2014 -- H 7938 SUBSTITUTE A

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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, and Craven

     Date Introduced: March 13, 2014

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

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

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

CHAPTER 19.1

     FINANCIAL EXPLOITATION OF ELDERS AND DEPENDENT PERSONS

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

Exploitation of Elders and Dependent Persons Act."

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

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

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

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

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

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

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

this chapter or the reimbursement of expenses.

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

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

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

cooking, and assistance with finances.

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

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

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

following criteria:

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

health, food, clothing, or shelter;

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

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

influences.

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

following criteria:

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

health, food, clothing, or shelter.

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

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

undue influences.

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

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

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

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

chapter.

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

the following persons:

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

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

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

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

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

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

predeceased spouse or predeceased domestic partner.

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

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

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

     (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

or caused it to be transcribed;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

created by this section is conclusive.

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

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

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

instruments or transfers:

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

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

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

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

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

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

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

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

or a trust holding the transferred property for the entity.

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

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

($50,000).

     (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.

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

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

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

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

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

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

transferor an original certificate in substantially the following form:

     "CERTIFICATE OF INDEPENDENT REVIEW

     I, _______________________________________, have reviewed

      (attorney's name)

     __________________________and have counseled the transferor,

     (name of instrument)

     ___________,on the nature and consequences of any

     (name of transferor)

     transfers of property to________________________________

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

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

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

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

________________________________________that would (name of person described in § 33-

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

     _______________________ ______________________________"

     (Name of Attorney) (Bar#) (Date)

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

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

represent the transferor as a client.

     (c) Under no circumstances shall an attorney who drafts an instrument review and certify

the instrument.

     (d) The attorney who conducts the independent review shall provide a copy of the signed

certification to the drafting attorney.

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

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

partner, or issue.

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

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

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

this section.

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

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

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

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

provision in an instrument.

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

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

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

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

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

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

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

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

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

     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

***

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

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

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

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

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

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

     This act would take effect on January 1, 2015.

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