Hot Topics New Developments in Trusts & Estates 6-19-15.pdf · Hot Topics – New Developments in Trusts & Estates ... 1‐2‐3look‐back of Adjusted Taxable Gifts ... Reduce taxable

Vermont Bar Association

Seminar Materials

Hot Topics – New Developments

in Trusts & Estates

June 19, 2015

Sheraton Burlington

Faculty:

Mark Langan, Esq. (Moderator)

Jeanne Blackmore, Esq.

Cindy Bruzzese, Vermont Ethics Network

Joseph Cook, Esq.

Emily Gould, Esq.

Catherine Richmond, Esq.

Jonathan Secrest, Esq.

1

Hot TopicsVermont Bar Association

Vermont Bar AssociationCLE June 19, 2015

Probate & Trust Section CLEBurlington, Vermont

June 19, 2015

Mark A. Langan, Esq.Dinse Knapp & McAndrew, P.C.

P.O. Box 988Burlington, VT 05402‐0988

www.dinse.com

Vermont Estate Tax ‐ Reform

a. How it works now

b. H. 399 State QTIP Option/Portability

c. S.55 2016 $2.45

2017 2018 $3 90


2017‐2018 $3.90

2019 Federal Exemption

1‐2‐3 look‐back of Adjusted Taxable Gifts

Current State Estate Tax Environment

30 states have no state estate tax

20 states and D C have an estate tax


20 states and D.C. have an estate tax

9 of those states have or will have legislation going to the federal exemption

2

Vermont Estate Tax ‐ Constitutionality

32 V.S.A. § 7442a(a)

A tax is imposed on the transfer of the Vermont Estate of every decedent who at the time of


Estate of every decedent…who, at the time of death was a resident of this State.

Vermont Estate Tax

32 V.S.A § 7402(13)

“Vermont gross estate” means for any decedent the value of the federal gross estate excluding


the value of the federal gross estate…excluding the value of real or tangible personal property which has an actual situs outside Vermont.


3

Section 67 Final Regulations

Deductibility of fees subject to and not subject to the 2% floor


VBA Seminar

Valuation Cases


Richmond v. Commissioner of Taxes

Tax Court

37.4% discount

Undervaluation penalty applied


4

Elkins v. Commissioner of Taxes

Tax Court

10% discount for undivided interest in art


Guistina v. Commissioner of Taxes

Tax Court

Discounts with respect to timberland


Adell v. Commissioner

Discount business for “goodwill.” Son had the contacts (goodwill) not the decedent.


5

IRS Recognizes State Court Trust Reformation

“incredibly defective trust” not “gaming the system”


system

SEC v. Wyly

Resurrection of the “de facto trustee” concept


Asset Protection Trusts

Mississippi has a new APT statute

Dahl v. Dahl – Utah divorce; Nevada APT


6

Inherited IRAs

No creditor protection

Clark v. Rameker

(Patterson v. Schumate; Vt. IRA creditor protection)


protection)

State Income Tax “Resident Trust” Cases

3 cases: Illinois, New Jersey & Pennsylvania

Not a resident trust merely because settlor was


Not a resident trust merely because settlor was domestic when trust became irrevocable

Material Participation by Trusts

Frank Aragona Trust v. Commissioner

Has to do with the passive loss rules of § 469


Trustees were material participants on large real estate trust

7

Administration’s Proposals

General Explanations of the Administration’s Fiscal Year 2016 Revenue Proposals

(the “Green Book”)


§1014

Treating Gifts & Bequests as Realization Events (“tax loophole”)

Eliminate Step‐Up in Basis


Eliminate Step Up in Basis

Green Book Proposal

Increase the Capital Gain Rate to 28%


8

Green Book Proposal

Restore Federal Estate Tax Exemption at $3.5 million and Gift Tax Exemption at $1.0


Green Book Proposal

New GRAT Requirements: 10 years


Green Book Proposal

Sale to Grantor Trusts

Include sold assets in trust


9

Green Book Proposal

Annual Gift Exclusion

$14k per donee

$50k per donor


$50k per donor

Other Matters

GST Exemption

99 year limitGuistina v. Commissioner of Taxes

§ 6166 lien provision


§ 6166 lien provision

Definition of executor

1

Marital DeductionMarital DeductionPlanningPlanning

By: Jonathan D. Secrest, Esq.By: Jonathan D. Secrest, Esq.y o a a Sec es , sqy o a a Sec es , sqCorum Mabie Cook Prodan Angell & Corum Mabie Cook Prodan Angell &

Secrest, PLCSecrest, PLC

June 19, 2015June 19, 2015

Estate Taxes in 2015Estate Taxes in 2015

Federal threshold: $5.43 million per Federal threshold: $5.43 million per personperson

Vermont threshold: $2.75 million per Vermont threshold: $2.75 million per personpersonpersonperson

Vermont Estate Tax RatesVermont Estate Tax Rates

Gross Assets Taxes Marginal rateGross Assets Taxes Marginal rate$3,000,000 $100,000 40 percent$3,000,000 $100,000 40 percent$3,500,000 $229,200 31 percent$3,500,000 $229,200 31 percent$4,000,000 $280,400 22 percent$4,000,000 $280,400 22 percent$5,430,000$5,430,000 $442,400$442,400 16.5 percent16.5 percent

2

PortabilityPortability

Deceased Spousal Unused Exclusion Deceased Spousal Unused Exclusion Amount may be used up by second Amount may be used up by second spouse to die for federal estate taxspouse to die for federal estate taxMalpractice alert: After first death 706Malpractice alert: After first death 706 Malpractice alert: After first death, 706 Malpractice alert: After first death, 706 must be filed and portability election made must be filed and portability election made

Be careful about remarriage rulesBe careful about remarriage rules However, However, no Vermont estate tax no Vermont estate tax

portability.portability.

With portability, why use trusts?With portability, why use trusts?

Vermont has no portabilityVermont has no portability Protects against second marriage or Protects against second marriage or

exploitation of surviving spouseexploitation of surviving spouseC dit h lt t t id tC dit h lt t t id t Credit shelter trust avoids taxes on Credit shelter trust avoids taxes on appreciationappreciation

Probate avoidanceProbate avoidance Protects against irrational exuberance of Protects against irrational exuberance of

youthyouth

Marital DeductionMarital Deduction

Transfers to spouse are not subject to gift Transfers to spouse are not subject to gift tax rules. tax rules.

B t t il bl f t f fB t t il bl f t f f But not available for transfers of But not available for transfers of nondeductible terminable interests.nondeductible terminable interests.

3

Terminable Interest RuleTerminable Interest Rule

Purpose: Purpose:

To ensure that property which avoids estate To ensure that property which avoids estate tax upon the death of the first spouse to dietax upon the death of the first spouse to dietax upon the death of the first spouse to die tax upon the death of the first spouse to die will be subject to tax upon the death of the will be subject to tax upon the death of the second spouse.second spouse.

Terminable interest: an interest which will Terminable interest: an interest which will fail or terminate due to the lapse of time fail or terminate due to the lapse of time or the occurrence or nonoccurrence of an or the occurrence or nonoccurrence of an event or contingencyevent or contingencyevent or contingency.event or contingency.

E.g.: life estate, term of years, interests E.g.: life estate, term of years, interests subject to a condition (remarriage)subject to a condition (remarriage)

How Assets May Qualify with How Assets May Qualify with TrustTrust

To a general testamentary power of To a general testamentary power of appointment trust (some control for appointment trust (some control for surviving spouse)surviving spouse)To such a trust with absolute right ofTo such a trust with absolute right of To such a trust with absolute right of To such a trust with absolute right of withdrawal for withdrawal for s.s.s.s. (total control)(total control)

To trust that gives To trust that gives s.s.s.s. income for life with income for life with remainder to her estate (some control)remainder to her estate (some control)

To QTIP trust (much less control for To QTIP trust (much less control for s.s.s.s.))

4

QTIP TRUSTQTIP TRUST

Qualified Terminable Interest Property Qualified Terminable Interest Property must:must: Give qualifying income interest for life for Give qualifying income interest for life for

surviving spousesurviving spousesurviving spousesurviving spouse Trustee may not appoint the trust property to Trustee may not appoint the trust property to

someone other than spouse.someone other than spouse. Election on decedent’s Form 706Election on decedent’s Form 706

Two main benefitsTwo main benefits

Allows first spouse to die to control Allows first spouse to die to control ultimate disposition of assets (e.g., second ultimate disposition of assets (e.g., second marriage), while deferring taxesmarriage), while deferring taxesDelays decision (by executor) of howDelays decision (by executor) of how Delays decision (by executor) of how Delays decision (by executor) of how much marital deduction will be claimed much marital deduction will be claimed until estate tax return is filed until estate tax return is filed

ProblemProblem

Vermont has no QTIP exclusion (yet) for Vermont has no QTIP exclusion (yet) for Vermont estate taxesVermont estate taxes

A t $2 75 illi hi h tA t $2 75 illi hi h t Amounts over $2.75 million which are not Amounts over $2.75 million which are not given outright to surviving spouse are given outright to surviving spouse are taxed at first deathtaxed at first death

5

Other powers allowable to Other powers allowable to surviving spouse:surviving spouse:

Right to invade principal for HEMSRight to invade principal for HEMS Right to greater of 5 percent of principal or Right to greater of 5 percent of principal or

$5,000 from trust each year$5,000 from trust each year Right to receive discretionary payments fromRight to receive discretionary payments from Right to receive discretionary payments from Right to receive discretionary payments from

independent trusteeindependent trustee Power to appoint principal during life or at death Power to appoint principal during life or at death

to anyone other than herself, her estate, her to anyone other than herself, her estate, her creditors, or creditors of her estate.creditors, or creditors of her estate.

Trap for the Unwary:Trap for the Unwary:NonNon--citizen spousescitizen spouses

Qualifying Domestic Trust as alternativeQualifying Domestic Trust as alternative

Annual gift limit to noncitizen spouses:Annual gift limit to noncitizen spouses: Annual gift limit to noncitizen spouses: Annual gift limit to noncitizen spouses: $147,000 in 2015$147,000 in 2015

Thought on ethics/ client Thought on ethics/ client managementmanagement

Conflict between spouses?Conflict between spouses? Disagreements between parents and kids?Disagreements between parents and kids?

Discuss/explain issues in writingDiscuss/explain issues in writing Ask what may be shared with childrenAsk what may be shared with children

6

How much to fund credit shelter How much to fund credit shelter trust?trust?

Provide amounts over $2.75 million to Provide amounts over $2.75 million to surviving spouse, avoiding Vermont estate surviving spouse, avoiding Vermont estate tax at first death and rely on portability to tax at first death and rely on portability to minimize federal estate tax?minimize federal estate tax?minimize federal estate tax?minimize federal estate tax?

Or fund credit shelter trust with up to Or fund credit shelter trust with up to $5.43 million in large estate, minimizing $5.43 million in large estate, minimizing federal estate tax risk later but triggering federal estate tax risk later but triggering Vermont taxes at first death? Vermont taxes at first death?

If credit shelter trust if funded If credit shelter trust if funded with first $2.75 million:with first $2.75 million:

Excess outright to spouse (no control by Excess outright to spouse (no control by first spouse) but avoiding Vermont estate first spouse) but avoiding Vermont estate tax at first death? (Relying on portability)tax at first death? (Relying on portability)

Or excess in QTIP trust to spouse, Or excess in QTIP trust to spouse, allowing control by first spouse but allowing control by first spouse but triggering Vermont tax right away?triggering Vermont tax right away?

Practice tipPractice tip

Speak with clients about equalization of Speak with clients about equalization of assets to extent possibleassets to extent possible

Less important now for federal estate tax Less important now for federal estate tax b/c of portability but still key for stateb/c of portability but still key for stateb/c of portability, but still key for stateb/c of portability, but still key for state

Consider both trusts as Tenants in Consider both trusts as Tenants in Common?Common?

7

Option 1Option 1-- “I love you” wills/trusts“I love you” wills/trusts

All to spouse if living, otherwise to All to spouse if living, otherwise to childrenchildren

No taxes at death of first spouseNo taxes at death of first spouseV t t t t t d d thV t t t t t d d th Vermont estate tax at second death on Vermont estate tax at second death on amounts over $2.75 million, and federal amounts over $2.75 million, and federal tax on amounts over $5.43 milliontax on amounts over $5.43 million

Portability can protect against federal tax, Portability can protect against federal tax, but but s.s.s.s. may be hit with VT estate taxmay be hit with VT estate tax

Option 2: Credit Shelter Trust for Option 2: Credit Shelter Trust for first $2.75 million, rest to spousefirst $2.75 million, rest to spouse

Avoids Vermont estate tax at first deathAvoids Vermont estate tax at first death Fails to use $2,680,000 of surviving Fails to use $2,680,000 of surviving

spouse’s exemption amount (but spouse’s exemption amount (but s.s.s.s. may may use federal portability)use federal portability)use federal portability)use federal portability)

Other benefits of trust (probate Other benefits of trust (probate avoidance, protection, etc.)avoidance, protection, etc.)

Option 3: First $2.75 million to credit Option 3: First $2.75 million to credit shelter trust; rest to spouse, with shelter trust; rest to spouse, with

disclaimer optiondisclaimer option

Avoids Vermont estate tax at first deathAvoids Vermont estate tax at first deathFails to use $2 680 000 of survivingFails to use $2 680 000 of surviving Fails to use $2,680,000 of surviving Fails to use $2,680,000 of surviving spouse’s exemption amount (but spouse’s exemption amount (but s.s.s.s. may may use federal portability)use federal portability)

S.S. may disclaim to fully fund credit S.S. may disclaim to fully fund credit shelter trust; maximum flexibilityshelter trust; maximum flexibility

8

Option 4: $5.43 million to credit Option 4: $5.43 million to credit shelter trust; rest to spouse or shelter trust; rest to spouse or

marital trustmarital trust Minimizes federal estate taxes at death of Minimizes federal estate taxes at death of

second spousesecond spouse Incurs Vermont estate tax of $442 000 onIncurs Vermont estate tax of $442 000 on Incurs Vermont estate tax of $442,000 on Incurs Vermont estate tax of $442,000 on

$2,680,000 at first death$2,680,000 at first death But allows for taxBut allows for tax--free appreciation of free appreciation of

credit shelter trust assetscredit shelter trust assets

Option 5: $2.75 million to credit Option 5: $2.75 million to credit shelter trust; rest in QTIP trust shelter trust; rest in QTIP trust

Provides first spouse to die with maximum Provides first spouse to die with maximum control over principalcontrol over principal

Avoids Vermont tax on first $2 75 millionAvoids Vermont tax on first $2 75 million Avoids Vermont tax on first $2.75 millionAvoids Vermont tax on first $2.75 million Incurs Vermont estate tax on Incurs Vermont estate tax on allall amounts amounts

in QTIP trustin QTIP trust

Option 6: $5.43 million to credit Option 6: $5.43 million to credit shelter trust; rest to QTIP trustshelter trust; rest to QTIP trust

Minimizes federal estate taxes at death of Minimizes federal estate taxes at death of second spousesecond spouse

Incurs Vermont estate tax on all amountsIncurs Vermont estate tax on all amounts Incurs Vermont estate tax on all amounts Incurs Vermont estate tax on all amounts over first $2.75 millionover first $2.75 million

But allows for taxBut allows for tax--free appreciation of free appreciation of credit shelter trust assetscredit shelter trust assets

Allows control by first spouseAllows control by first spouse

9

Option 7Option 7

Reduce taxable estate now by investing Reduce taxable estate now by investing $100,000 to hire state lobbyists to $100,000 to hire state lobbyists to advocate legislature for:advocate legislature for:

Increased state estate tax thresholdIncreased state estate tax threshold State portabilityState portability State QTIPState QTIP

Gifting ideasGifting ideas

Obvious advice to client: Make annual Obvious advice to client: Make annual exclusion amount gifts, if they canexclusion amount gifts, if they can

When does it make sense to make gifts in When does it make sense to make gifts in Vermont to avoid estate tax?Vermont to avoid estate tax?Vermont to avoid estate tax? Vermont to avoid estate tax?

Deathbed gifts?Deathbed gifts?

6/18/2015

1

Disclaimers: Advance Planning Tool in Era

of Estate Tax Uncertainty

Jeanne C. Blackmore

Background: What is a Disclaimer?

Renunciation or rejection of a lifetime or testamentary gift

Done in a timely manner

Failure to accept nullifies the gift

Jeanne C. Blackmore

What is so great about this?For gift, estate and generation-skipping tax purposes,

disclaimant treated as never having received the gift.

Traditional Uses of Disclaimers

Corrective Post-Mortem Planning

Cure tax errors

Cure or rearrange dispositive provisions

Jeanne C. Blackmore

Charitable or altruistic motives

Defense against creditors

6/18/2015

2

Traditional Uses of Disclaimers

Advance Planning

Credit shelter trust funding mechanism

General dispositive flexibility

Jeanne C. Blackmore

Disclaimer Requirements

Must comply with both federal and state law

Federal Qualified Disclaimer: IRC Section 2518

Vermont Uniform Disclaimer Act: 14 VSA 1951, et seq.

Jeanne C. Blackmore

Qualified Disclaimer: IRC Section 2518

Writing that adequately describes the disclaimed property

Made within 9 months of date interest created

No acceptance

Jeanne C. Blackmore

Disclaimed property must pass without direction

Qualifies under state law

6/18/2015

3

Qualified Disclaimer: Traps for the Unwary

Special rules for jointly-held property

Powers of appointment: general vs. limited

Minority exception to 9-month rule

Jeanne C. Blackmore

Unintentional acceptance

Qualified Disclaimer: Special Planning Considerations

Life insurance

Retirement accounts

Partial disclaimers

Jeanne C. Blackmore

Formula disclaimers

Vermont Uniform Disclaimer Act: 14 VSA Section 1951, et seq.

Writing that is signed and delivered

Made within 9 months of date interest created

Describes disclaimed property and extent of disclaimer

Jeanne C. Blackmore

No acceptance

6/18/2015

4

Vermont Uniform Disclaimer Act: Traps for the Unwary

File with probate court?

Record in land records?

Special rules for jointly-held property

Jeanne C. Blackmore

Advance Planning with Disclaimers

Question:Why consider disclaimer planning now?

Answer:Flexibility in era of estate tax uncertainty

Jeanne C. Blackmore

y y

Planning with Disclaimers

High federal exemption and portability

Wide array of proposals for federal estate tax:

Eliminate altogether Reduce exemption

Jeanne C. Blackmore

Install carry over basis regime and income tax on built-in gains

State estate tax regimes vary widely

6/18/2015

5

Disclaimer as Credit Shelter Trust Funding Mechanism

Use in combination with traditional credit shelter trust

Postpone determination of credit shelter funding until first death

Jeanne C. Blackmore

Disclaimer as Credit Shelter Funding Mechanism

Sample basic language:

If Mary survives the Donor, the Trustees shall distribute the remainder of the trustestate to Mary or as Mary otherwise directs. Notwithstanding the foregoing, if and tothe extent that Mary or her legal or personal representative disclaims, by writteninstrument delivered within nine months of the death of the Donor to the Trustees andthe Donor’s executor (if any), any or all of the amount to be distributed to Mary, the

Jeanne C. Blackmore

property which has been so disclaimed (“said property”) shall be placed by theTrustees into John’s Bypass Trust and held, administered and disposed of as a partthereof. If the disclaimer is made with respect to less than the whole amount to pass toMary, then said property and the amount which does pass to Mary shall each share, inproportion to their respective values (as finally determined for federal or state estate taxpurposes), in the income from and appreciation or depreciation (whether realized orunrealized) of the trust estate prior to the distribution to Mary.

Disclaimer as Credit Shelter Funding Mechanism

Pros:

Flexibility

Simplicity

Ease of administration

Jeanne C. Blackmore

Ease of administration

6/18/2015

6

Disclaimer as CreditShelter Funding Mechanism

Cons:

Acceptance of loss of control

Failure to attend to disclaimer

Assets that are tricky to disclaim

Jeanne C. Blackmore

Assets that are tricky to disclaim

Permanent solution (Florida better work out)

May not work in high net worth estates

Disclaimer as CreditShelter Funding Mechanism

Traps for the unwary:

Vermont estate tax calculation

Careful review of assets available for disclaimer

W f l d th l i

Jeanne C. Blackmore

Wrongful death claims

6/18/2015

1

ACT 39: PATIENT CHOICE AND CONTROL AT THE END-OF-LIFE

C I N D Y B R U Z Z E S E , M P AE X E C U T I V E D I R E C T O R

V E R M O N T E T H I C S N E T W O R K

VEN’S POSITION OF NEUTRALITY

• Mission to promote understanding of ethical issues in health care.

• Maintain a neutral stance surrounding the practice

www.vtethicsnetwork.org

g pof Physician Assisted Death (PAD).

• Our role is one of education and encouraging thoughtful and respectful discussion and deliberation.

• VEN has focused on providing education and information about the specifics of the law

VERMONT’S ACT 39: PATIENT CHOICE AT THE END OF LIFE

Objectives

• Act 39 Refresher - key provisions, process, documentation requirements and data to date


documentation requirements and data to date

• Factors that have impacted implementation

• 2015 Legislative changes

• Surrogate consent legislation

6/18/2015

2

VERMONT

• Passed and Enacted in May of 2013 (Act 39)(18 V.S.A., chapter 113)


• Seven (7) sets of paperwork have been properly completed and submitted to the Vermont Department of Health indicating that a physician has fulfilled the statutory requirements to prescribe. (June, 2015)

ACT 39 SUMMARY

Act 39 makes it legal for a terminally ill, capable adult patient to request and obtain a lethal prescription of a


and obtain a lethal prescription of a medication to be self-administered for the purpose of hastening their death.

6/18/2015

3

PROCESS REQUIREMENTS: ELIGIBILITY

For a physician to legally provide the requested medication, a patient must:

• Be at least 18 years of age. • Have a terminal condition with a life expectancy of 6


p ymonths or less.

• Be a resident of Vermont. • Be under the care of a physician.• Make a voluntary request to a physician for medication

to be self-administered for the purpose of hastening their own death.

• Be capable of making an informed decision. (§ 5283)

DECISION-MAKING STANDARD FOR PATIENTS UNDER ACT 39

• Be capable of making an informed decision: Meaning the patient “has the ability to make and communicate health care decisions to a physician, including communication through persons familiar


including communication through persons familiar with the patient’s manner of communication.”

• Not have impaired judgment: Meaning the “patient sufficiently understands or appreciates the relevant facts necessary to make an informed decision.”

KEY PROVISIONS

• Participation is voluntary: a physician, nurse, pharmacist or other person shall not be compelled to participate (§ 5285)


be compelled to participate. (§ 5285)

• Immunity for prescribing physician: a physician shall not be subject to any civil or criminal liability or professional disciplinary action if prescribing in accordance with the law. (§ 5283)

6/18/2015

4

KEY PROVISIONS

• No duty to aid: “…no person shall be subject to civil or criminal liability solely for being present when a patient with a terminal condition self-administers a lethal


terminal condition self administers a lethal dose of medication…” (§ 5284)

• Insurance Policies: A person and his or her beneficiaries shall not be denied benefits under a life insurance policy for actions taken in accordance with this law. (§ 5287)

KEY PROVISIONS

• Right to Information: Patients have a right to be informed of all available options related to terminal care and to receive

t ifi ti


answers to any specific questions. (§ 5282)

• Limitation on action: A health care facility or provider may not penalize a physician, nurse or pharmacist based on their participation or refusal to participate in the law. (§ 5285)

HEALTH FACILITY EXCEPTION

A health care facility may prohibit a physician from writing a prescription for a lethal dose of medication when


all three of the following conditions exist:

1. The patient is a resident of the facility;2. The patient intends to use the medication on that facility’s

premises; and3. The facility has notified the physician in writing of its policy

prohibiting the use of lethal doses of medication on its premises.

(§ 5286)

6/18/2015

5

PROCESS REQUIREMENTS: SUMMARY OF PROTOCOL (§ 5283)

• Patient makes 2 voluntary oral requests.(Physician must document date, time and wording of all oral requests)

Th d l t l t b


• The second voluntary oral request can be no fewer than 15 days after the first oral request.

• At the time of second request, physician must offer the patient an opportunity to rescind the request.

PROCESS REQUIREMENTS – SUMMARY OF PROTOCOL

• Patient makes a written request

• Signed by patient


• Witnessed by 2 non-interested persons (not relatives, beneficiaries, or employed by patient’s health care facility)Attesting that patient’s request was informed and voluntary

(Physician must document date, time and wording of the written request)

PATIENT WRITTEN REQUEST

FORM

6/18/2015

6


• Physician must determine and document:the patient is suffering from a terminal condition based

on the physician’s physical examination of the patient and review of the patient’s relevant medical records


and review of the patient’s relevant medical records.the patient is capable.the patient is making an informed decision.the patient is a Vermont resident.the patient is making a voluntary request for

medication to hasten his or her death. the patient is able to self-administer the medication

requested at the time of the request.


• Physician informs the patient in person, both verbally and in writing of:• The medical diagnosis.• The prognosis.• The range of treatment options appropriate for the


• The range of treatment options appropriate for the patient’s diagnosis.

• If the patient is not enrolled in hospice care, all feasible end-of-life services, including palliative care, comfort care, hospice care and pain control.

• The range of possible results, including potential risks associated with taking the prescribed medication.

• The probable result of taking the prescribed medication.


• Refer the patient to a second physician for second opinion.

For confirmation of the diagnosis, prognosis, and a determination that the patient is capable, is acting voluntarily and is making an informed decision


voluntarily, and is making an informed decision.

• If there is concern about whether or not the patient is capable —the prescribing physician must refer the patient for an evaluation by a psychiatrist, psychologist, or clinical social worker licensed in Vermont.

For confirmation that the patient is capable and does not have impaired judgment.

6/18/2015

7

PROCESS REQUIREMENTS – PROTOCOL

• Ensure that all the required steps were carried out in accordance with the law and confirm, immediately prior to writing the prescription, that the patient was making an informed decision


making an informed decision.

• Once the process has been completed, physician must wait no fewer than 48 hours before writing the prescription.

PROCESS REQUIREMENTS – PROTOCOL AND DOCUMENTATION

• Physician must contact a pharmacist (with the patient’s consent) and inform the pharmacist of the prescription, and deliver the written prescription personally by mail or by fax to the pharmacist


personally, by mail or by fax to the pharmacist.

• Promptly file a report with the Department of Health documenting completion of all of the requirements under this statute.

PHYSICIAN REPORTING

FORM PAGE 1

6/18/2015

8

PHYSICIAN REPORTING

FORM PAGE 2

FACTORS THAT HAVE IMPACTED IMPLEMENTATION

1. Insufficient time & no designated agency responsible for educating providers, patients and facilities about the law.


2. Finding a prescribing physician.

3. Ambiguity surrounding Vermont residency requirements, role of second physician, definition of self-administration, use of the term “capable”, etc.

THE RESIDENCY QUESTION

In response to frequent questions surrounding residency, the Vermont Department of Health has offered the following clarifying information:

“The Act does not specify what qualifies a person as a


The Act does not specify what qualifies a person as a resident: it is up to the patient’s physician to make that determination. Factors demonstrating residency include, but are not limited to 1) Possession of a Vermont driver’s license; 2) Registration to vote in Vermont; 3) Evidence that a person leases/owns property in Vermont; or 4) Filing of a Vermont tax return for the most recent tax year.

http://healthvermont.gov/family/end_of_life_care/documents/Act39_faq.pdf.

6/18/2015

9

ROLE OF SECOND PHYSICIAN

The Vermont Attorney General’s Office issued the following statement:

“…the Legislature intended for the treating physician to refer the patient for a second opinion. Given the Legislature’s intent, a physician does not violate the law and does not face liability for


physician does not violate the law and does not face liability for providing the second opinion called for by Title 18, section 5283(a)(7), even though the physician knows that the patient seeks medication for the purpose of hastening death. Of course, the physician has the same obligation, as for any patient, to provide the requested opinion in a manner that satisfies the standard of care. The same reasoning applies to a psychiatrist, psychologist, or social worker consulted pursuant to section 5283(8), and to a primary care doctor consulted pursuant to section 5283(9).”

http://healthvermont.gov/family/end_of_life_care/documents/Act39_faq.pdf

FACTORS THAT HAVE IMPACTED IMPLEMENTATION

• Insufficient time & no designated agency responsible for educating providers, patients and facilities about the law.

• Finding a prescribing physician.


• Ambiguity surrounding Vermont residency requirements, role of second physician, definition of self-administration, use of the term “capable”, etc.

• Logistics surrounding federal restriction regarding use of federal funds to pay for aid-in-dying services/meds.

• Lack of explicitly stated immunity for pharmacy, social work, nursing, psychology, etc.

IMMUNITY FOR PHARMACY

The Vermont Attorney General’s Office issued the following statement regarding pharmacists:

“The Legislature intended that, where all statutory requirements are met, terminally ill patients have the option to obtain medication that they may choose to self administer for


obtain medication that they may choose to self-administer for the purpose of hastening death. The statute expressly contemplates a role for a pharmacist in filling a prescription for this purpose (although a pharmacist is not required to do so). Given the Legislature’s intent, a pharmacist does not violate the law and does not face liability for filling a prescription consistent with the terms of the statute, even though the pharmacist knows that the patient intends to self-administer the medication for the purpose of hastening death.”

http://healthvermont.gov/family/end_of_life_care/documents/Act39_faq.pdf.

6/18/2015

10

AS PASSED: JULY 1, 2016 – NEW PROCESS IN EFFECT

Physician with a bona fide relationship with a terminally-ill patient, will not be considered to have engaged in unprofessional conduct if the physician:1. Determines patient is capable and does not have

impaired judgment;


impaired judgment;2. Informs patient of all feasible end-of-life services,

including palliative care, comfort care, hospice care and pain control;

3. Prescribes a lethal dose of medication;4. Advises patient of all foreseeable risks related to the

prescription; and5. Patient makes an independent decision to self-

administer.18 V.S.A., chapter 113 § 5289

AS PASSED: JULY 1, 2016 – NEW PROCESS IN EFFECT

Immunity for Physicians:

Physician shall be immune from any civil or criminal li bilit f i l di i li ti f ti


liability or professional disciplinary action for actions performed in good faith compliance with the provisions of this chapter.

18 V.S.A., chapter 113, § 5290

2015 LEGISLATION TO REPEAL SUNSET PROVISION

• February 18, 2015 Senate Health and Welfare Committee took testimony on Act 39 related to 2 questions:


• 1. Is the law working?• 2. Should the provision for a new process in 2016 be repealed?

• February 24, S.108, An act relating to repealing the sunset on provisions pertaining to patient choice at end of life, was introduced.

6/18/2015

11

ACT 27

S.108: Passed by legislature and signed by Governor on May 20, 2015 (Act 27)

Repeals Section 2 of the original legislation (§ 5289 d § 5290)


• Repeals Section 2 of the original legislation (§ 5289 and § 5290) and leaves current process in place (§ 5283).

• Adds new section (§ 5293): Reporting Requirements

Directs the Dept. of Health (VDH) to adopt rules for the collection of information regarding compliance with the chapter.

In 2018, VDH will generate and make available to the public a biennial report of information collected in compliance with HIPAA.

SURROGATE CONSENT LEGISLATION (S.62)

S. 62 - An Act Relating to Surrogate Decision-Making for DNR/COLST• Address the ambiguity surrounding “other

individuals” providing informed consent for


individuals providing informed consent for DNR/COLST orders.

• Establish a process for determining who can make these decisions when the patient lacks capacity and has no agent or guardian.

• Prioritize substituted judgment above best interest as the standard for how these decisions should be made - across all health care settings.

QUESTIONS?


Thank you

Fiduciary Access to Digital Assets

FIDUCIARY ACCESS TO DIGITAL ASSETS

By Catherine Richmond, Esq.

For

Hot Topics in Trusts and Estate CLE

Sponsored by

The Vermont Bar Association

Friday, June 19, 2015

Sheraton Burlington Hotel & Conference Center

Burlington, Vermont


FIDUCIARY ACCESS TO DIGITAL ASSETS

This presentation is an overview of unchartered property territory: digital assets and

fiduciary access. What is a digital asset and how is a digital asset accessed at disability and

accessed and owned at death? Digital assets do not fit neatly into the traditional definition of

assets for trust and estate planning and administration. Attorneys are experienced at dealing with

real property, tangible personal property, financial assets and even intellectual property. Where

do digital assets fit? The traditional manner of dealing with property ownership or access to

property in estate planning or trust or estate administration does not clearly include digital

assets. This presentation will provide some guidance for how to deal with digital assets under

current law and discuss a uniform body of law, which, if enacted in Vermont, could provide even

more precise guidance.

WHAT IS A DIGITAL ASSET?

What is a digital asset? The term “digital asset” is relatively new. There is no uniform

definition. The National Conference of Commissions on Uniform State Laws (NCCUSL) has

worked on a definition. Most recently, under its Uniform Fiduciary Access to Digital Assets

Act, at its annual conference in Seattle Washington in July, 2014 (UFADAA)1 NCCUSL

approved a pared down definition of a digital asset as follows. A digital asset is “. .. a record

that is electronic. The term does not include an underlying asset or liability unless the asset or

liability is itself a record that is electronic.”2 There are longer, more comprehensive definitions

out there, however. A definition preferred by one attorney and author of “Web Meets the Will:

Estate Planning for Digital Assets”, Gerry W. Beyer, is as follows:

“Digital assets means text, images, multimedia information, or personal property stored

in a digital format, whether stored on a server, computer, or other electronic device which

currently exists or may exist as technology develops, regardless of ownership of the

physical device upon which the digital asset is stored. Digital assets include, without

1 Uniform Fiduciary Assess to Digital Assets Act (2014), at http:www.uniformlaws.org, June 6, 2015 (UFADAA). 2 UFADAA, Section 2, definition (9), page 2.


limitation, any works, characters, codes, or contractual rights necessary to access the

digital assets.3

What do these two definitions mean? Following are some examples of what are

considered digital assets:

1. Personal assets stored on a computer or smart phone or uploaded from a website.

2. Social media such as Facebook, Myspace, Linkedin, Twitter and email.

3. Financial accounts.

4. Domain names or blogs.

5. Loyalty program benefits.4

CURRENT VERMONT LAW.

Current Vermont law provides little guidance with respect to access to digital assets.

Vermont has no uniform definition of the term, who has access to a digital asset or who owns a

digital asset of a decedent. Vermont has adopted the Uniform Electronic Transaction Act.5 This

act deals with electronic records, transactions and signatures. It defines, for example,

“Electronic,” Information,” and “Record,” but not ownership and access. The Vermont Trust

Code addresses electronic signatures and records under 14A VSA §12026, but not ownership or

access to digital assets. Vermont statutory law is silent with respect to an executor’s access to

and ownership of digital assets. Vermont statutory law with respect to powers of attorney at

least implicitly addresses digital assets. It states that an agent under a general durable power of

attorney is “granted powers that are not expressly delineated in the terms of the power of

attorney if it appears from the facts and circumstances that the principal intended the agent to

have general authority to act on the principal’s behalf with respect to all lawful subjects and

purposes.”7 A general power of attorney may seem to include the authority to access to digital

assets, but it is not clear whether applicable third parties, for example online service providers,

will accept this authority.

3 Beyer, Gerry W., Web Meets the Will: Estate Planning for Digital Assets, page 2, Estate Planning Journal 2015, Vol. 42 No. 3, March 2015. 4 Beyer, Gerry W., Web Meets the Will: Estate Planning for Digital Assets, page 2-4, Estate Planning Journal 2015, Vol. 42 No. 3, March 2015. 5 09 VSA, Chapter 20. 6 14A VSA §1202 7 14 VSA §3504(a)(2).


WHY DO WE CARE?

General Durable Power of Attorney. Most people today use electronic means to do many

things including, for example, paying bills, opening, managing and accessing their bank

accounts, applying for loans and borrowing money and purchasing things. The electronic

mechanisms to do all this have passwords and usernames. If a person becomes disabled and an

agent needs to step in and handle the disabled person’s financial affairs, without clear authority,

an agent may have difficulty obtaining the necessary usernames and passwords, accessing the

accounts and accessing account information to take care of the principal.

Trusts. One reason why access to digital assets matters to a trustee while the grantor of

the trust is alive, is the same reason why it matters to an agent under a general durable power of

attorney. Another reason it matters is when the grantor is no longer alive. The trustee has a

duty to hold, manage, administer and distribute all trust assets, including digital assets, under the

terms of the trust and needs access to the digital assets to carry out the trustee’s duties.

Wills. An executor has a duty to account for and preserve the assets of the estate. An

executor may have difficulty fulfilling the executor’s duty without clear authority to access

digital assets. An executor may have difficulty accessing financial information and accounts

needed to pay bills of the decedent and expenses of the estate. Further, the executor may have

difficulty determining the value of the estate without access to digital assets and information

about digital assets. Information about and clarity about ownership of digital assets are needed

for probate administration and estate tax issues.

The Wild Card: Service Agreements for Online Accounts. A complication in a

fiduciary’s obtaining access to digital assets is service agreements for an online accounts.

Without going into the particulars of various online service companies, each has its owns terms

that may or may not state a policy with regard to access by an agent or trustee during the life of

an individual or by a trustee or executor after death. Some companies can be very difficult to

deal with.

Other Laws to Consider. Federal laws to consider when drafting provisions with respect

to digital assets include the Electronics Communications Privacy Act of 1986 (18 U.S.C. 2510-

2522) which extends an individual’s rights under the Fourth Amendment to electronic data and


communications and under the Stored Communications Act (18 U.S.C. Sections 2701-12)

protects and generally prohibits disclosure of stored electronic communications.8

WHAT TO DO?

Under Current Vermont Law. Until and unless a uniform body of law is enacted to

address fiduciary access to and ownership of digital assets, the best line of defense if a good

offense. Following are some sample provisions for access to digital assets:

General Durable Power of Attorney Sample Provisions.

1. To exercise all powers I may have over any computer, telephone, digital device, data

storage device, user account, electronically stored information, and any domain name,

whether the same are in my own name or that I own or lawfully use jointly with

anyone else; to access, manage, control, delete and terminate any such asset or

account, including, but not limited to, e mail, telephone, bank, brokerage, investment,

insurance, social networking, internet service provider, retail vendor, utilities and

other accounts; to change my username and password to gain access to such accounts

and information; to transfer or withdraw funds or other assets among or from such

accounts; and to open new accounts in my name; all as my attorney determines is

necessary or advisable. I hereby give my lawful consent and fully authorize my

attorney to access, manage, control, delete and terminate any electronically stored

information and communications to the fullest extent allowable under the Electronic

Communications Privacy Act of 1986, as amended; the Computer Fraud and Abuse

Act of 1986, as amended; the Gramm Leach-Bliley Act, as amended; and any other

federal, state or international privacy or other laws, and to take any actions I am

authorized to take under all applicable terms of service, terms of use, licensing and

other account agreements or laws. To the extent a specific reference to any federal,

state, local or international law is required in order to give effect to this provision, I

specifically provide that my intention is to so reference such law, whether it is now in

existence or comes into existence or is amended after the date of this document.9

8 Walsh, Suzanne Brown and Teitel, Conrad, Protecting Client’s Digital Assets, at page 34, Trusts & Estates, trusts and estates .com, January 2014. 9 Walsh, Suzanne Brown, [email protected], Murtha Cullina LLP, Hartford, CT , Feb. 3, 2015.

mailto:[email protected]


2. My agent has (i) the power to access, use and control my digital device, including,

but not limited to, desktops, laptops, peripherals, storage devices, mobile telephones,

smart phones, and any similar device which currently exists or exists in the future as

technology develops for the purpose of accessing, modifying, deleting, controlling or

transferring my digital assets, and ii) the power to access, modify, delete , control,

and transfer my digital assets, including, but not limited to, any emails, email

accounts, digital music, digital photographs, digital videos, software licenses, social

network accounts, file sharing accounts, financial accounts, domain registrations, web

hosting accounts, tax preparation, service accounts, on-line stores, affiliate programs,

other on-line programs, including frequent flyer and other bonus programs , and

similar digital items which currently exist or exist in the future as technology

develops.10

Trustee/Executor Powers Sample Provision:

The Trustee (or Executor) shall have the authority to access, handle, distribute and

dispose of the Grantor’s/Testator’s digital assets. “Digital Assets” includes files stored

on digital devices, including, but not limited to, desktops, laptops, tablets, mobile

telephones, smartphones, digital music, digital photographs, digital videos, software

licenses, social network accounts, file sharing accounts, financial accounts, domain

registrations, web hosting accounts, tax preparation service accounts, online stores, other

online accounts and similar digital items which currently exist or may exist as technology

develops, regardless of the ownership of the physical device upon which the digital item

is stored.11

Uniform Fiduciary Access to Digital Assets Act.

To promote uniform laws among the states, make access clear and to eliminate

uncertainty, the National Conference of Commissioners on Uniform State Laws has approved

10 Beyer, Gerry W., Web Meets the Will: Estate Planning for Digital Assets, Vol. 42, No. 03, Estate Planning Journal (WG&L) March 2015, adapted from a clause suggested by Huffman, “Law Tips: Estate Planning for Digital Assets,” Indiana CLE Forum (12/4/2012). 11 Annis, Tina L., [email protected] Annis & Zellers, PLLC, Concord, NH, Oct. 10, 2014.

mailto:[email protected]


and recommended a Uniform Fiduciary Access to Digital Assets Act (UFADAA).12 UFADAA

provides uniform definitions for digital assets and related terms. UFADAA gives a fiduciary

access to digital assets unless decedent expressly opts out of the right or a court provides

otherwise.13 Under UFADAA, agents under a general power of attorney are treated differently.

The principal must expressly state what the agent has the power to do and has access to with

respect to digital assets.14 One reason for this different treatment (opt in versus opt out) is to

provide more privacy protection to and control over access to the digital assets of an individual

during the individual’s life.15 UFADAA addresses the Federal Electronic Communications

Privacy Act and online service provider terms of agreement. UFADAA states in pertinent part

that if a provision of a “terms-of-service agreement” limits a fiduciary’s access to the digital

assets of the account holder, the provision is void as against the strong public policy of the state,

unless the account holder agreed to the provision by an affirmative act separate from the account

holder’s asset to other provision of the terms of service agreement.16 Currently, twenty-six

states, including Maine, Massachusetts and Florida, have introduced legislation this year to enact

some form of UFADAA and one state, Delaware, has enacted its version of UFADAA.17

Vermont should consider adopting UFADAA to provide clarity, consistency and guidance to

everyone (drafting attorneys, Vermonters, their agents, executors, and trustees and the court). As

other states adopt some version of UFADAA, it will become even more important for Vermont

to adopt its version to make it easier for everyone, both within the state and without, to deal with

the digital assets of Vermonters.

CONCLUSION.

Unless or until UFADAA is adopted in Vermont, or another body of law is enacted

federally that provides clarity with respect to access and ownership of digital assets, digital assets

should be expressly defined and the fiduciary power to access digital assets expressly described

in general durable powers of attorney, trusts and wills. This will provide clarity and make it

much easier for a fiduciary to carry out the fiduciary’s duties. Following are references to two

12 Uniform Fiduciary Assess to Digital Assets Act (2014), at http:www.uniformlaws.org, June 6, 2015 (UFADAA). 13 Section 3 and Section 6 of UFADAA. 14 Section 5 of UFADAA. 15 Section 5 of UFADAA. 16 Section 7 (b) of UFADAA. 17 www.uniformlaws.org/ACT, June 6,2015.

http://www.uniformlaws.org/ACT


articles from which much of this presentation is drawn that go into the issue of fiduciary access

to digital assets in more detail.

1. Web meets the Will: Estate Planning for Digital Assets by Gerry W. Beyer in the

Estate Planning Journal, Volume 42, Number 03, March 2015.

2. Protecting Clients’ Digital Assets by Susanne Brown Walsh and Conrad Teitel,

Trusts & Estates, January 2014.

Finally, attached is a copy of the Uniform Fiduciary Access to Digital Assets Act, drafted

and approved for enactment by all states by the National Conference of Commissioners on

Uniform State Laws, July 22, 2014 (UFADAA). UFADAA can also be found at the NCCUSL

website, www.uniformlaws.com.

http://www.uniformlaws.com/

6/22/2015

1

Emily J. Gould, Esq.Resolution Consultant

June 19, 2015

"Mediation" means a process in which a mediator facilitates communication and negotiation between parties to assist them in reaching a voluntary agreement regarding their dispute. 12 V.S. A. § 5713(2)

"Mediator" means an individual who conducts a mediation. 12 V.S. A. § 5713(4)

With attorneys or without

In person or virtually

Prior to filing or after filing

Legal issue or non‐legal issue

Single mediator or co‐mediation

Attorney mediator or non‐attorney mediator

One long session or multiple short sessions

With mediation statement or without

6/22/2015

2

Confidentiality

Voluntariness

Party empowerment

Mediator transparency

Evaluative

Facilitative

Transformative

Convening, contracting, intake, mediation statements

Mediator opening, overview, ground rules

Opening statements of parties, story telling

Agenda settingAgenda setting

Information sharing stage

Negotiation stage – plenary and caucus

Agreement testing and drafting

Closing

6/22/2015

3

Start discussing mediation early onStart discussing mediation early on

Impress the opposing client with your compassionImpress the opposing client with your compassion

Shop for the right mediator for your clientsShop for the right mediator for your clients

6/22/2015

4

Allow enough timeAllow enough time

www.emilyjgould.comwww.emilyjgould.com

[email protected] Main StreetMontpelier, VT802‐223‐1735

June 19, 2015 VBA – Hot Topics & New Developments in Trusts & Estates Here are the links to the following documents: https://www.vermontjudiciary.org/LC/Statutes%20and%20Rules/PROPOSEDVRFP18_4%28a%29%282%29_9%28a%29%282%29.pdf http://legislature.vermont.gov/statutes/fullchapter/12/194.

https://www.vermontjudiciary.org/LC/Statutes%20and%20Rules/PROPOSEDVRFP18_4%28a%29%282%29_9%28a%29%282%29.pdf

https://www.vermontjudiciary.org/LC/Statutes%20and%20Rules/PROPOSEDVRFP18_4%28a%29%282%29_9%28a%29%282%29.pdf

http://legislature.vermont.gov/statutes/fullchapter/12/194

The Vermont Statutes OnlineTitle 12: Court Procedure

Chapter 194: Uniform Mediation Act

§ 5711. Short title

This chapter may be cited as the Vermont Uniform Mediation Act. (Added 2005,No. 126 (Adj. Sess.), § 1.)

§ 5712. Uniformity of application

In applying and construing this chapter, consideration must be given to the needto promote uniformity of the law with respect to its subject matter among states thatenact it. (Added 2005, No. 126 (Adj. Sess.), § 1.)

§ 5713. Definitions

As used in this chapter:

(1) "Court" means a court of competent jurisdiction in Vermont.

(2) "Mediation" means a process in which a mediator facilitates communicationand negotiation between parties to assist them in reaching a voluntary agreementregarding their dispute.

(3) "Mediation communication" means a statement, whether oral, in a record,verbal, or nonverbal, that is made or occurs during a mediation or for purposes ofconsidering, conducting, participating in, initiating, continuing, or reconvening amediation or retaining a mediator.

(4) "Mediator" means an individual who conducts a mediation.

(5) "Nonparty participant" means a person, other than a party or mediator, thatparticipates in a mediation.

(6) "Party" means a person that participates in a mediation and whoseagreement is necessary to resolve the dispute.

(7) "Person" means an individual, corporation, business trust, estate, trust,partnership, limited liability company, association, joint venture, government,governmental subdivision, agency, instrumentality, public corporation, or any otherlegal or commercial entity.

(8) "Proceeding" means a judicial, administrative, arbitral, or other adjudicativeprocess, including related prehearing and posthearing motions, conferences, anddiscovery; or a legislative hearing or similar process.

VERMONT GENERAL ASSEMBLY

http://legislature.vermont.gov/statutes/title/12

http://legislature.vermont.gov/statutes/chapter/12/194

http://legislature.vermont.gov/

(9) "Record," except in the phrase "record of proceeding," means informationthat is inscribed on a tangible medium or that is stored in an electronic or othermedium, and is retrievable in perceivable form.

(10) "Sign" includes:

(A) executing or adopting a tangible symbol with the present intent toauthenticate a record;

(B) attaching or logically associating an electronic symbol, sound, or processto or with a record with the present intent to authenticate a record. (Added 2005, No.126 (Adj. Sess.), § 1.)

§ 5714. Scope

(a) Except as otherwise provided in subsection (b) or (c) of this section, this chapterapplies to a mediation in which:

(1) the parties are required to mediate by statute or court or administrativeagency rule, or referred to mediation by a court, administrative agency, or arbitrator;

(2) the parties and the mediator agree to mediate in a record that demonstratesan expectation that mediation communications will be privileged against disclosure;or

(3) the parties utilize as a mediator a person that holds himself or herself out asproviding mediation services.

(b) This chapter does not apply to a mediation:

(1) relating to the establishment, negotiation, administration, or termination of acollective bargaining relationship;

(2) relating to a dispute that is pending under or is part of the processesestablished by a collective bargaining agreement, except that this chapter applies toa mediation arising out of such a dispute that has been filed with a court or with apublic agency other than the federal Mediation and Conciliation Service or theVermont Labor Relations Board;

(3) conducted under the auspices of a primary or secondary school where allthe parties are students, or under the auspices of a correctional institution for youthswhere all the parties are residents of that institution; or

(4) conducted by a judge who might make a ruling on the case.

(c) If the parties agree in advance that all or part of a mediation is not privileged,the privileges under sections 5715 through 5717 of this title do not apply to themediation or part agreed upon. The agreement must be in a signed record orreflected in the record of a proceeding. However, sections 5715 through 5717 of this

title apply to a mediation communication made by a person who has not receivedactual notice of the agreement before the communication is made. (Added 2005, No.126 (Adj. Sess.), § 1.)

§ 5715. Privilege against disclosure; admissibility; discovery

(a) A mediation communication is privileged and is not subject to discovery oradmissible in evidence in a proceeding.

(b) In a proceeding, the following privileges apply:

(1) A party may refuse to disclose, and may prevent any other person fromdisclosing, a mediation communication.

(2) A mediator may refuse to disclose a mediation communication and mayprevent any other person from disclosing a mediation communication of themediator.

(3) A nonparty participant may refuse to disclose, and may prevent any otherperson from disclosing, a mediation communication of the nonparty participant.

(c) Evidence or information that is otherwise admissible or subject to discoverydoes not become inadmissible or protected from discovery solely by reason of itsdisclosure or use in a mediation. (Added 2005, No. 126 (Adj. Sess.), § 1.)

§ 5716. Waiver and preclusion of privilege

(a) A privilege under section 5715 of this title may be waived in a record or orallyduring a proceeding, if it is expressly waived by all parties to the mediation, and:

(1) in the case of the privilege of a mediator, it is expressly waived by themediator; and

(2) in the case of the privilege of a nonparty participant, it is expressly waived bythe nonparty participant.

(b) A person who discloses or makes a representation about a mediationcommunication which prejudices another person in a proceeding is precluded fromasserting a privilege under section 5715 of this title to the extent necessary for theperson prejudiced to respond to the representation or disclosure.

(c) A person who intentionally uses a mediation to plan, attempt to commit, orcommit a crime, or conceal an ongoing crime or ongoing criminal activity, may notassert a privilege under section 5715 of this title. (Added 2005, No. 126 (Adj. Sess.), §1.)

§ 5717. Exceptions to privilege

(a) There is no privilege under section 5715 of this title for a mediationcommunication that is:

(1) in an agreement evidenced by a record signed by all parties to theagreement;

(2) available to the public under 1 V.S.A. chapter 5, subchapter 3, or madeduring a session of a mediation which is open, or is required by law to be open, tothe public;

(3) a threat or statement of a plan to inflict bodily injury or commit a crime ofviolence;

(4) intentionally used to plan, attempt to commit, or commit a crime, or concealan ongoing crime or ongoing criminal activity;

(5) sought or offered to prove or disprove abuse, neglect, abandonment, orexploitation in a proceeding in which a child or adult protective services agency is aparty, but this exception does not apply where a child or adult protection case isreferred by a court to mediation and a public agency participates in the mediation;

(6) sought or offered to prove or disprove a claim or complaint of professionalmisconduct or malpractice filed against a mediator; or

(7) sought or offered to prove or disprove a claim or complaint of professionalmisconduct or malpractice filed against a party, nonparty participant, orrepresentative of a party based on conduct occurring during a mediation, except asotherwise provided in subsection (c) of this section.

(b) There is no privilege under section 5715 of this title if a court, administrativeagency, or arbitration panel finds, after a hearing in camera, that the party seekingdiscovery or the proponent of the evidence has shown that the evidence is nototherwise available, that there is a need for the evidence that substantially outweighsthe interest in protecting confidentiality, and the mediation communication is soughtor offered in:

(1) a criminal proceeding in Criminal Division of the Superior Court;

(2) a child protection proceeding under 33 V.S.A. chapter 49 or 55;

(3) a protection proceeding involving a vulnerable adult under 33 V.S.A. chapter69; or

(4) a proceeding to prove a claim to rescind or reform, or a defense to avoidliability on, a contract arising out of the mediation, except as otherwise provided insubsection (c) of this section.

(c) A mediator may not be compelled to provide evidence of a mediationcommunication referenced in subdivision (a)(7) or (b)(4) of this section.

(d) If a mediation communication is not privileged under subsection (a) or (b) of thissection, only the portion of the communication necessary for the application of theexception from nondisclosure may be admitted. Admission of evidence undersubsection (a) or (b) of this section does not render the evidence or any othermediation communication discoverable or admissible for any other purpose. (Added2005, No. 126 (Adj. Sess.), § 1; amended 2009, No. 154, § 238.)

§ 5718. Mediator report; disclosure; background

(a) A mediator may not make a report, assessment, evaluation, recommendation,finding, or other communication regarding a mediation to a court, agency, or otherauthority that may make a ruling on the dispute that is the subject of the mediation,but a mediator may disclose:

(1) whether the case is not appropriate for mediation, whether the mediationoccurred or has terminated, whether a settlement was reached, and attendance;

(2) a mediation communication as permitted under section 5717 of this title; or

(3) a mediation communication evidencing abuse, neglect, abandonment, orexploitation of a child or vulnerable adult to a public agency responsible forprotecting such individuals against such mistreatment.

(b) A communication made in violation of subsection (a) of this section may not beconsidered by a court or other tribunal.

(c) Subsections (d), (e), (f), and (g) of this section do not apply to an individual actingas a judge.

(d) Before accepting a mediation, an individual who is requested to serve as amediator shall:

(1) make an inquiry that is reasonable under the circumstances to determinewhether there are any known facts that a reasonable individual would consider likelyto affect the impartiality of the mediator, including a financial or personal interest inthe outcome of the mediation and an existing or past relationship with a party orforeseeable participant in the mediation; and

(2) disclose as soon as is practicable before accepting a mediation any suchfact known.

(e) If a mediator learns any fact described in subdivision (d)(1) of this section afteraccepting a mediation, the mediator shall disclose as soon as is practicable.

(f) A mediator shall be impartial, unless, after disclosure of the facts required insubsections (d) and (e) of this section, the parties agree otherwise.

(g) A person who is requested to serve as a mediator shall disclose the mediator'squalifications to mediate a dispute if requested to do so by a party.

(h) A person who violates subsection (d), (e), or (f) of this section is precluded fromasserting a privilege under section 5715 of this title.

(i) Unless otherwise required by law, no special qualification by background orprofession is necessary to be a mediator under this chapter. (Added 2005, No. 126(Adj. Sess.), § 1.)

§ 5719. Nonparty participation in mediation

An attorney or other individual designated by a party may accompany the party toand participate in a mediation. A waiver of participation given before the mediationmay be rescinded. (Added 2005, No. 126 (Adj. Sess.), § 1.)

§ 5720. Confidentiality

Unless subject to 1 V.S.A. chapter 5, subchapter 2 or 3, mediation communicationsare confidential to the extent agreed to by the parties or provided by law. (Added2005, No. 126 (Adj. Sess.), § 1.)

§ 5721. Relation to Electronic Signature in Global and National Commerce Act

This chapter modifies, limits, and supersedes the federal Electronic Signatures inGlobal and National Commerce Act (Act), 15 U.S.C. § 7001(c), except that nothing inthis chapter modifies, limits, or supersedes Section 101(c) of the Act nor authorizeselectronic delivery of any of the notices described in Section 103(b) of the Act.(Added 2005, No. 126 (Adj. Sess.), § 1.)

§ 5722. Severability clause

If any provision of this chapter or its application to any person or circumstance isheld invalid, the invalidity does not affect other provisions or applications of thischapter which can be given effect without the invalid provision or application, and, tothis end, the provisions of this chapter are severable. (Added 2005, No. 126 (Adj.Sess.), § 1.)

§ 5723. Application to existing agreements or referrals

(a) This chapter governs a mediation pursuant to a referral or an agreement tomediate made on or after July 1, 2006.

(b) On or after July 1, 2008, this chapter governs an agreement to mediatewhenever made. (Added 2005, No. 126 (Adj. Sess.), § 1.)

1

PROPOSED

STATE OF VERMONT

VERMONT SUPREME COURT

______________ TERM, 2015

Order Promulgating Addition of Rule 18 and Amendments to Rules 4(a)(2) and 9(a)(2) of

the Vermont Rules for Family Proceedings

Pursuant to the Vermont Constitution, Chapter II, Section 37, and 12 V.S.A. § 1, it is

hereby ordered:

1. That Rule 18 of the Vermont Rules for Family Proceedings be added to read as

follows:

RULE 18. MEDIATION

(a) Applicability. This rule applies to all actions and proceedings under V.R.F.P. 4(a)-

(q) and V.R.F.P. 8.

(b) Order to Mediate. Except as provided in subdivision (c), the court, on its own

motion or the motion of a party, at any time after the commencement of an action or proceeding

to which this rule applies may order the parties to participate in mediation of any issue or issues

involved in the action or proceeding if the court determines that the issue or issues could be

resolved or clarified through mediation and that the interest of the parties and the court in a fair,

economical, and efficient resolution of the issues would be served thereby.

(c) Exceptions. The court will not order mediation if

(1) at the commencement of the action or proceeding, the parties jointly certify

that they have in good faith voluntarily engaged in mediation with a neutral of their

choice regarding the issue or issues that would have been the subject of the court’s order

and file with the court a report of the neutral describing the process employed and the

results;

(2) at, or at any time after, the commencement of the action or proceeding, jointly

agree on the record that they will voluntarily participate in mediation regarding the issue

or issues that would have been the subject of the court’s order and will file the neutral’s

report of the process and results by a specific date;

(3) a relief from abuse action is pending between the parties or a final order has

ever been issued in such an action between the parties; or

(4) the court determines that mediation would not be appropriate due to

allegations of abuse, the possibility of undue hardship, or for other reasons.

2

(d) Conduct of Mediation. In a mediation ordered under subdivision (b),

(1) The mediation will be conducted by an individual mediator from the Family

Division Mediation Program’s list of mediators, acceptable to the court and the parties. If

no mediator on the Mediation Program’s list who is acceptable to the court and the

parties is available to conduct the mediation, the court, with the agreement of the parties,

may designate another mediator with credentials comparable to the minimum

requirements for inclusion on the list.

(2) The mediation will be carried out on a schedule prepared by the parties in

consultation with the mediator and approved by the court unless the court subsequently,

on the request of the parties and mediator, approves a modification.

(3) The mediator will meet with each party separately prior to the mediation and

may meet with any party separately at any time during the mediation.

(4) The parties are expected to attend all mediation sessions and to mediate in

good faith. Attorneys may attend mediation sessions with their clients.

(5) If at any time the mediator determines that the issues are not suitable for

mediation, the mediator may refer the matter back to the court to be determined in

further proceedings as ordered by the court.

(6) The mediator has no authority to make a decision or impose a settlement

upon the parties. Any settlement must be voluntary. The parties may reach a partial

settlement of the issues and preserve the right to litigate remaining issues. In the

absence of settlement, the parties retain their rights to a resolution of all issues through

litigation.

(7) Any agreement reached by the parties through the mediation process on all or

some of the disputed issues must be reduced to writing, signed by each party and the

mediator, and filed with the court by the parties within ten days after the date of the last

signature.

(8) If no settlement is reached by the date specified in the schedule approved or

modified under paragraph (2), the parties must notify the court in writing. The matter

will then be determined by the court as provided in any agreement reached in the

mediation and approved by the court or, in the absence of agreement, as ordered by the

court.

(e) If a party, lawyer, or other person who is required to participate in mediation under

this rule does not appear at the mediation, or does not comply with any other requirement of this

rule or any order made under it, unless that person shows good cause for not appearing or not

complying, the court will impose one or more of the following sanctions:

3

(1) The court will require the party or lawyer, or both, to pay the reasonable

expenses, including attorney fees, of the opposing party, and any fees and expenses of the

mediator, incurred by reason of the nonappearance, unless the court finds that such an

award would be unjust in the circumstances.

(2) In addition, the court may upon motion of a party, or upon its own motion,

order the parties to submit to mediation, dismiss the action or any part of the action,

render a decision or judgment by default, or impose any other sanction that is just and

appropriate in the circumstances.

Reporter’s Notes

Rule 18 is added to make clear that mediation may be ordered in a

Family Division proceeding and to provide standards and a procedure for

the process. The rule is not intended to preclude voluntary use of

mediation or another form of ADR by agreement of the parties without

judicial involvement. See discussion of Rule 18(c)(1) and (2) below.

Simultaneous amendments to V.R.F.P. 4(a) and 9(a) make clear that the

provisions of V.R.C.P. 16.3 for alternative dispute resolution no longer

apply in the Family Division.

The rule is intended to resolve a difference of opinion among

Family Division judges. Some judges were ordering mediation; others

declined to do so because there was no express provision for the general

use of ADR in the Family Rules. V.R.C.P. 16.3 permits or requires the

court to order mediation or other forms of ADR in many types of civil

actions. That rule is expressly incorporated in V.R.E.C.P. 2(d), with the

result that the process is being used effectively in the Environmental

Division. The rules and statutes of a number of other states, including New

Hampshire and Maine, expressly provide for mandatory mediation in

family cases. See, e.g., N.H. R. Fam. Div. 2.13, 2.14.

The Vermont bench and bar generally support the idea of mediation

in the Family Division. When used in Vermont, the process has been found

generally beneficial for the parties. Specific benefits include (1)

management of conflict and decreasing acrimony between parties in

disputes concerning parental rights and responsibilities, (2) promotion of

the best interests of children, (3) improvement of the parties’ satisfaction

with the outcome of Family Division matters, (4) increased participation of

parties in making decisions for themselves and their children, (5) increased

compliance with court orders, (6) reduction in the number and frequency of

cases returning to court, and (7) improvements in court efficiency.

Rule 18(a) specifies that the rule applies only in the matters covered

in V.R.F.P. 4(a)-(q), whether before a judge or before a magistrate under

V.R.F.P. 8. Property matters before a master under Rule 4(r) and parent

4

coordination proceedings under Rule 4(s) are excluded because they

provide a different, specialized, form of ADR. The rule does not apply in

abuse prevention proceedings under V.R.F.P. 9, or when the parties are

involved in such proceedings or a final order has previously been issued in

such proceedings between them. See Rule 18(c)(3). See also Reporter’s

Notes to simultaneous amendment of V.R.F.P. 9(a).

Rule 18(b) provides that, with important exceptions set out in

subdivision (c), the court may order mediation of any or all issues at any

time after commencement of the action on its own or a party’s motion on a

determination that mediation would resolve or clarify the issues and that

mediation would serve the interests of both the parties and the court in “a

fair, economical, and efficient resolution of the issues.”

Rule 18(c)(1) and (2) make clear that the rule is not intended to

preclude voluntary use of mediation by agreement of the parties. Under

paragraph (c)(1), the court will not order mediation if the parties certify that

they voluntarily engaged in mediation with a neutral of their choice before

the action was commenced and file the neutral’s report with the court.

Alternatively, under paragraph (c)(2), if the parties agree on the record after

the commencement of the action that they will engage in mediation and

will file the neutral’s report by a specific date, mediation will not be

ordered. Note that these two provisions come into play only if one party

has moved for mediation and withdraws the motion or the court has

indicated an intention to order mediation on its own motion. If no motion

for mediation has been made or proposed, the parties are free to engage in

mediation or another form of ADR at any time as part of their efforts to

settle the issues between them.

Rule 18(c)(3) and (4) address the problem of abuse, which is a

significant risk in using mediation in domestic violence situations, where

an abuser may seek to manipulate or control the other party’s responses in

the proceeding. As previously noted, mediation is not available in a relief

from abuse proceeding under Rule 9. As a further precaution, paragraph

(c)(3) provides that mediation may not be ordered if an RFA proceeding is

pending or a final RFA order has ever been issued in an action between the

parties. Under paragraph (c)(4), the court will not order mediation if, even

in the absence of an RFA proceeding, there are allegations of abuse or child

neglect; the process could involve financial or physical hardship for a

party; or there are “other reasons.” Those reasons could include findings of

alcohol or drug abuse or other serious emotional or psychological

condition, the unavailability of an acceptable mediator within a reasonable

time given the demands of the proceeding, or deliberate use of the process

by a party to defer action on the merits.

5

Rule 18(d) provides details of the process by which mediation

ordered under Rule 18(b) is to be carried out. To assure that any mediator

selected has sufficient training and experience to deal with all issues that

may arise, including situations of domestic violence, paragraph (d)(1)

provides that the court will ordinarily designate a mediator acceptable to

the court and the parties from the Family Division Mediation Program’s list

of mediators. Individuals on that list are selected after meeting significant

requirements of experience and training. If no acceptable mediator on the

list is available, the court, with the agreement of the parties, may designate

another mediator with credentials comparable to the minimum

requirements for inclusion on the list. If no acceptable mediator can be

found or agreed upon within a reasonable time, as noted above, under Rule

18(c)(4) the court will not order mediation.

Other provisions of subdivision (d) describe standard mediation

practice. The mediation schedule prepared by the parties and mediator is

subject to approval and modification by the court. The mediator must meet

separately with the parties at the outset and may do so at any time during

the mediation. The parties are to attend all sessions and participate in good

faith. They may be accompanied by counsel. Under paragraph (d)(5), if the

mediator determines for any reason that the matter cannot be mediated, the

mediator may send the matter back to the court for judicial determination.

Paragraph (d)(6) provides that any settlement reached must be

voluntary. The parties have the right to litigate any issues not settled in the

mediation. Under paragraphs (d)(7) and (8), any agreement reached must

be filed in court within 10 days by the parties in a writing signed by them

and the mediator. If no settlement is reached by the scheduled date, the

parties must notify the court in writing. The court may then determine the

matter in accord with any agreement that has been reached, or may order

further proceedings in its discretion.

Subdivision (e), based on V.R.C.P. 16.3(h), has been added to

assure appropriate participation in the mediation process.

2. That Rule 4(a)(2) of the Vermont Rules for Family Proceedings be amended to read as

follows (new matter underlined; deleted matter struck through):

RULE 4. DIVORCE, ANNULMENT, AND LEGAL SEPARATION; ABUSE

PREVENTION

(a) Applicability of Rules.

* * * * * *

6

(2) Rules Not Applicable. Rules 16.3 (Alternative Dispute Resolution) and 79.1

(Appearance and Withdrawal of Attorneys) of the Vermont Rules of Civil Procedure does

not apply to actions under this rule.

Reporter’s Notes—2015 Amendment

Rule 4(a)(2) is amended to reflect the fact that V.R.F.P. 18, promulgated

simultaneously, establishes a mediation rule for Family Division cases that

renders the application of V.R.C.P. 16.3 for alternative dispute resolution

unnecessary and inappropriate.

3. That Rule 9(a)(2) of the Vermont Rules for Family Proceedings be amended to read as

follows (new matter underlined; deleted matter struck through):

RULE 9. ABUSE PREVENTION

(a) Application of Civil Rules.

* * * * *

(2) Rules Not Applicable. Rules 16.3 (Alternative Dispute Resolution) and 79.1

(Appearance and Withdrawal of Attorneys) of the Vermont Rules of Civil Procedure does

not apply to actions under this rule.

Reporter’s Notes—2015 Amendment

Rule 9(a)(2) is amended to reflect the fact that V.R.F.P. 18,

promulgated simultaneously, establishes a mediation rule for Family

Division cases that does not apply to cases under Rule 9 and renders the

application of V.R.C.P. 16.3 for alternative dispute resolution unnecessary

and inappropriate.

4. That these rules are prescribed and promulgated effective _________, 2015. The

Reporter's Notes are advisory.

5. That the Chief Justice is authorized to report these rules to the General Assembly in

accordance with the provisions of 12 V.S.A. § 1, as amended.

Dated in Chambers at Montpelier, Vermont, this ___ day of __________, 2015.

____________________________________

Paul L. Reiber, Chief Justice

____________________________________

John A. Dooley, Associate Justice

7

____________________________________

Marilyn S. Skoglund, Associate Justice

____________________________________

Beth Robinson, Associate Justice

____________________________________

Harold E. Eaton, Jr., Associate Justice

Documents

Hot Topics New Developments in Trusts & Estates 6-19-15.pdf · Hot Topics – New Developments in Trusts & Estates ... 1‐2‐3look‐back of Adjusted Taxable Gifts ... Reduce taxable