Montana Lawyer April/May 2024

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or other interested third parties, such as a guardian, conservator, spouse, parent, or descendant. While not stated in the stat ute, it may be useful to have an attorney represent the principal or the principal’s interests in the transaction. The belt-and-suspenders approach may appear overkill. However, the Montana slayer statute was amended in 2019 to include new provisions to disinherit individuals who financially exploit a vulnerable adult. § 72-2-813, MCA. Financial exploitation is defined as follows: The act of purposefully or know ingly standing in a position of trust and confidence with a vulnerable adult and obtaining, using, or attempting to obtain or use at least $1,000, whether in one or more acts, of a vulnerable person’s money, assets, or property with the intent to temporarily or permanently deprive the vulnerable adult of the use, benefit, or possession of the money, assets, or prop erty or to benefit someone other than the vulnerable adult. § 72-2-813(1)(c), MCA, goes on to provide a non-exhaustive list of examples of financial exploitation that includes “acting or failing to act, including the use of a power of attorney, in order to… convert money, assets, or property of a vulnerable adult to deprive the vulner able adult of the ownership, use, benefit, or possession of the money, assets, or property.” § 72-2-813(1)(c)(i)(B), MCA. A vulnerable adult is defined as, among other things, a person who is 60 years or older; functionally, mentally, or physically unable to provide self-care; or incapaci tated. § 72-2-813(1)(f), MCA. This broad language creates a risk for the agent in his or her individual capacity if the agent is also an heir or devisee under the princi pal’s estate plan. The other heirs or devi sees may seek to use these provisions to disinherit the agent for actions he or she took using the FPOA. Thus, it seems pru dent to advise the agent that this statute exists, and to the extent the agent desires to minimize some of this risk during the principal’s lifetime, to seek court approval when it’s appropriate. In addition to gifting, there are other actions that require a specific grant of authority in the FPOA. Unless the FPOA expressly provides otherwise, an agent

cannot do any of the following: (1) Create, amend, revoke, or termi nate a revocable living trust; (2) Create or change rights or survivorship; (3) Create or change a beneficiary designation; (4) Waive the principal’s right to be a beneficiary of a joint or survivor annu ity; including a survivor benefit under a retirement plan; or (5) Disclaim property. § 72-31-336, MCA. § 72-31-336(2), MCA, provides that the agent cannot use the power to create a benefit for the agent or a person the agent owes a “legal obliga tion of support” unless the FPOA pro vides otherwise. In other words, the agent should not use these powers to benefit himself or herself, or the individuals the agent is obligated to support, unless the principal authorized such a self-interested transaction in the FPOA. If the agent wishes to exercise one of these enhanced powers, it is important that we analyze and advise the agent on any impact the changes may have on the principal’s estate planning and taxes. Unless the FPOA provides otherwise, § 72-31-319(2)(f), MCA, imposes a duty upon an agent under a FPOA to attempt to preserve the principal’s estate plan, to the extent it’s known to the agent and is in the principal’s best interests. This applies even if the principal has not executed a will, trust, or other testamen tary instrument! The principal’s failure to make an estate plan still results in an es tate plan under Montana’s intestacy laws. As a result, we should advise the agent that the intestacy laws count as an estate plan that requires preservation. The preservation of the estate plan includes, but is not limited to, preserv ing the value and extent of the principal’s property and the minimization of taxes, including income, estate, inheritance, generation-skipping transfer, and gift taxes. The agent must also evaluate the principal’s foreseeable obligations and needs for maintenance. The agent should maintain sufficient records to justify any actions taken by the agent that may trig ger a change in an estate plan. The agent should also be leery of using their author ity to make changes that benefit the agent personally, either directly or indirectly,

because (1) they risk triggering a claim under the revised slayer statute; and (2) because it may be a breach of the agent’s other duties to the principal, as more fully explained below. However, if the agent can prove that he or she acted in good faith, then the agent may avoid liability to the beneficiary for failing to preserve the estate plan. § 72-31-319(3), MCA. IV. Agent’s Fiduciary Obligations to the Principal. § 72-31-319(1)(a)-(c), MCA, provides three core duties that an agent owes a principal. The agent can only act within the scope of the authority granted under the FPOA. The agent must either act according to the principal’s reasonable expectations (if the agent has knowledge of those expectations), but if not, then in the principal’s best interests. The agent must act in good faith. These three duties cannot be waived under the terms of an FPOA. § 72-31-319(1)(a)-(c), MCA, goes on to specify other duties that the agent may assume unless the FPOA provides other wise. These duties include acting loyally for the principal’s benefit; avoiding con flicts of interest that impair the agent’s ability to act impartially for the benefit of the principal; duty to keep a record of receipts, disbursements, and transactions on behalf of the principal; acting with care, competence, and diligence; cooper ating with the agent appointed to make health care decisions on the principal; and attempting to preserve the principal’s estate plan. At its core, the purpose of these statutes is to ensure that the assets of the principal are used in the same or similar manner as the principal would have used them but for the principal’s incapacity or other triggering event. The agent’s role is to ensure the principal receives the ben efit of his or her assets, the assets are used to care for the principal, and the assets are managed responsibly. If the agent violates these duties, then the agent is liable to the principal or the principal’s successors in interest to restore the property to the value it would have been without the violation; and to reimburse the principal or the principal’s successors in interest for the attorney fees and costs paid on the agent’s behalf. § 72 31-322, MCA. The risk to the agent is in