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New Connecticut Power of Attorney Law Becomes Effective July 1, 2016

July 20, 2016

Connecticut’s Uniform Power of Attorney Act becomes effective July 1, 2016. Under the new law, individuals commonly referred to as the “principal” may execute a Power of Attorney “POA” designating another individual or someone commonly referred to as their “agent” to act on their behalf or to transact business for them. Key aspects of the new law are as follows:

The new law provides suggested forms that can be used for a POA and also allows the suggested forms to be customized to meet an individual’s specific needs.

The appointment of an agent under a POA is now durable, so unless the instrument expressly provides that the POA will terminate upon incapacity, the POA remains in effect even if the principal later becomes incompetent.

A POA between spouses is now automatically revoked by operation of law immediately upon the filing of divorce or separation.

The new law allows for a principal to nominate a conservator of the person and the estate under a POA and unlike the past law, the Probate Court now has no discretion but to honor such a declaration unless the named individual is unwilling to serve as conservator.

The new law allows a principal the ability to grant their agent broader powers within the suggested form POA instrument. Principals are warned under the new POA forms to obtain independent legal advice before including certain powers set forth in the new forms.

An agent acting under a POA is now held to a new standard of care. Rather than acting in the “best interest” of the principal, the agent must now act in good faith, with loyalty, and avoid conflicts of interest for the benefit of the principal. The agent must also attempt to preserve the principal’s estate plan, including minimizing estate and gift taxes.

The group of parties that have had the standing to petition the agent named under a POA to provide an accounting of their actions is now expanded to include a host of parties including ”a caregiver or person demonstrating sufficient interest in the welfare of the principal”.

One of the most significant changes to the new law is the protection provided to a third party who accepts and/or relies on a POA “in good faith” and without knowledge of the invalidity of the POA document. A third party, including a bank or financial institution, must now honor a POA unless the third party honestly believes the POA is revoked, the agent seeks to take action outside the scope of the agent’s authority, the proposed action is illegal, or the agent refuses to provide a legal opinion or certification from the agent stating that the action requested is legal.

Under certain circumstances, if a court finds that a third party failed to act in good faith in refusing to accept a POA, the court can award attorney fees to the agent who is forced to go to court to obtain a court order to force a third party to honor a POA.

The new law is extensive and we provide only a brief highlight of key changes under the new law. Please contact us if you have questions concerning the new law and we suggest that each person who currently has a POA should have it reviewed to confirm that their POA fully complies with the new law.