I. INTRODUCTION
With passage of LB 1113, the law governing powers of attorney in Nebraska has been conformed to the Uniform Power of Attorney Act, with certain modifications. The highlights of the Nebraska Uniform Power of Attorney Act (the “Act”), which became effective on January 1, 2013, are set forth below.
A. Powers of Attorney – General Application (Section 2)
A power of attorney is a writing that grants authority to an agent to act in the place of the principal, whether or not the term “power of attorney” is used. Pursuant to the Act, a principal is an individual who grants authority to an agent and an agent is the person granted authority by the principal in a power of attorney, whether denominated an agent, attorney in fact, or otherwise.
The Act allows for both durable and nondurable powers of attorney. A durable power of attorney is one that is not terminated by the incapacity of the principal, whereas a nondurable power of attorney is terminated upon the principal’s incapacity. Under the Act, a power of attorney created after January 1, 2013, is durable unless it expressly provides that it is terminated by the incapacity of the principal.
1. Exceptions (Section 3)
The Act applies to all powers of attorney created by an individual except (a) a proxy or other delegation to exercise voting or management rights with respect to an entity; (b) a power to make healthcare decisions; (c) a power created on a form prescribed by a governmental agency, subdivision or instrumentality for a governmental purpose; and (d) any power coupled with an interest in the subject of the power (e.g., a power given to a creditor to sell pledged collateral).
B. The Power of Attorney Instrument
1. Execution (Sections 5 and 6)
A power of attorney executed after January 1, 2013, must be signed by the principal and be acknowledged by the principal before a notary public or other individual authorized by law to take acknowledgments or it is not valid. A signature on a power of attorney is presumed to be genuine if the principal acknowledges the signature before a notary public or other individual authorized by law to take acknowledgments.
A power of attorney executed in Nebraska prior to January 1, 2013, is valid if its execution complied with the laws of Nebraska as they existed at the time it was executed. Additionally, the law recognizes powers of attorney executed in another state as valid in Nebraska (even if it doesn’t comply with the execution requirements of Nebraska) if it complied with the law of the jurisdiction that determines the meaning and effect of the power of attorney at the time it was executed or if it complied with the requirements for a military power of attorney pursuant to 10 U.S.C. 1044b.
Under the Act, a photocopy or electronically transmitted copy of an original power of attorney has the same effect as the original.
2. Meaning and Effect of Power of Attorney (Section 7)
The meaning and effect of a power of attorney is determined by the law of the jurisdiction indicated in the power of attorney and, in the absence of an indication of jurisdiction, by the law of the jurisdiction in which the power of attorney was executed.
3. When Power of Attorney Becomes Effective (Section 9)
The Act establishes a default rule that a power of attorney is effective immediately upon delivery unless the principal chooses to create a “springing” power of attorney. A “springing” power of attorney is one that becomes effective at a future date or upon the occurrence of a future event or contingency. If a power of attorney becomes effective upon the occurrence of a future event or contingency, the principal, in the power of attorney, may authorize one or more persons to determine in writing or other record that the event or contingency has occurred. If a power of attorney becomes effective upon the principal’s incapacity and the principal has not authorized a person to determine whether the principal is incapacitated, or the person authorized is unable or unwilling to make the determination, the power of attorney becomes effective upon a determination that the principal is incapacitated set forth in a written or other record by a licensed physician or licensed psychologist or the court or an appropriate governmental official. Under the Act, a person authorized to verify the incapacity of the principal may act as the principal’s personal representative for purposes of the Health Insurance Portability and Accountability Act, which includes obtaining access to the principal’s health-care information and communicating with the principal’s health care provider.
4. Termination (Section 10)
A power of attorney terminates upon the occurrence of any of the following events: (a) death of the principal; (b) incapacity of the principal and the power of attorney is not durable; (c) revocation of the power of attorney by the principal; (d) termination of the power of attorney pursuant to its terms; (e) accomplishment of the purpose of the power of attorney; or (f) revocation of the agent’s authority by the principal or death, incapacitation, or resignation of the agent and the power of attorney does not provide for another agent to act under the power of attorney.
An agent’s authority under a power of attorney terminates upon: (a) revocation of the authority by the principal; (b) death, incapacitation or resignation of the agent; (c) the filing of an action for dissolution or annulment of the agent’s marriage to the principal or their legal separation, unless the power of attorney otherwise provides; or (d) termination of the power of attorney.
A power of attorney, unless it otherwise provides, does not become ineffective due to a lapse of time since its execution. Termination of an agent’s authority or of a power of attorney is not effective as to the agent or another person that, without actual knowledge of the termination, acts in good faith (honesty in fact) under the power of attorney. Incapacity of the principal of a power of attorney that is not durable does not revoke or terminate the power of attorney as to an agent or other person that, without actual knowledge of the incapacity, acts in good faith under the power of attorney.
To effectively revoke a power of attorney, a subsequently executed power of attorney must expressly provide for the revocation of the previously created power of attorney or state that all other powers of attorney are revoked.
C. Agents
1. Designation of Agent (Section 11)
A principal may designate a single agent or two or more persons to act as co-agents. Unless the power of attorney otherwise provides, each co-agent may exercise its authority independently. Additionally, a principal may designate one or more successor agents to act if the initial agent resigns, dies, becomes incapacitated, is not qualified to serve, or declines to serve. A principal may grant authority to designate one or more successor agents to an agent or other person designated by name, office, or function. Unless the power of attorney provides otherwise, the successor agent (a) has the same authority as that granted to the original agent; and (b) may not act until all predecessor agents have resigned, died, become incapacitated, are no longer qualified to serve, or have declined to serve.
Unless otherwise provided in the power of attorney, an agent that does not participate in or conceal a breach of fiduciary duty committed by another agent, including a predecessor agent, is not liable for the actions of the other agent. However, an agent that has actual knowledge of a breach or imminent breach of fiduciary duty by another agent must notify the principal and, if the principal is incapacitated, take any action reasonably appropriate in the circumstances to safeguard the principal’s best interest. If an agent under such circumstances fails to notify the principal or take reasonable action to safeguard the principal’s interest, he will be liable for foreseeable damages, which might have been avoided if the agent had notified the principal or taken such action.
2. Reimbursement and Compensation of Agent (Section 12)
Unless otherwise provided in the power of attorney, an agent is entitled to reimbursement or expenses reasonably incurred on behalf of the principal and to compensation that is reasonable under the circumstances.
3. Acceptance (Section 13)
A person accepts the appointment as agent by exercising authority or performing duties as an agent or by any other assertion or conduct indicating acceptance.
4. Resignation (Section 18)
Unless the power of attorney provides otherwise, an agent may resign by giving notice to the principal and, if the principal is incapacitated; (a) to a conservator or guardian, if one has been appointed for the principal, and an co-agent or successor agent; or if there is no such person, to (i) the principal’s caregiver; (ii) another person reasonably believed by the agent to have sufficient interest in the principal’s welfare; or (iii) a governmental agency having the authority to protect the welfare of the principal.
D. Duties of Agent (Section 14)
The Act lists mandatory duties of the agent that cannot be altered by the power of attorney with the remaining duties being “default” rules which can be modified by the principal. The mandatory duties provide that all agents must act in good faith, within the scope of the authority granted, or reasonably implied by, the grant of the authority in the power of attorney, and in accordance with the principal’s reasonable expectations if known or in the principal’s best interest if the principal’s expectations are not known. Remaining duties, unless otherwise provided in the power of attorney, are to (1) act loyally for the principal’s benefit; (2) avoid conflicts of interest; (3) act with the care, competence and diligence ordinarily exercised by agents in similar circumstances; (4) keep a record of all receipts, disbursements, and transactions made on behalf of the principal; (5) cooperate with a person that has authority to make healthcare decisions for the principal; and (6) attempt to preserve the principal’s estate plan, to the extent actually known by the agent, if preserving the plan is consistent with the principal’s best interest based on all relevant factors.
An agent that acts in good faith is not liable to any beneficiary of the principal’s estate plan for failure to preserve the plan. Similarly, an agent who acts with care, competence, and diligence “for the best interest of the principal” is not liable solely because the agent also benefits from the act; or has a conflicting interest. If an agent is selected by the principal because of special skills or expertise possessed by the agent or in reliance on the agent’s representation of those skills or expertise, the special skills or expertise shall be considered in determining whether the agent has acted with care under the circumstances. Absent a breach of duty to the principal, the agent is not liable if the value of the principal’s property declines. An agent who exercises authority to delegate to someone else the authority granted by the power of attorney is not liable for any error of that person, provided the agent exercises care in the delegation and monitoring of the agent.
Unless the power of attorney provides otherwise, an agent is not required to disclose receipts, disbursements, or transactions conducted on behalf of the principal unless ordered by a court or requested by the principal, a guardian, a conservator, another fiduciary or agent acting for the principal, a government agency having authority to protect the welfare of the principal, or, upon the death of the principal, by the personal representative or successor in interest of the principal’s estate. If so requested, the agent must comply with the request within 30-days or provide a writing or other record substantiating why additional time is needed and must comply with the request within an additional 30-days.
E. Exoneration of Agent (Section 15)
Under the Act, the inclusion of an exoneration provision, relieving the agent of liability for breach of duty, is binding on the principal and the principal’s successors in interest unless the agent’s breach is “committed dishonestly, with an improper motive, or with reckless indifference to the purposes of the power of attorney or the best interest of the principal or if the exoneration provision was inserted in the power of attorney as the result of an abuse of confidential or fiduciary relationship with the principal.
F. Judicial Relief (Section 16)
Included within the list of persons who may petition a court to construe a power of attorney or review the agent’s conduct and grant appropriate relief is any person asked to accept the power of attorney. These provisions would allow a financial institution to which a power of attorney is presented for acceptance to petition a court for construction of the power of attorney.
G. Agent’s Liability (Section 17)
An agent violating the Act is liable to the principal or the principal’s successors in interest for the amount required to restore the value of the principal’s property to what it would have been had the violation not occurred. In addition, in a judicial proceeding involving the administration of a power of attorney, the court may award costs and expenses, including reasonable attorney’s fees to any party, to be paid by another party.
H. Acceptance and Reliance upon Acknowledged Power of Attorney (Section 19)
1. Acceptance
Under the Act, a person that in good faith accepts an acknowledged (purportedly verified before a notary public or other individual authorized to take acknowledgments) power of attorney without actual knowledge that the signature is not genuine, may rely upon the presumption under the Act that the signature is genuine. The Act provides broad protections for persons who, in good faith, (honesty in fact) accept an acknowledged power of attorney without actual knowledge that the power of attorney is void, invalid, or terminated, that the purported agent’s authority is void, invalid, or terminated, or that the agent is exceeding or improperly exercising the agents authority. In such cases, the power of attorney may be relied upon as if the power of attorney was genuine, valid, and still in effect, the agent’s authority was genuine, valid, and still in effect, and the agent had not exceeded and had properly exercised the authority.
While the Act does not require investigation into the validity of an acknowledged power of attorney or an agent’s authority, the act allows a person that is asked to accept an acknowledged power of attorney to request the agent’s certification under oath as to any actual matter concerning the principal, agent, or power of attorney; an English translation of the power of attorney if the power of attorney contains, in whole or in part, language other than English; and an opinion of counsel as to any matter of law concerning the power of attorney, if the person making the request provides in a writing or other record the reason for request.
An English translation or opinion of counsel requested under this section must be provided at the principal’s expense unless the request is made more than seven business days after the power of attorney is presented for acceptance. The act also specifically rejects an imputed knowledge standard for persons who conduct activities through employees. Specifically, such persons are held to be without actual knowledge of a fact relating to a power of attorney, a principal, or an agent if the employee conducting the transaction involving the power of attorney is without actual knowledge of the fact. By way of example, if an employee who accepts a forged, invalid, or revoked power of attorney did so honestly and without actual knowledge that it was forged, invalid, or revoked, the employer is insulated from liability.
2. Liability for Refusal to Accept Acknowledged Power of Attorney (Section 20)
Under the Act, a person must either accept an acknowledged power of attorney or request a certification, translation, or an opinion of counsel within seven business days of presentation of the power of attorney for acceptance. If a person requests a certification, a translation, or an opinion of counsel, the person must accept the power of attorney within five business days of receiving the requested document. Additionally, a person may not require an additional or different form of power of attorney for authority granted in the power of attorney presented. For purposes of the act, the term “business day,” excludes Saturdays, Sundays, and state or nationally observed legal holidays.
The Act also provides a person with significant protection against liability for rejecting a power of attorney by providing clear “safe harbors” for legitimate refusals. Specifically, a person is not required to accept an acknowledged power of attorney if: (a) the person is permitted to refuse transacting business with the principal in the same circumstances; (b) engaging in the transaction with the agent or the principal in the same circumstances would be inconsistent with state or federal law; (c) a person has actual knowledge of the termination of the agents authority or of the power of attorney before exercise of the power; (d) a request for a certification, a translation, or an opinion of counsel has been refused; (e) the person believes in good faith that the power is not valid or that the agent did not have the authority to perform the act requested; (f) the person makes, or has actual knowledge that another person has made, a report to the local adult protective services office stating a good faith belief that the principal may be subject to physical or financial abuse, neglect, exploitation, or abandonment by the agent or a person acting for or with the agent; (g) the person brought, or has actual knowledge that another person has brought, a judicial proceeding for construction of a power of attorney or review of the agent’s conduct; or (h) the power of attorney becomes effective upon the occurrence of an event or contingency, and neither a certification nor evidence of the occurrence of the event or contingency is presented to the person being asked to accept the power of attorney.
A person may not refuse to accept an acknowledged power of attorney if: (a) the person’s reason for refusal is based exclusively upon the date the power of attorney was executed; or (b) the person’s refusal is based exclusively on a mandate that an additional or different power of attorney form must be used. A person refusing to accept an acknowledged power of attorney in violation of the act is subject to: (a) a court order mandating acceptance of the power of attorney; and (b) liability for reasonable attorney’s fees and costs incurred in any action or proceeding that confirms the validity of the power of attorney or mandates acceptance of the power of attorney.
I. Laws Applicable to Financial Institutions and Entities (Section 22)
The Act expressly provides that laws governing financial institutions are not superseded by the Act and in the event that laws applicable to financial institutions conflict with the Act, the other law will control.
J. Authority that Requires Specific Grant of Authority (Section 24)
An express, specific grant of authority must be given by a principal to an agent for certain acts due to the risk that such acts may pose to the principal’s property and estate plan. Acts requiring a specific grant of authority include: (a) creating, amending, revoking, or terminating an inter vivos trust; (b) making a gift; (c) creating or changing rights of survivorship; (d) creating or changing a beneficiary designation; (e) delegating authority granted under the power of attorney; (f) waiving the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan; (g) exercising fiduciary powers that the principal has authority to delegate; or (h) renouncing or disclaiming property, including the power of appointment.
K. Authority with Respect to Particular Subjects (Sections 27-40)
A power of attorney may grant an agent authority with respect to a particular subject by using the descriptive term for the subject or by citing to the section in the Act where the authority is described. For example, if a power of attorney grants an agent authority over the principal’s real property, the agent will have the authority described in Section 27 of the Act. One of the categories of the powers that may be initialed on the new statutory form POA is “Banking and other financial institutions.” Under this category, an agent is authorized to: (a) Continue, modify, and terminate an account or other banking arrangement made by or on behalf of the principal; (b) Establish, modify, and terminate an account or other banking arrangement with a bank, trust company, savings and loan association, credit union, thrift company, brokerage firm, or other financial institution selected by the agent; (c) Contract for services available from a financial institution, including renting a safe deposit box or space in a vault; (d) Withdraw, by check, order, electronic funds transfer, or otherwise, money or property of the principal deposited with or left in the custody of a financial institution; (e) Receive statements of account, vouchers, notices, and similar documents from a financial institution and act with respect to them; (f) Enter a safe deposit box or vault and withdraw or add to the contents; (g) Borrow money and pledge as security personal property of the principal necessary to borrow money or pay, renew, or extend the time of payment of a debt of the principal or a debt guaranteed by the principal; (h) Make, assign, draw, endorse, discount, guarantee, and negotiate promissory notes, checks, drafts, and other negotiable or nonnegotiable paper of the principal or payable to the principal or the principal's order, transfer money, receive the cash or other proceeds of those transactions, and accept a draft drawn by a person upon the principal and pay it when due; (i) Receive for the principal and act upon a sight draft, warehouse receipt, or other document of title whether tangible or electronic, or other negotiable or nonnegotiable instrument; (j) Apply for, receive, and use letters of credit, credit and debit cards, electronic transaction authorizations, and traveler's checks from a financial institution and give an indemnity or other agreement in connection with letters of credit; and (k) Consent to an extension of the time of payment with respect to commercial paper or a financial transaction with a financial institution.