In re Guardianship and Conservatorship of Lorine Mueller, an alleged incapacitated person.
Cheryl Mueller, appellant. Margo Loop, guardian and conservator, appellee,
1. Guardians and Conservators: Appeal and Error. An appellate court reviews guardianship and conservatorship proceedings for error appearing on the record made in the county court.
2. Judgments: Appeal and Error. When reviewing a judgment for errors appearing on the record, an appellate court's inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.
3. Guardians and Conservators: Evidence. A court may appoint a guardian under Neb. Rev. Stat. § 30-2620(a) (Cum. Supp. 2014) if it is satisfied by clear and convincing evidence that (1) the person for whom a guardian is sought is incapacitated and (2) the appointment is necessary or desirable as the least restrictive alternative available for providing continuing care or supervision of the person alleged to be incapacitated.
4. Guardians and Conservators. The persons eligible for appointment as guardian, as well as their respective priorities, are described in Neb. Rev. Stat. § 30-2627 (Reissue 2008). If it is in the best interest of the ward, a court may pass over a person having priority and appoint a person having lower or no priority.
5. Guardians and Conservators: Agents. If a guardian has been appointed and an attorney in fact has been designated and authorized under a valid power of attorney for health care, the attorney in fact's authority to make health care decisions supersedes the guardian's authority to make such decisions.
6. ___:___. Neb. Rev. Stat. §§ 30-2628(c) (Cum. Supp. 2014) and 30-3420(5)(b) and (c) (Reissue 2008) do not preclude a court from [23 Neb.App. 431] considering a ward's best interest and revoking or setting aside a health care power of attorney in favor of a guardianship when the facts support such action.
7. ___: ___. Under Neb. Rev. Stat. § 30-3421 (Reissue 2008), a court can revoke a power of attorney for health care upon finding (1) that the attorney in fact has violated, failed to perform, or is unable to perform the duty to act in a manner consistent with the principal's wishes or, when the principal's wishes are unknown, in the principal's best interest and (2) that the principal lacks the capacity to revoke the power of attorney.
8. Guardians and Conservators: Evidence. Under Neb. Rev. Stat. § 30-2630(2) (Reissue 2008), a court may appoint a conservator to manage a person's estate and property affairs if satisfied by clear and convincing evidence that (1) the person is unable to manage his or her property and property affairs effectively for reasons including mental illness, mental deficiency, or physical illness or disability and (2) the person has property that will be wasted or dissipated unless proper management is provided, or funds are needed for the support, care, and welfare of the person and protection is necessary or desirable to obtain or provide the funds.
9. Guardians and Conservators: Agents. Pursuant to Neb. Rev. Stat. § 30-2639(b)(1) (Reissue 2008), a person nominated in a power of attorney or acting under a power of attorney has first priority for appointment as conservator; however, if it is in the best interest of the protected person, a court may pass over a person having priority and appoint a person having lower or no priority.
10. ___: ___. A conservatorship may be necessary despite the existence of a power of attorney where an attorney in fact has violated his or her fiduciary duty, to act solely for the benefit of the principal, by engaging in self-dealing with the protected person's estate.
11. Decedents' Estates: Wills: Words and Phrases. A specific devise is a provision in a will that passes a particular piece of property. When specifically devised property ceases to be part of the estate at the time of the testator's death, ademption occurs.
12. Estates: Wills: Sales: Presumptions: Words and Phrases. Ademption by implied revocation occurs when specifically devised property is sold during the testator's lifetime. This type of ademption is based upon a presumed alteration of intention arising from the changed condition and circumstances of the testator, or on the presumption that the will would have been different had it been executed under the altered circumstances.
13. Estates: Sales. The common-law doctrine of ademption has been modified by statute under certain circumstances. Pursuant to Neb. Rev. [23 Neb.App. 432] Stat. § 30-2346(a) (Reissue 2008), when a conservator or guardian, not the testator, sells specifically devised property during the testator's lifetime, no ademption occurs. The proceeds of the sale are not included in the testator's residuary estate, but, rather, are given to the specific devisee to honor the specific devise.
14. Guardians and Conservators: Estates. Pursuant to Neb. Rev. Stat. § 30-2656 (Reissue 2008), in selecting the assets of a protected person's estate for distribution and utilizing the powers of revocation or withdrawal available for the support of the protected person, a conservator and the court should take into account any known estate plan of the protected person, including his or her will.
15. Guardians and Conservators: Estates: Sales. Given the heightened protection that specific devises receive by statute, a conservator taking into account a protected person's known estate plan should invade specifically devised property as a last resort, and only when doing so is clearly necessary for the protected person's care and support. Where there is ample property in a protected person's estate that can be sold to adequately fund the protected person's care without invading specifically devised property, the conservator and the court should not sell the specifically devised property unless circumstances clearly establish that it is in the protected person's best interests to do so.
Appeal from the County Court for Platte County: Frank J. Skorupa, Judge. Judgment in No. A-14-780 affirmed. Judgment in No. A-14-971 affirmed in part, and in part reversed.
Clark J. Grant, of Grant & Grant, for appellant.
Brenda K. Smith and Heather S. Voegele, of Dvorak & Donovan Law Group, L.L.C., for appellee.
Moore, Chief Judge, and Pirtle and Bishop, Judges.
Margo Loop was appointed guardian and conservator for her 94-year-old mother, Lorine Mueller, in the county court for Platte County, Nebraska. At the time of the appointment, Lorine suffered from moderate to severe Alzheimer's disease and dementia and resided in a skilled nursing facility. After appointing Margo, the county court authorized her to sell [23 Neb.App. 433] various real property to fund Lorine's care, including a 17.56-acre property owned by Mue-Cow Farms, Inc. (Mue-Cow), a corporation of which Lorine is the majority shareholder.
Cheryl Mueller, Lorine's daughter-in-law who lives in a farmhouse on the Mue-Cow property and alleges that she is a minority shareholder of Mue-Cow, appeals the orders appointing Margo guardian and conservator and authorizing her to sell the Mue-Cow property. Cheryl does not dispute that Lorine is incapacitated and unable to manage her property; instead, she argues that as Lorine's attorney in fact under powers of attorney for health care and asset management, she is capable of caring for Lorine and managing her property. She also argues that if a guardian and conservator were necessary, she had statutory priority for appointment. Cheryl challenges the order authorizing the sale of the Mue-Cow property because it fails to preserve Lorine's estate plan, in which Lorine devised the property to Cheryl.
As explained below, we affirm the county court's order appointing Margo guardian and conservator for Lorine. However, we reverse the county court's order authorizing Margo to sell the Mue-Cow property. We conclude that because Lorine specifically devised the Mue-Cow property to Cheryl in her will, and because there was sufficient property in Lorine's estate to adequately support her without selling the Mue-Cow property, it was error to authorize Margo to sell the Mue-Cow property absent circumstances establishing that it was in Lorine's best interests to do so.
Lorine was born in January 1920 and had three children, Margo, Gary Mueller, and Randy Mueller. Margo has lived in Wichita, Kansas, since 1982; Gary has lived in St. Charles, Missouri, since 1991; and Randy died in 2001 while living in Columbus, Nebraska.
Until 1990, Lorine lived with her husband in the farmhouse on the Mue-Cow property, which is located in Platte County. [23 Neb.App. 434] Lorine's husband conducted a dairy cow operation on the property and farmed adjoining parcels of land that totaled approximately 156 acres. Shortly before her husband passed away in 1991, Lorine and he moved into a house in the city of Columbus.
Cheryl was married to Lorine's son Randy. When Lorine and her husband moved to Columbus, Cheryl and Randy moved into the farmhouse on the Mue-Cow property and Randy managed the dairy cow operation and farm. In 2003, approximately 2 years after Randy passed away, Lorine sold her house in Columbus and moved back to the farmhouse to live with Cheryl. In March 2006, Lorine executed powers of attorney for health care and asset management, appointing Cheryl as her attorney in fact for health care and property-related decisions.
In March 2014, Lorine fell and broke her hip while still residing at the farmhouse. She underwent surgery and was admitted to Mory's Haven, a skilled nursing facility in Columbus, for rehabilitation.
In May 2014, while Lorine was at Mory's Haven, Margo and Gary filed a petition for appointment of a guardian and conservator for Lorine. They alleged that Lorine suffered from Alzheimer's disease and dementia and was in need of continuing medical care for her broken hip. They requested that Margo be appointed guardian and conservator but noted that Cheryl might have a prior right to appointment by virtue of the powers of attorney. Margo and Gary alleged that it would not be in Lorine's best interests to appoint Cheryl, because Cheryl planned to remove Lorine from Mory's Haven.
Cheryl objected to the petition, arguing that Lorine was not incapacitated and that appointing a guardian and conservator was not the least restrictive means of caring for Lorine or managing her property. Cheryl contended that the powers of attorney were less restrictive and accomplished the same goals.
[23 Neb.App. 435] The court appointed Margo temporary guardian and conservator, pending a hearing on the petition.
Guardian Ad Litem's Report and Recommendation.
Prior to the hearing on the petition, the guardian ad litem (GAL) appointed by the court for Lorine filed a report and recommendation. She confirmed that Lorine suffered from moderate to severe Alzheimer's disease and dementia. She further indicated that Lorine was in a wheelchair and that her doctor had advised that she should not '"be doing stairs from here on out.'" The GAL noted that the only bathroom in the farmhouse was located on the second floor, up a series of 24 steps.
The GAL stated that until Lorine's hospitalization in March 2014, Cheryl did not believe that she was acting in the capacity of Lorine's attorney in fact under the powers of attorney. The GAL reported that Cheryl was first listed on Lorine's bank account in September 2011. The GAL was concerned with the number of checks written to "'Cash'" and was unable to verify Cheryl's explanations for the checks. Cheryl told the GAL that she had not understood her fiduciary duties as attorney in fact and had signed checks at Lorine's direction and for convenience. Cheryl indicated that she and Lorine had shared home expenses and taken care of each other.
The GAL located seven lawsuits that were either collection or tax matters involving Lorine filed during the time that Cheryl held the powers of attorney. The GAL also discovered that Cheryl's father had loaned money for the payment of delinquent taxes on Lorine's properties and that promissory notes and deeds of trust issued as security for the notes were recorded against the properties. The GAL reported that Cheryl's father was recently deceased and that Cheryl was a beneficiary of his estate.
The GAL noted that in addition to Lorine's Mue-Cow shares and the parcels of land adjoining the Mue-Cow property, [23 Neb.App. 436] Lorine owned a rental home in Columbus and leased a lot at Wagner Lakes. The rental home had not had a tenant for 3 years due to water damage that occurred after the last tenant moved out. Cheryl told the GAL that the damage had been repaired and that the repairs had been funded in part using a loan from Cheryl's father. The Wagner Lakes lot did not produce any income.
The GAL indicated that an individual had farmed approximately 70 to 80 acres of Lorine's land for the prior 3 years under an oral agreement for a 50-50 crop share. Cheryl informed the GAL that the agreement with that individual had not been as profitable as preferred during its first 2 years because of drought, lack of crop insurance, and other factors. Cheryl reported that crop insurance had since been obtained.
The GAL stated that Cheryl had consistently taken Lorine to doctors' appointments over the years. However, the GAL was concerned that Lorine had not received proper dental care and had experienced tooth decay and broken teeth. Cheryl told the GAL that Lorine had not wanted to receive followup care after ...