CONSERVATORSHIP PROCEEDINGS
by David W. Kirch

Reproduced by permission. ©2001 Colorado Bar Association,

30 The Colorado Lawyer 5 (January 2001). All rights reserved.

CRS § 15-14-401. Protective Proceedings:

Under the Colorado UGPPA, this section (previously CRS § 15-14-401) places greater emphasis on limited conservatorships to reduce the possible encroachment on individual rights. Many new procedural protections are built into the new law, which is likely to make conservatorships more cumbersome and expensive. The specific criteria justifying the need for a conservatorship are eliminated.

For adults, a two-part test with different evidentiary standards must be satisfied. Under prior law, a clear and convincing evidence standard applies to the entire matter. Under the Colorado UGPPA, the first part of the test applies to the issue of impairment. A clear and convincing evidence standard applies, and the test requires consideration of available technological assistance. The Colorado UGPPA states that such assistance must be reasonably available, for example, taking its cost into consideration. The second part of the test is that the individual has property that will be wasted or dissipated unless management is provided or money is needed for the support, care, education, health, and welfare of the individual or of individuals who are entitled to the individual’s support. This section of the Colorado UGPPA has expanded the category of persons eligible for a conservatorship to include those missing, detained, or unable to return to the United States. A preponderance of the evidence standard applies to this second part of the test.

CRS § 15-14-402. Jurisdiction Over Business Affairs of Protected Person:

This section has only slight changes from prior law (CRS § 15-14-402). As before, other courts can have jurisdiction over third-party claims against the protected person or conservator.

CRS § 15-14-403. Original Petition for Appointment Of Protective Order:

This Colorado UGPPA section (previously CRS § 15-14-404) requires substantial changes from the previous form of petition. If there is no spouse, there must be an indication (and notice must be given) to the adult with whom the respondent has resided for more than six months (within one year before the filing of the petition). The one-year requirement was added to the Colorado UGPAA.

Specific reasons must be stated as to why a limited conservatorship is not appropriate. Stock provisions are likely to be used in the vast majority of cases where limitations on powers are not desirable. The Colorado UGPPA does not require a description of functional limitations or a statement that less intrusive alternatives be considered, as had the National Probate Court Standards.18

As under the prior statute, this new section leaves open the question of whether and when heirs, devisees, and joint tenants should be treated as “interested” parties. The age for making nominations of conservators was changed from age 14 in the Uniform version to age 12 in the Colorado UGPPA. Prior CRS § 15-14-403 on venue was moved to the first part of the Colorado UGPPA (CRS § 15-14-108).

CRS § 15-14-404. Notice:

The respondent must now be affirmatively excused from being physically present at the hearing. Previous law did not impose such a requirement (CRS § 15-14-405). The use of the term “respondent” prior to appointment or other protective order also is new.

Notice must be given to all persons listed in the petition. With respect to notice to third parties, such notice is not essential for the court to enter an order of appointment or of protection. However, the court cannot act unless valid notice is given to the respondent. Notice must include a description of the nature, purpose, and consequences of an appointment. Stock wording is likely to be developed to satisfy this requirement. Personal service on the respondent is still required. The Colorado UGPPA permits a broad range of circumstances when personal service is not necessary, namely, when the respondent’s whereabouts is unknown or personal service cannot be made. Agents under powers of attorney will be entitled to notice. This is an important improvement from the prior statute, which overlooked the role and rights of agents nominated by the protected person in a power of attorney.

In addition to notices of hearing on subsequent petitions, the new law adds the requirement of notice within ten days of filing the inventory, reports, or plans of conservatorship. Such notice must be given to the protected person and other persons, as determined by the court.

A provision was added to the previous statute requiring that the court specifically designate those persons who must be given notice of proceedings subsequent to appointment. The purpose of this prior change was to avoid giving a protected person with diminished capacity notice of matters, such as the sale of the protected person’s home, which could needlessly upset the protected person. However, this provision was not carried over into the new statute. Notice of hearing must now be given to minors, regardless of age.

CRS § 15-14-407. Confidentiality of Records:

This section of the Uniform version, which maintained the confidentiality of medical information presented to the court, was deleted from the Colorado UGPPA. A court order under C.R.C.P. 35 (dealing with discovery of medical information) and a hearing on good cause may be necessary if this issue is raised by the physician. A doctor’s letter is permitted under C.R.P.P. 27.1; however, the current practice is always to provide a doctor’s letter. The new statute probably will not change this practice of always providing a letter.

CRS §§ 15-14-405, -406, and -408 through -411: Original Petition:

Consistent with the guardianship division between adults and minors, the conservatorship sections have been restructured in the Colorado UGPPA (previously CRS §§ 15-14-407 and -408). Under § -405, no visitor or guardian ad litem is required for establishing a conservatorship for minors. The appointment of a lawyer to represent a minor-respondent is permissive, not mandatory. A temporary conservator for a minor has been eliminated, but a special conservator can be appointed during the pendency of appointment proceedings, after a preliminary hearing and without notice, to preserve and apply the property of the minor.

Under § -406, a visitor is mandatory when establishing a conservatorship for adults, unless the respondent is represented by an attorney and there is no request for appointment of a conservator. The visitor’s role is expanded. The Colorado UGPPA, unlike the Uniform version, leaves the visitor’s training and experience up to the court’s discretion. However, the visitor’s duties are more specific, and a more elaborate report is required. The visitor is required to make an explanation to the respondent of the proceedings to the extent the respondent is able to understand. Thus, the visitor is charged with making a de facto competency determination on this issue.

The Colorado UGPPA requires appointment of an attorney, if one is requested by an adult respondent. Unlike the requirement for an explanation of the proceedings to the respondent, there is no threshold determination of capacity by the visitor on this issue. For adults, there is no provision for a temporary conservator. However, as is true for minors, a special conservator can be appointed for an adult, pending appointment of a permanent conservator.

Time limitations on such appointments (while not previously required by statute) were common in the past. This practice may continue under the new statute. Such appointments do not require prior or subsequent notice, although CRS § 15-14-409(c) requires notice within thirty days after a permanent appointment.

Under the Colorado UGPPA, CRS § 15-14-408, bedridden and other non-ambulatory respondents must request that the court excuse their attendance at the hearing. If excuse from attendance is not obtained in advance, a delay in the proceeding could result. Practitioners should ascertain the court’s usual practice in such cases. The conservator also must attend, which is consistent with current practice. Colorado modified the Uniform version to add the requirement that the petitioner secure the respondent’s attendance at the hearing. The new statute also permits closing the hearing. The Colorado UGPPA changed this section from the Uniform version to permit the respondent to object to a closed hearing.

Under new CRS § 15-14-409, there is a requirement for subsequent notice of appointment within thirty days, if the respondent is over the age of 12. The statue is not applicable to other protective orders and special conservatorships. The court must enter the least restrictive order consistent with its findings. Stock language is likely to be used in the majority of situations, where full powers are necessary and appropriate.

This section also addresses the impact of protective proceedings on the issue of incapacity, specifically providing that there is no impact. The question remains whether issues of competence should be addressed in the case of requests for legal counsel or opposition to the appointment or when there are concerns about the respondent’s ability to act independently after an appointment—for example, to enter contracts. Deleted from the new statute are portions of CRS § 15-14-407, unique to Colorado’s prior law, dealing with the issues of charities serving as visitors (§ -407(4)) and the frequency of court review (§ -407(6)).

CRS § 15-14-411 deals with those exercises of powers by a conservator that require prior court approval. Notice is required, but the recipients of the notice are not specified. A conservator can now revoke, modify, or make a will (following the usual formalities), with court approval. Given that actions of a conservator can affect an estate plan, for example, expending payable on death accounts or joint tenancy assets, a will can now be changed to correct the impact of such actions by a conservator. The implementation of incomplete estate plans or a finding before death that an existing will was subject to undue influence, mistake, or lack of capacity would now seem to be possible. The limitations on the use of this power to avoid abuses will have to be defined by the courts over time.

In the gifting area, the Colorado UGPPA allows gifts based on the best interest of the protected person. This change was made to avoid the IRS argument that a court-approved gift was not legally valid if not consistent with the protected person’s wishes.19

Moreover, the new Colorado UGPPA requires that the court consider the impact on Medicaid assistance in approving gifts. Thus, Medicaid planning by the courts through gifts is encouraged. An expanded list of estate planning activities is allowed with court approval, such as exercising elective shares. Under CRS § 15-11-206, it was already permissible to establish a Medicaid qualifying trust for an incapacitated surviving spouse to receive the surviving spouse’s elective share. The continuing powers of agents under powers of attorney are recognized and protected under the new law. This should avoid unnecessary conservatorships where agents are available to act.

CRS § 15-14-412. Protective Arrangements And Single Transactions:

This section continues the availability of special conservators to avoid full-blown estate administration (previously, CRS § 15-14-409). The factors to be considered by the court under CRS § 15-14-411(3) are incorporated into this section. Trusts for minors are no longer prohibited from continuing beyond age 21. Thus, use of such trusts continuing beyond age 21 for estate planning purposes for gifts to minors may become more common. CRS § 15-14-412 (a)(2) provides for court approval of personal injury settlements.20 The new Colorado UGPPA also includes authority regarding life care contracts; that is, for Medicaid planning purposes.

CRS § 15-14-413. Who May Be Conservator—Priorities—Prohibition Of Dual Roles:

An agent under a power of attorney is now given priority to be appointed a conservator, if no conservator has been appointed in another state and there is no nominee of the respondent. This change should reduce attempts to circumvent powers of attorney through conservatorship proceedings. Nursing homes are specifically excluded as appointees. The respondent can now nominate a conservator after the proceeding is commenced, assuming the respondent has the legal capacity to do so. CRS § 15-14-413(6) was added to the Colorado UGPPA, requiring a showing of “good cause” for a “professional” to act in dual capacities.

CONSERVATORSHIPS—BONDS, FINANCIAL PLANS AND FEE MATTERS
by Bob Steenrod, Jr.

The new Colorado UGPPA is a significant step forward. It greatly clarifies the financial procedures surrounding conservatorships and provides a host of tools both to the court and the practitioner to better handle conservatorship proceedings and related fee matters. Note that the subsections dealing with “Fees, Expenses in Estate Litigation” and “Expenses Incurred in the Defense of Fiduciary Fees,” set forth in CRS § 15-14-417, apply equally to Article 16 matters dealing with trust administration. The following sections highlight changes in this area.

CRS § 15-14-414. Authority to Review Motions and Petitions to Determine if Brought in Good Faith:

This new section provides the court with the authority, after the conclusion of hearings authorized by this section, to review the motions and petitions filed by a party to determine if they were substantially warranted and brought in good faith. If any of these motions or petitions are found to be substantially unwarranted or brought in bad faith, the court is given the authority to award fees and costs incurred by the conservatorship in responding to the motions and petitions.

CRS § 15-14-415. Requires Bond Unless Court Makes Exception:

This section directs the court to require a bond in each conservatorship unless the court makes specific findings as to the reason a bond is not required.

CRS § 15-14-416. Authority to Request Information Concerning Bonds:

If there is a request for a waiver or reduction of surety upon a bond, this section provides the court with the authority to request the conservator to supply the court with a credit report, a statement of the conservator’s assets, a statement about any interest the conservator may have in or liability to the conservatorship estate, or any other information the court may wish to consider.

CRS § 15-14-417. Fees, Costs, Expenses of Administration:

This section adds substantial new measures dealing with fees and costs and expenses of administration for both protective proceedings and trusts. These include the following:

1) This section applies the “reasonableness” standards found in CRS § 15-12-721 to a protected person’s proceedings and trusts.

2) This section allows any fiduciary who defends or prosecutes any proceeding in good faith to receive from the estate payment for his or her necessary time, expenses, and costs, including reasonable attorney fees incurred. This section and the following subsection effectively eliminate the importance and impact of the old Painter cases in this area.21

3) This section requires the court, at the end of proceedings in which any fiduciary is required to defend his or her fees or costs, to consider the fees and expenses incurred by the fiduciary in this fee review. The court is required to determine whether or not to award to the fiduciary the fiduciary’s own fees and costs, including the fiduciary’s own attorney fees and costs, as the court deems equitable under the circumstances of the case. The court also is given broad latitude to allocate the fee burden among the parties of the estate.

4) If an incapacitated person or protected person dies, this section transfers the same priority for the payment of guardian and/or conservator’s fees and costs and expenses of administration that existed in the protected proceeding to the decedent’s estate. This change adds substantial protection to the fiduciary in an estate with limited resources.

5) This section clarifies that any fiduciary who is a member of a law firm may use that firm, and charge for legal services of the members and staff of that firm, to assist the fiduciary in his or her duties as a fiduciary.

CRS § 15-14-418. Requirement of a Financial Plan:

This section requires a financial plan within ninety days after appointment that is based on a comparison of the projected income and expenses of the protected person. The financial plan must set forth a plan to address the needs of the protected person and must explain how the assets and income of the protected person are to be managed to meet those needs.

CRS § 15-14-421: Authority to Control a Financial Power Of Attorney:

This section addresses a long-standing problem of how a conservator is to deal with the protected person’s agent whose agency was previously created under a power of attorney. It provides clear statutory authority that a conservator has the authority to continue, modify, or revoke any financial power of attorney previously created by the protected person. This section also provides authority for a conservator to deal with all agents acting under a previously created power of attorney, including the requirement that the agent provide an accounting to the conservator of all actions taken under the power of attorney.

CRS § 15-14-428. No Expenditures After Death Without Court Authorization; Exception:

This section clarifies that, after the death of a protected person, the conservator will make no expenditures of conservatorship funds without court authorization, except as necessary to preserve the assets of the estate. Authority is given to the conservator to release funds for the funeral, cremation, or burial of the deceased person if necessary under the circumstances.

CRS § 15-14-431. Procedures for Closing a Conservatorship Estate And Obtaining a Decree Of Discharge:

This section clarifies and sets forth in detail the normal procedures necessary to close a conservatorship estate and obtain a Decree of Discharge, which was lacking in the Uniform version.

CONCLUSION

The new Colorado UGPPA will require careful study. It mandates new procedures and a more thorough and careful approach to protective proceedings. The authors of this article hope that the highlights of the new act expressed above alert practitioners and the courts to the major changes and provide practitioners with a head start in adopting the new provisions into their practices.

18. Standard 3.4.1, “Petition” (1993).

19. See Walker, “Avoiding Living Probate,” 27 The Colorado Lawyer 6-7 (March 1998).

20. Supra, note 4.

21. See Matter of Estate of Painter, 567 P.2d 820 (Colo.App. 1977); 628 P.2d 124 (Colo.App. 1980); 671 P.2d 1331 (Colo.App. 1983).