hot topics new developments in trusts & estates 6-19-15.pdf · hot topics – new developments...
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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.
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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
Vermont Bar AssociationCLE June 19, 2015
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
Vermont Bar AssociationCLE June 19, 2015
20 states and D.C. have an estate tax
9 of those states have or will have legislation going to the federal exemption
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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
Vermont Bar AssociationCLE June 19, 2015
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
Vermont Bar AssociationCLE June 19, 2015
the value of the federal gross estate…excluding the value of real or tangible personal property which has an actual situs outside Vermont.
Vermont Bar AssociationCLE June 19, 2015
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Section 67 Final Regulations
Deductibility of fees subject to and not subject to the 2% floor
Vermont Bar AssociationCLE June 19, 2015
VBA Seminar
Valuation Cases
Vermont Bar AssociationCLE June 19, 2015
Richmond v. Commissioner of Taxes
Tax Court
37.4% discount
Undervaluation penalty applied
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Elkins v. Commissioner of Taxes
Tax Court
10% discount for undivided interest in art
Vermont Bar AssociationCLE June 19, 2015
Guistina v. Commissioner of Taxes
Tax Court
Discounts with respect to timberland
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Adell v. Commissioner
Discount business for “goodwill.” Son had the contacts (goodwill) not the decedent.
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IRS Recognizes State Court Trust Reformation
“incredibly defective trust” not “gaming the system”
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system
SEC v. Wyly
Resurrection of the “de facto trustee” concept
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Asset Protection Trusts
Mississippi has a new APT statute
Dahl v. Dahl – Utah divorce; Nevada APT
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Inherited IRAs
No creditor protection
Clark v. Rameker
(Patterson v. Schumate; Vt. IRA creditor protection)
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protection)
State Income Tax “Resident Trust” Cases
3 cases: Illinois, New Jersey & Pennsylvania
Not a resident trust merely because settlor was
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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
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Trustees were material participants on large real estate trust
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Administration’s Proposals
General Explanations of the Administration’s Fiscal Year 2016 Revenue Proposals
(the “Green Book”)
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§1014
Treating Gifts & Bequests as Realization Events (“tax loophole”)
Eliminate Step‐Up in Basis
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Eliminate Step Up in Basis
Green Book Proposal
Increase the Capital Gain Rate to 28%
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Green Book Proposal
Restore Federal Estate Tax Exemption at $3.5 million and Gift Tax Exemption at $1.0
Vermont Bar AssociationCLE June 19, 2015
Green Book Proposal
New GRAT Requirements: 10 years
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Green Book Proposal
Sale to Grantor Trusts
Include sold assets in trust
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Green Book Proposal
Annual Gift Exclusion
$14k per donee
$50k per donor
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$50k per donor
Other Matters
GST Exemption
99 year limitGuistina v. Commissioner of Taxes
§ 6166 lien provision
Vermont Bar AssociationCLE June 19, 2015
§ 6166 lien provision
Definition of executor
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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
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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.
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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.))
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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
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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
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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?
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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
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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
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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?
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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
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Charitable or altruistic motives
Defense against creditors
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Traditional Uses of Disclaimers
Advance Planning
Credit shelter trust funding mechanism
General dispositive flexibility
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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.
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Qualified Disclaimer: IRC Section 2518
Writing that adequately describes the disclaimed property
Made within 9 months of date interest created
No acceptance
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Disclaimed property must pass without direction
Qualifies under state law
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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
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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
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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
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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
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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
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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
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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
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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
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documentation requirements and data to date
• Factors that have impacted implementation
• 2015 Legislative changes
• Surrogate consent legislation
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VERMONT
• Passed and Enacted in May of 2013 (Act 39)(18 V.S.A., chapter 113)
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• 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
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and obtain a lethal prescription of a medication to be self-administered for the purpose of hastening their death.
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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
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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
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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)
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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)
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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
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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
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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
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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)
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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
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• 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
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• 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
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PROCESS REQUIREMENTS – SUMMARY OF PROTOCOL
• 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
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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.
PROCESS REQUIREMENTS – SUMMARY OF PROTOCOL
• 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
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• 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.
PROCESS REQUIREMENTS – SUMMARY OF PROTOCOL
• 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
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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.
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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
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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
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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
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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.
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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
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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.
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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
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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.
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• 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
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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.
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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;
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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
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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:
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• 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.
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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)
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• 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
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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?
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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
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.
Fiduciary Access to Digital Assets
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).
Fiduciary Access to Digital Assets
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
Fiduciary Access to Digital Assets
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.
Fiduciary Access to Digital Assets
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.
Fiduciary Access to Digital Assets
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.
Fiduciary Access to Digital Assets
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.
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
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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.
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
(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.)
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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.
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(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:
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(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.
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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