A Power of Attorney is a powerful legal document which delegates authority from one individual to another. Specifically, the maker of the power of attorney, also known as the “principal,” grants the right to act on their behalf to an “agent.” A Power of Attorney can be uniquely drafted in order to expand or restrict delegated powers based on the wishes of the principal. The benefit of having a Power of Attorney is that it can be used to obviate the need for a court-monitored guardianship should the principal become incapacitated and no longer have the ability to manage their finances.
One of the most common questions I encounter when speaking with clients is, “when the Power of Attorney actually takes effect”? In the past, Florida allowed for the execution of what was referred to as a “springing” Power of Attorney. The term springing refers to the fact that an agent is only allowed to act upon the satisfaction of a condition. For example, a springing Power of Attorney could be conditioned to only be in effect upon written confirmation that the principal was incapacitated. This was a great feature in that it allowed individuals to give a Power of Attorney to a relative without having to worry about them accessing a banking account or selling property while the principal still maintained full capacity. Unfortunately, changes in Florida law recently resulted in the abolishment of springing Powers of Attorney. Today, the minute someone executes a Power of Attorney the agent is granted the power to take action regardless of whether there is incapacity.
Because agents now have immediate control of the finances of the principal, creating a Power of Attorney should never be taken likely. First and foremost, never create a Power of Attorney and grant financial responsibility to someone whom you do not trust completely. Second, provided you feel comfortable sharing the information, speak with your family as to whom you have named as your agent so that they understand your wishes and are able to make sure the agent is handling your affairs accordingly. Finally, meet with a licensed attorney prior to executing a Power of Attorney. One of the easiest ways to encounter an estate planning problem is to used pre-made, boilerplate forms that do not account for the complexities of individual planning. We all know the saying, an ounce of prevention is worth a pound of cure.
Having a Power of Attorney is a good idea and certainly part of responsible estate planning. If you have any questions regarding establishing a Power of Attorney, please give our office a call.