2014 -- H 7868

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LC004990

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO PROBATE PRACTICE AND PROCEDURE - FINANCIAL EXPLOITATION

OF ELDERS AND DEPENDENT PERSONS

     

     Introduced By: Representatives Ajello, Craven, and Fox

     Date Introduced: March 04, 2014

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

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     SECTION 1. Title 33 of the General Laws entitled "PROBATE PRACTICE AND

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PROCEDURE" is hereby amended by adding thereto the following chapter:

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CHAPTER 19.1

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     FINANCIAL EXPLOITATION OF ELDERS AND DEPENDENT PERSONS

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     33-19.1-1. Short title. -- This chapter shall be known and may be cited as the "Financial

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Exploitation of Elders and Dependent Persons Act."

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     33-19.1-2. Definitions. -- As used in this chapter: (1) "Care custodian" means a person

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who provides health or social services to a dependent adult, except that "care custodian" does not

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include a person who provided services without remuneration if the person had a personal

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relationship with the dependent adult: (i) At least ninety (90) days before providing those

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services; (ii) At least six (6) months before the dependent adult's death; and (iii) Before the

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dependent adult was admitted to hospice care, if the dependent adult was admitted to hospice

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care. As used in this section, "remuneration" does not include the donative transfer at issue under

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this chapter or the reimbursement of expenses.

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     (2) "Health and social services" means services provided to a dependent adult because of

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the person's dependent condition, including, but not limited to, the administration of medicine,

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medical testing, wound care, assistance with hygiene, companionship, housekeeping, shopping,

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cooking, and assistance with finances.

 

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      (3) "Dependent adult" means a person who, at the time of executing the instrument at

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issue under this section, was a person described in either of the following:

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     (i) The person was sixty-five (65) years of age or older and satisfied one or both of the

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following criteria:

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     (A) The person was unable to provide properly for his or her personal needs for physical

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health, food, clothing, or shelter;

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     (B) Due to one or more deficits in the mental functions listed in § 11-5-12(b)(2), the

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person had difficulty managing his or her own financial resources, or resisting fraud or undue

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influences.

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     (ii) The person was eighteen (18) years of age or older and satisfied one or both of the

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following criteria:

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     (A) The person was unable to provide properly for his or her personal needs for physical

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health, food, clothing, or shelter.

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     (B) Due to one or more deficits in the mental functions listed in § 11-5-12(b)(2), the

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person had substantial difficulty managing his or her own financial resources, or resisting fraud or

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undue influences.

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     (4) "Independent attorney" means an attorney who has no legal, business, financial,

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professional, or personal relationship with the beneficiary of a donative transfer at issue under

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this chapter, and who would not be appointed as a fiduciary or receive any pecuniary benefit as a

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result of the operation of the instrument containing the donative transfer at issue under this

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chapter.

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     (5)(i) A person who is "related by blood or affinity" to a specified person means any of

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the following persons:

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     (A) A spouse or domestic partner of the specified person;

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     (B) A relative within a specified degree of kinship described in §§ 33-19.1-3 or 33-19.1-4

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to the specified person, or within a specified degree of kinship described in §§ 33-19.1-3 or 33-

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19.1-4 to the spouse or domestic partner of the specified person; or

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     (C) The spouse or domestic partner of a person described in subsection 5(i)(B).

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     (ii) For the purposes of this definition, "spouse or domestic partner" includes a

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predeceased spouse or predeceased domestic partner.

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     33-19.1-3. Prohibited transaction. -- (a) A provision of any document or instrument,

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including commercial instruments as defined in title 6A, making a donative transfer to any of the

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following persons is presumed to be the product of fraud or undue influence:

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     (1) The person who drafted the instrument;

 

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     (2) A person in a fiduciary relationship with the transferor who transcribed the instrument

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or caused it to be transcribed;

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     (3) A care custodian of a transferor who is a dependent adult, but only if the instrument

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was executed during the period in which the care custodian provided services to the transferor, or

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within ninety (90) days before or after that period;

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     (4) A person who is related by blood or affinity, within the third degree, to any person

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described in subsections (a)(1) - (a)(3).

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     (5) A cohabitant or employee of any person described in subsections (a)(1) - (a)(3); or

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     (6) A partner, shareholder, or employee of a law firm in which a person described in

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subsections (a)(1) - (a)(2) has an ownership interest.

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     (b) The presumption created by this section is a presumption affecting the burden of

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proof. The presumption may be rebutted by proving, by clear and convincing evidence, that the

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donative transfer was not the product of fraud or undue influence.

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     (c) Notwithstanding the provisions of subsections (a)(1) - (a)(2), and with respect to a

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donative transfer to the person who drafted the donative instrument, or to a person who is related

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to, or associated with, the drafter as described in subsections (a)(4) - (a)(6), the presumption

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created by this section is conclusive.

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     (d) If a beneficiary is unsuccessful in rebutting the presumption, the beneficiary shall bear

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all costs of the proceeding, including reasonable attorney's fees.

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     33-19.1-4. Exceptions. -- Section 33-19.1-3 does not apply to any of the following

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instruments or transfers:

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     (1) A donative transfer to a person who is related by blood or affinity, within the fourth

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(4th) degree, to the transferor or is the cohabitant of the transferor.

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     (2) An instrument that is drafted or transcribed by a person who is related by blood or

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affinity, within the fourth (4th) degree, to the transferor or is the cohabitant of the transferor.

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     (3) An instrument that is approved pursuant to an order of the superior, family, district or

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any probate court, after full disclosure of the relationships of the persons involved.

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     (4) A donative transfer to a federal, state, or local public entity, an entity that qualifies for

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an exemption from taxation under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code,

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or a trust holding the transferred property for the entity.

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     (5) A donative transfer of property valued at five thousand dollars ($5,000) or less, if the

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total value of the transferor's estate equals or exceeds the amount of fifty thousand dollars

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($50,000).

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     (6) An instrument executed outside of Rhode Island by a transferor who was not a

 

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resident of Rhode Island when the instrument was executed.

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      33-19.1-5. Review by independent attorney – Certificate of review. -- (a) A gift is not

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subject to § 33-19.1-3 if the instrument is reviewed by an independent attorney who counsels the

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transferor, out of the presence of any heir or proposed beneficiary, about the nature and

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consequences of the intended transfer, including the effect of the intended transfer on the

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transferor's heirs and on any beneficiary of a prior donative instrument, attempts to determine if

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the intended transfer is the result of fraud or undue influence, and signs and delivers to the

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transferor an original certificate in substantially the following form:

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     "CERTIFICATE OF INDEPENDENT REVIEW

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     I, _______________________________________, have reviewed

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      (attorney's name)

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     __________________________and have counseled the transferor,

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     (name of instrument)

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     ___________,on the nature and consequences of any

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     (name of transferor)

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     transfers of property to________________________________

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     (name of person described in § 33-19.1-3) that would be made by the instrument.

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     I am an "independent attorney" as defined in § 33-19.1-2 and I am in a position to advise

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the transferor independently, impartially, and confidentially as to the consequences of the

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transfer. On the basis of this counsel, I conclude that the transfers to

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________________________________________that would (name of person described in § 33-

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19.1-3) be made by the instrument are not the product of fraud or undue influence.

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     _______________________ ______________________________"

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     (Name of Attorney) (Bar#) (Date)

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     (b) An attorney whose written engagement, signed by the transferor, is expressly limited

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solely to compliance with the requirements of this section, shall not be considered to otherwise

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represent the transferor as a client.

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     (c) An attorney who drafts an instrument can review and certify the same instrument

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pursuant to this section, but only as to a gift to a care custodian. In all other circumstances, an

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attorney who drafts an instrument may not review and certify the instrument.

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     (d) If the certificate is prepared by an attorney other than the attorney who drafted the

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instrument that is under review, a copy of the signed certification shall be provided to the drafting

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attorney.

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     33-19.1-6. Failure of gift. -- If a gift fails under this chapter, the instrument making the

 

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gift shall operate as if the beneficiary had predeceased the transferor without spouse, domestic

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partner, or issue.

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     33-19.1-7. Liability. -- (a) A person is not liable for transferring property pursuant to an

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instrument that is subject to the presumption created under § 33-19.1-3, unless the person is

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served with notice, prior to transferring the property, that the instrument has been contested under

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this section.

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     (b) A person who is served with notice that an instrument has been contested under this

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section is not liable for failing to transfer property pursuant to the instrument, unless the person is

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served with notice that the validity of the transfer has been conclusively determined by a court.

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     33-19.1-8. Non-Waiveability. -- This chapter applies notwithstanding a contrary

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provision in an instrument.

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     33-19.1-9. Applicability to present documents. -- (a) This section shall apply to

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instruments that become irrevocable on or after January 1, 2015. For the purposes of this section,

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an instrument that is otherwise revocable or amendable shall be deemed to be irrevocable if, on or

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after January 1, 2015, the transferor by reason of incapacity was unable to change the disposition

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of the transferor's property and did not regain capacity before the date of the transferor's death.

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     (b) It is the intent of the general assembly that this chapter supplements the common law

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on undue influence, without superseding or interfering in the operation of that law. Nothing in

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this chapter precludes an action to contest a donative transfer under the common law or under any

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other applicable law. This chapter is declarative of existing law.

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     SECTION 2. This act shall take effect on January 1, 2015.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROBATE PRACTICE AND PROCEDURE - FINANCIAL EXPLOITATION

OF ELDERS AND DEPENDENT PERSONS

***

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     This act would create a rebuttable presumption that any donative transfers to certain

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individuals by persons age sixty (60) years of age or older and any dependent persons of any age

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for whom a conservator, guardian or trustee has been appointed by a probate court of this state are

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a product of fraud or undue influence. Those individuals are persons who are in a fiduciary, legal,

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familial and/or caregiver relationship with the elder and/or dependent persons and utilize their

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relationship to effect a donative transfer by any document or commercial instrument.

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     This act would take effect on January 1, 2015.

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LC004990

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