated your Agent will have these powers before you become incapacitated. You have the right to retain this Power and not to release this Power until you instruct your attorney or any other person who may hold this Power of Attorney to so release it to your Agent pursuant to written instructions. You have the right to revoke or take back this Durable Power of Attorney at any time, so long as you are of sound mind. If there is anything about this Durable Power of Attorney that you do not understand, you should seek professional advice. _______________

(b) The language required by this paragraph shall not confer any powers to the agent that are not otherwise contained in the durable power of attorney.

VII.(a) An agent[~~, prior to acting in the capacity of agent, may execute and affix~~] shall have no authority to act as agent under the power of attorney unless the agent has first executed and affixed to the power of attorney an acknowledgment in substantially the following form:

I, _________________, have read the attached power of attorney and am the person identified as the Agent for the Principal. I hereby acknowledge that when I act as Agent or "attorney in fact," I am given power under this Durable Power of Attorney to make decisions about money, property, or both belonging to the Principal, and to spend the Principal's money, property, or both on the Principal's behalf, in accordance with the terms of this Durable Power of Attorney. This Durable Power of Attorney is valid only if the Principal is of sound mind when the Principal signs it. When acting in the capacity of Agent, I am under a duty (called a "fiduciary duty") to observe the standards observed by a prudent person, which means the use of those powers that is reasonable in view of the interests of the Principal and in view of the way in which a person of ordinary judgment would act in carrying out that person's own affairs. If the exercise of my acts is called into question, the burden will be upon me to prove that I acted under the standards of a fiduciary. As the Agent, I am not entitled to use the money or property for my own benefit or to make gifts to myself or others unless the Durable Power of Attorney specifically gives me the authority to do so. As the Agent, my authority under this Durable Power of Attorney will end when the Principal dies and I will not have authority to manage or dispose of any property or administer the estate unless I am authorized to do so by a New Hampshire Probate Court. If I violate my fiduciary duty under this Durable Power of Attorney, I may be liable for damages and may be subject to criminal prosecution. If there is anything about this Durable Power of Attorney, or my duties under it, that I do not understand, I understand that I should seek professional advice.

(b) The acknowledgement by the agent need not be signed when the durable power of attorney is executed as long as it is executed prior to the agent exercising the power granted under the durable power of attorney.

VIII. [~~Nothing in paragraphs V-VII of this section shall render ineffective a durable power of attorney validly executed under New Hampshire law~~]

(1) Is valid under common law or statute existing at the time of execution; or

(2) Has been determined by the court to be valid upon the filing of a petition pursuant to RSA 506:7.

(b) Failure to comply with paragraph VI shall not invalidate an otherwise valid durable power of attorney, subject to the provisions of RSA 506:7, IV(b).

312:5 Powers of Attorney; Limitations on Agent. Amend RSA 506:7, I(g) to read as follows:

(g) The department of justice, the department of health and human services, or the county attorney.

312:6 New Subparagraph; Powers of Attorney; Limitations on the Agent. Amend RSA 506:7, III by inserting after subparagraph (d) the following new subparagraph to read as follows:

(e) To determine that particular gifts or other transactions are authorized. In determining the authority of an agent to make a gift, the court shall consider:

(2) The principal's personal history of making or joining in the making of lifetime gifts;

(4) The principal's foreseeable obligations and maintenance needs and the impact of the proposed gift on the principal's housing options, access to care and services, and general welfare;

(5) The income, gift, estate or inheritance tax consequences of the transaction;

(6) Whether the proposed gift creates a foreseeable risk that the principal will be deprived of sufficient assets to cover his or her needs during any period of Medicaid ineligibility that would result from the proposed gift; and

(7) Whether the proposed gift is likely to result in premature or unnecessary nursing home placement or institutionalization of the principal, or compromise the principal's access to care or services in the least restrictive setting in which his or her needs can be met.

312:7 Powers of Attorney; Limitations on the Agent. Amend RSA 506:7, IV to read as follows:

IV.(a) The court may hold hearings, issue injunctions, make orders and decrees, and take other actions that are necessary or proper in making determinations and providing relief on matters presented by a petition filed under paragraph III.

(b) When a gift or transfer made by an agent is challenged in a petition filed under paragraph III of this section, the gift or transfer shall be presumed to be lawful if the durable power of attorney is accompanied by the disclosure statement and acknowledgement drafted in accordance with RSA 506:6, VI and VII, and explicitly authorizes such gifts or transfers as set forth in RSA 506:6, V. However, if the petitioner establishes that the agent made a transfer for less than adequate consideration, and the transfer is not explicitly authorized by a durable power of attorney drafted in accordance with RSA 506:6, VI and VII, the agent shall be required to prove by a preponderance of evidence that the transfer was authorized and was not a result of undue influence, fraud, or misrepresentation.

312:8 New Paragraphs; Powers of Attorney; Limitations on the Agent. Amend RSA 506:7 by inserting after paragraph VI the following new paragraphs:

VII. The probate court, prior to authorizing a lifetime gift in a proceeding under this section, shall appoint a guardian ad litem if the proposed gift would benefit the agent personally or otherwise create a potential conflict of interest between the principal's interests and the agent's personal interests.

VIII. The department of health and human services, county attorney, and the department of justice shall be notified and shall have the opportunity to address the court in any proceeding under this section if the court has concerns relative to:

(a) The impact on the principal of any period of Medicaid ineligibility that would result from the proposed gift; or

(b) Whether the principal has been the victim of a crime or has been or is at risk of being abused, neglected, or exploited within the meaning of RSA 161-F:43.