08.13.09
Guardianship Reform: a Briefing for Bankers
This year a major reform of probate and guardianship law was enacted in Massachusetts. Aside from its major target of simplifying probate and providing more protection for incapacitated persons, the new Massachusetts Uniform Probate Code brings some subtle changes which should be understood by the retail banking community.
Beginning July 1, 2009 guardians will be appointed for personal decision making only and new appointees will not have authority over the incapacitated person’s property, including bank accounts. Conservators must be appointed to manage any property and bank accounts.
Since any appointment may be limited in its scope, it becomes important for the Letters of Conservatorship to be examined to determine if a conservator has authority appropriate to a particular transaction. For instance, the Letters may permit the protected person to continue managing some accounts. Or, some accounts may be restricted to prohibit withdrawals (except transfers to take advantage of interest rates) except by court order.
Any person who in good faith assists of deals with a conservator is protected except as to limitations endorsed on Letters of Conservatorship and certain transactions which require court approval.
A conservator may expend funds for the support, education, care or benefit of the protected person. The new Probate Code includes a list of powers which are conferred on a conservator (unless limited by the Letters). They include authorization to invest and reinvest funds of the protected person as would a trustee and, more specifically, depositing funds in any single state or federally insured bank, not in excess of the amount protected by federal or state insurance. A conservator may also borrow money to be repaid from estate assets. But, a conservator may not sell real estate without a license granted by the Probate and Family Court.
Old plenary (general) guardianships and guardianships of the estate will still confer authority over the person’s property and they will be automatically considered to be conservatorships. New appointments of guardians will not include power over property, including bank accounts. After June 30 new appointments will have to be of conservators if there is property to be managed. Anyone with a new or old appointment with powers over property can get Letters of Conservatorship from the Probate and Family Court. The old appointment remains in effect and the guardian or conservator is not required to make any new filings for continuation of authority.
A bank may pay funds of a protected person to a conservator or guardian of the estate appointed in another state after receiving proof of appointment and an affidavit of the guardian or conservator that no conservator proceeding is pending in this state and that the foreign conservator or guardian of the estate is entitled to receive the funds. If the bank is not aware of any pending proceeding, it is discharged of liability.
The new law provides that a durable power of attorney will not be affected by subsequent disability or incapacity of the person making the power, or lapse of time unless it states a time of termination. A new provision provides that any person relying in good faith on a durable power of attorney will not be liable for action taken in such reliance. However, unreasonable refusal to honor a durable power of attorney can result in a suit for damages.
The Probate Code also introduces new procedures which will enable quicker and more efficient probate of estates of deceased persons. It will also permit more privacy relative to estate assets. However, these provisions will not be effective until 2011.