pointment of a guardian ad litem, con- servator or guardian. (emphasis added)


We believe that Vermont should examine whether additional requirements may ap- propriately be imposed on attorneys who have reason to know that the client could suffer financial harm from the actions of others. We also suggest that the proposed rule on the unauthorized practice of law be adjusted so that non-lawyers giving legal advice are subject to the same standard as lawyers giving legal advice.7


Amend Power of Attorney Statute Vermont’s existing power of attorney statute (Title 14, Chapter 123) appears to be based in large part on the Uniform Dura- ble Power of Attorney Act as it was amend- ed in 1987 by the National Conference of Commissions on Uniform State Laws (NC- CUSL) committee. NCCUSL revised the 1987 version by proposing a Uniform Pow- er of Attorney Act (2006) (“UPOAA”). Short of adoption of the UPOAA, we recommend the following.


A. Persons Requesting Accountings from Agents. Under current law (14 VSA §3510), only the principal, the princi- pal’s legal representative, and the Com- missioner of Disabilities, Aging, and In- dependent Living (DAIL) may request an accounting by an agent acting under a power of attorney. We would propose expanding the categories of individuals who may request an accounting of an agent to those permitted by the 2006 UPOAA model statute. Pursuant to the Uniform Act, Section 116, a court may grant appropriate relief upon the peti- tion of: i. The principal or agent; ii. A guardian, conservator, or other fiduciary acting for the principal;


iii. A person authorized to make health care decisions for the princi- pal;


iv. The principal’s spouse, parent, or descendant;


v. An individual who would qualify as an heir of the principal;


vi. A person named as a beneficiary to receive any property under a trust or other arrangement;


vii. A government agency having regu- latory authority to protect the wel- fare of the principal;


viii. The principal’s caregiver or anoth- er person that demonstrates suffi- cient interest in the principal’s wel- fare;


ix. A person asked to accept the pow- er of attorney.


While waiting for an appropriate statu- tory change, we believe attorneys should modify their power of attorney documents


20


to embody the recommendations of the UPOAA when it comes to authority to de- mand accountings.


B. Contempt as a Remedy for Failure by Agent to Account. A statutory provi- sion in Vermont law should provide for a contempt proceeding against an agent who refuses to turn over assets upon re- vocation of the Agency and/or failure to account for their actions as Agent. Far too often, legal expenses for the Prin- cipal are driven much higher than nec- essary by former Agents who refuse to comply with requests for production of assets, documents, and accountings.


C. Who pays? In appropriate cases (e.g., when no defalcation is found), principals should be obligated to pay for account- ings prepared by or for a former or cur- rent agent. When an agent is removed and fully complies with the transition of assets, fully accounts for all monies used, and shows that no negligence or self-dealing occurred, then the princi- pal should pay for the time and expense of preparation of such accounting and transition of assets. The power of attor- ney document should provide for pay- ment of the expense of annual account- ings or accountings on demand. This is an open issue in our existing statutory framework.


Properly “Vetting” Fiduciaries As can be understood from our case studies, fiduciaries have substantial powers over assets they control, including the abil- ity to convert them for their own personal benefit. In our view, the individuals in the case studies should never have been select- ed as agents, executors, trustees, or guard- ians. Most of the fiduciaries involved would have flunked any kind of cursory screening. Several of the guardians we dealt with had no understanding of the law or their duties as fiduciaries. Several guardians and agents had no stable work history, were financial- ly unstable in their personal life, could not have passed a credit/background check, and were potentially close to filing personal bankruptcy when they took over the assets of a ward/principal. We are left to wonder what type of vetting process, if any, was in- volved when these individuals were nomi- nated to manage assets as fiduciaries in the legal documents or in court proceedings. It seems to us that in many cases the at-


torneys preparing documents naming fidu- ciaries to act on behalf of their clients fail to ask basic “due diligence” questions re- garding the potential fiduciary’s history of managing their own money, and whether they have any dangerous propensities that indicate they may pose a potential threat to the client’s assets. For instance, are we ask-


THE VERMONT BAR JOURNAL • SPRING 2012


ing whether or not the nominee has issues with alcohol, drug use/abuse, or gambling, or whether they have a poor credit histo- ry, poor employment history, or have law- suits pending against them that could re- sult in financial distress? Perhaps adding a few basic questions to a lawyer’s estate or guardianship planning questionnaire would help in counseling a client on their choice for fiduciary. In addition, the questionnaire might ask if the fiduciary nominee would be willing to provide a credit history (or at least their credit score) before assuming their office. Although the decision of whom to choose as a fiduciary resides with the cli- ent, we also believe that the lawyer draft- ing documents has a responsibility to make some inquiries in the context of explaining the legal significance of the documents to his or her client. We take this responsibility seriously in our practice. In a recent situation, we de- clined to name a relative of the client to become agent and executor due to lack of employment history, lack of credit worthi- ness, and other behaviors indicating to us that the person would not be able to act in accordance with the standards of conduct of a fiduciary.


Bonding Statute Any Vermont lawyer who has not yet had the experience of having to consider how to recover damages under a probate divi- sion personal bond should read 14 V.S.A. § 2108 before opening their next estate or consenting to the petition of another law- yer.


A. Duplicate judicial process. The first problem encountered by the lawyer seeking to enforce what essentially con- stitutes a simple promise to pay (like a check) is that, while the bond is given to the probate division, and thereby the obligations run to the judge of probate, section 2108 requires a suit in the civil division in the county in superior court makes this allocation of jurisdiction to two divisions highly inefficient. Under current Vermont law, the per- son claiming the breach on a probate bond must solicit the permission of the probate judge to bring an action in the civil division and then “give a bond to the adverse party.”8


Why the individual


who is harmed by the executor/admin- istrator’s alleged defalcation must give a bond defies logic in today’s world. We note that this section of our statute was first cited in case law in 1833 and last cited by case law in 1913.


B. Recommended Changes to Existing Probate Procedures. If section 2108 gave jurisdiction to the judge of pro- bate over the enforcement of probate


www.vtbar.org


Living Well on Other People’s Money


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40