Nebraska's Real Property Transfer on Death Act and Power of Attorney Act: a New Era Begins

• Publication year: 2022

46 Creighton L. Rev. 499. NEBRASKA'S REAL PROPERTY TRANSFER ON DEATH ACT AND POWER OF ATTORNEY ACT: A NEW ERA BEGINS

NEBRASKA'S REAL PROPERTY TRANSFER ON DEATH ACT AND POWER OF ATTORNEY ACT: A NEW ERA BEGINS

RONALD R. VOLKMER(fn*)

I. INTRODUCTION

The 2012 session of the Nebraska Unicameral witnessed the passage of two significant bills that are of major importance to Nebraska estate planning lawyers. Legislative Bill 536 enacted into Nebraska law the Nebraska Uniform Real Property Transfer on Death Act(fn1) ("Neb. TODA"); Legislative Bill 1113 enacted into law the Nebraska Uniform Power of Attorney Act(fn2) ("Neb. UPOAA"). Both legislative bills contained an operative date of January 1, 2013.(fn3)

These two Acts fit within the mainstream of twenty-first century estate planning practice. The Neb. TODA represents the most recent step taken by the Nebraska Unicameral in the movement toward legislative recognition of nonprobate transfers.(fn4) The Neb. UPOAA represents the reality of the modern day estate planning that addresses incapacity issues related to property management.

The changes in Nebraska law represented by passage of the two Acts are very different. The Neb. TODA authorizes a form of nonprobate transfer not previously allowed under Nebraska law; the Neb. UPOAA replaces existing Nebraska statutes(fn5) pertaining to so-called "durable powers" and replaces them with a comprehensive statute codifying the law of durable powers. The purpose of this Article is to examine the major impact that passage of the Neb. TODA and the Neb. UPOAA ("Nebraska Acts") will have on Nebraska law and potential impact for the practice of estate planning lawyers in Nebraska. The Article will selectively examine the legislative process which led to the enactment of both Nebraska Acts and highlight Nebraska Uni-cameral amendments to the national models upon which the Nebraska Acts are based. For those interested in the role played by the Nebraska State Bar Association in the passage of the Nebraska Acts, and the interaction between the Nebraska State Bar Association and the Judiciary Committee of the Nebraska Unicameral, there are other sources which may be consulted on this point.(fn6)

This Article begins by briefly reviewing the Uniform Real Property Transfer on Death Act(fn7) and the Uniform Power of Attorney Act(fn8) ("Uniform Acts") upon which the Nebraska Acts are based. This will be followed by a review of the Nebraska Acts, with special emphasis on the major differences between the Uniform Acts and the Nebraska Acts. The Article concludes with as assessment of the Nebraska Acts and the likelihood of future changes in the Nebraska Acts.

II. THE NATIONAL MODELS: THE UNIFORM TRANSFER ON DEATH DEED ACT AND THE UNIFORM POWER OF ATTORNEY ACT

A. UNIFORM ACTS-BACKGROUND

The Uniform Law Commission ("ULC"), formerly known as The National Conference of Commissioners on Uniform State Law, has the goal of providing "states with non-partisan, well-conceived, and well-drafted legislation that brings clarity and stability to critical areas of state statutory law."(fn9) Since 1892, the ULC has produced more than 300 uniform acts, some of which have achieved national prominence due to their popularity and comprehensive nature.(fn10) For better or worse, the various states adopting uniform acts have made changes to the ULC prototypes. In some instances the changes were fairly dramatic; in others, minor changes were needed to accommodate the local nuances of the adopting state's laws.

There is no accepted standard for judging whether a state's version of a uniform act sufficiently conforms to the ULC model so as to deserve classification of that state as one that has "adopted" the ULC prototype.(fn11) With regard to Nebraska's adoption of the Uniform Transfer on Death Deed Act and the Uniform Power of Attorney Act, the ULC characterized Nebraska as a state that has enacted both,(fn12)notwithstanding the fairly dramatic changes that the Nebraska Uni-cameral made to the Uniform Real Property Transfer on Death Deed Act.

B. THE UNIFORM REAL PROPERTY TRANSFER ON DEATH ACT

1. Background; Purpose; Theory

The ULC approved the Uniform Real Property Transfer on Death Act(fn13) ("Uniform TODA") in 2009.(fn14) At that time thirteen states had adopted laws validating a transfer on death deed, including Missouri, Kansas, and Colorado.(fn15) Five states enacted the Uniform TODA as of 2011; Nebraska is the only state to adopt the Act in 2012.(fn16)

According to the ULC, the Act "allows an owner of real property to pass the property simply and directly to a beneficiary on the owner's death without probate. The property passes by means of a recorded transfer on death deed."(fn17) As others have noted, the Act "was created in recognition of a trend toward the development of asset-specific will substitutes for the transfer of property at death."(fn18)

The legal recognition of a transfer on death deed is just the latest chapter in what John Langbein famously described as the nonprobate "revolution."(fn19) The more traditional nonprobate transfers of property in Nebraska are common law joint tenancies,(fn20) revocable trusts,(fn21) and payable on death designations in a contract.(fn22) Nebraska statutory law has recognized a variety of "asset specific" nonprobate transfers since the adoption of the Uniform Probate Code, including payable on death ("P.O.D.") accounts in financial institutions,(fn23) transfer upon death of a security,(fn24) and, most recently, a transfer on death motor vehicle certificate.(fn25)

Extending the "transfer on death" concept to real property is a logical development as the nonprobate revolution continues unabated. On the other hand, by entitling the transferring instrument as a "deed," one might argue that the Uniform TODA (and statutes predating the Act) is attempting to abridge a fundamental legal distinction that has been embedded in real property law for centuries. When it comes to real property, there has always been a fundamental divide between inter vivos and testamentary transfers: the owner of Black-acre has the legal power to convey the proverbial sticks in the bundle during life or, by valid will, to devise the property at death.(fn26)

The comment to section 12 of the Uniform TODA states that "[a] fundamental feature of a transfer on death deed under this Act is that it does not operate until the transferor's death. The transfer occurs at the transferor's death, not before."(fn27) Section 7 of the Uniform TODA declares that, "[a] transfer on death deed is nontestamentary."(fn28) Notwithstanding the power of the legislature to abolish fundamental legal distinctions or to create exceptions, the transfer on death "deed" might be characterized as an oxymoron, or perhaps, more accurately, a legal fiction. Traditionalists may cringe in reading that the transfer on death "deed" is nontestamentary and that, under this particular type of "deed," no interest passes until the death of the transferor. Be that as it may, under section 5 of the Uniform TODA, the bottom line is that "[a]n individual may transfer property to one or more beneficiaries effective at the transferor's death by a transfer on death deed."(fn29)

2. Particulars of the Uniform Act; Accommodating Local Law

The Uniform TODA consists of 19 sections. The heart of the Act is contained in sections 2 through 15, which are substantive in nature. Sections 16 and 17 of the Uniform TODA contain forms and are designated as "optional" sections. The ULC website provides an excellent summary of the substantive provisions of the Uniform TODA.(fn30)

The drafters of the Uniform TODA were sensitive to the fact that the Act's blueprint might not fit well with a state's existing statutory scheme. To that end, the drafters of the Uniform TODA included specific Legislative Notes to sections of the Act,(fn31) recognizing that changes in the Uniform Act language might be appropriate. The drafters also recognized that harmonization of the Uniform TODA's provisions with local law might necessitate amendment of other statutes. In a sense, the ULC acknowledges that the goal of drafting a "uniform act"-one that is copied verbatim in each state-is not realistic. As will be shown in the discussion of the Nebraska version of the Act, the changes Nebraska made to the Uniform TODA's language were significant and, in the eyes of some, questionable. Be that as it may, the bottom line is that the Nebraska Unicameral did adopt a version of the Uniform TODA and, as of January 1, 2013, has legitimated a new form of transferring real property.

C. THE UNIFORM POWER OF ATTORNEY ACT

1. Background; Purpose

The ULC approved the Uniform Power of Attorney Act(fn32) ("Uniform POAA") in 2006; it replaces the Uniform Durable Power of Attorney, which was approved in 1979.(fn33) Since its promulgation in 2006, thirteen states have enacted a version of the Uniform POAA, with Nebraska, Ohio, and West Virginia adopting their versions of the Act in 2012.(fn34)

According to the ULC, a revised Uniform POAA was imperative because over the years many states adopted non-uniform provisions to deal with issues the Uniform Probate Code and the 1987 Durable Power of Attorney Act were silent about.(fn35) The ULC explained the need to update the 1987 Act more particularly as follows:

A national study of durable powers of attorney, conducted in 2002...