Guarding Against the Increased Costs, Expenses and Reporting Requirements in Nebraska Guardianships & Conservatorships with Powers of Attorney

As of January 1, 2012, Nebraska’s guardianship and conservatorship laws have undergone significant changes due to a few “bad actors.”  These legislative changes provide even more reason for all adult individuals to have durable power of attorney documents in place appointing a substitute decision maker. This e-brief discusses various types of substitute decision makers, provides an overview of the changes in Nebraska’s guardianship and conservatorship laws, and explains the importance of durable power of attorney documents in avoiding the burdens imposed by such changes.

First, it is important to understand what a “substitute decision maker” is.  Specifically, a substitute decision maker is someone who has the legal authority to make certain decisions on another’s behalf. The most commonly recognized types of substitute decision makers include conservators, guardians, and attorneys-in-fact or agents under a power of attorney.

A conservator is a person appointed by the court as a substitute decision maker for an incapacitated person to make decisions concerning that person’s property and assets. For example, if you are deemed incapacitated and a conservator is appointed for you, the conservator can invest and reinvest your money and assets; continue or participate in the operation of your business; buy or sell property on your behalf; sell or invest in stocks; borrow money to be paid back by your assets; employ professionals such as attorneys or accountants to perform services on your behalf; or prosecute or defend legal actions to protect your assets.

Similarly, a guardian is a person appointed as a substitute decision maker for an incapacitated person by a court. A guardianship may be either a full guardianship or a limited guardianship. For example, under a full guardianship, the guardian would have sole authority to make decisions regarding where you live; your medical care; your personal property; consents/releases, contracts, or legal proceedings on your behalf; and, if no conservator has been appointed, the handling of your property and money. In contrast, under a limited guardianship, you would retain the right to make certain of the above decisions. The court will determine the type and extent of guardianship that is needed in each situation.

The court chooses who will serve as the guardian and/or conservator. In general, this may be your spouse, an adult child, parent or other relative. However, Nebraska law requires that the court give priority to certain persons. Once appointed, the guardian/conservator serves under the supervision of the court and the extent of their authority may be limited by the court and by applicable law.

With the recent changes in Nebraska’s guardianship and conservatorship laws, the steps required to be taken to become or to serve as a guardian and/or a conservator have become much more daunting. First, a person nominated to serve as a guardian and/or conservator must undergo several background checks before being appointed, including checks of the nominee’s credit history, the nominee’s criminal history, and the state sex offender and abuse/neglect registries.  The new law also imposes increased reporting and notice requirements on those serving as guardians and/or conservators. As a result, the costs associated with the appointment of a guardian and/or conservator and the costs and other burdens associated with complying with the legal administrative requirements while serving as a guardian and/or conservator have increased significantly.

Consequently, it is even more important than ever for individuals to obtain properly drafted durable power of attorney documents.  Specifically, in most instances, a properly drafted power of attorney can act as a substitute for the appointment of a guardian or conservator. A power of attorney is a document creating a legal relationship between a “principal” and an “agent” (also known as an “attorney-in-fact”). The agent is the substitute decision maker authorized to make decisions on behalf of the principal, a person needing help in making decisions. Powers of attorney come in several forms, such as powers of attorney for health care, powers of attorney for asset management, and powers of attorney for specific transactions. A power of attorney can be drafted to become effective immediately or only upon the principal’s incapacity. A power of attorney generally terminates upon cancellation by or upon the death of the principal. A power of attorney which is not “durable” will also terminate upon the incapacity of the principal, i.e., the power of attorney must contain language expressly providing that the power of the agent continues after the principal becomes incapacitated.

A Durable Power of Attorney for Health Care and a Durable Power of Attorney for Asset Management can play an important role in the event one becomes incapacitated or unable to make their own medical or financial decisions. In contrast to a guardianship or conservatorship, durable powers of attorney offer greater flexibility. The principal chooses the person serving as the agent and determines the specific powers or types of decisions the agent may make on the principal’s behalf. The agent is not subject to court supervision and thus can perform certain actions without seeking court approval or without having to report and account to the court for decisions made. This also allows for a certain amount of privacy with respect to the amount or extent of property and money belonging to the principal.

With appropriate durable powers of attorney in place, individuals can spare themselves and their families the burden and expense of guardianship and conservatorship proceedings under Nebraska’s new laws. You should consult with your legal counsel if you currently do not have or have not recently updated such powers of attorney to ensure that you and your family are protected in the event of your disability or incapacity.