Because the future is uncertain, it is very rare that one knows the exact date or time they will become unable to handle their own affairs. An illness or an accident can leave someone unable to manage a bank account or pay the household bills. Most of us do not like to confront issues such as our own mortality, or what our family will do if we are not around.
What a Durable Power of Attorney Does
A Power of Attorney is a powerful legal document which delegates authority from one person to another. 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 drafted to expand or limit the powers it gives, based on the wishes of the principal. As The Florida Bar notes, “An agent may perform only those acts specified in the power of attorney.”
Durable means the agent’s power lasts after incapacity, not that it waits for it. Under Section 709.2104, Florida Statutes, a power of attorney is durable if it contains the words: “This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in chapter 709, Florida Statutes,” or similar words.
When the Agent’s Authority Begins
Clients often ask 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. Changes in Florida law that took effect on October 1, 2011 resulted in the abolishment of springing Powers of Attorney for documents signed on or after that date, though an older springing power may still work under Section 709.2108(2) once a doctor’s affidavit is delivered.
Today, the minute someone executes a Power of Attorney the agent is generally granted the power to take action regardless of whether there is incapacity, with a narrow exception for a military power of attorney tied to deployment, which under Section 709.2106(4) “is effective upon the deployment of the principal.”
Signing It the Right Way
Under Section 709.2105(2), a power of attorney “must be signed by the principal and by two subscribing witnesses,” and the principal must acknowledge it before a notary public. While this might seem like a burdensome formality, it is important not to take shortcuts. Florida courts strictly enforce signing requirements. Your agent must be a person at least 18 years old, or a financial institution with trust powers and a place of business in Florida.
A power of attorney from another state will generally be valid in Florida if its execution complied with the law of the state where it was signed.
Powers That Need Your Initials
Under Section 709.2202(1), major powers such as making a gift or changing a beneficiary designation work only if you sign or initial next to each one. This includes naming a beneficiary for your life insurance policies and any “payment upon death” accounts.
Meet with a licensed attorney before executing a Power of Attorney. One of the easiest ways to encounter an estate planning problem is to use pre-made, boilerplate forms. They do not account for the complexities of individual planning. A power of attorney witnessed remotely under Section 117.285, for a principal who lives in Florida, cannot grant these powers.
Choosing Your Agent
Because agents now have immediate authority over the principal’s finances, within the powers granted, creating a Power of Attorney should never be taken lightly. First and foremost, never create one and grant financial control to someone whom you do not trust completely. Second, provided you feel comfortable sharing it, speak with your family as to whom you have named as your agent. That way they understand your wishes and are able to make sure the agent is handling your affairs as you wish.
Florida law holds the agent to a high standard. Section 709.2114(1) begins, “An agent is a fiduciary.” The agent “Must act in good faith” and “Must keep a record of all receipts, disbursements, and transactions made on behalf of the principal.” Under Section 709.2201(3), an agent may not “Vote in any public election on behalf of the principal” or “Execute or revoke any will or codicil for the principal.”
If you or a family member has married, divorced, had a child or other life changes, your estate planning documents may need to be updated. If your agent is your spouse, Section 709.2109(2)(b) ends the agent’s authority when “An action is filed for the dissolution or annulment of the agent’s marriage to the principal.” The power of attorney can provide otherwise.
How a Power of Attorney Can Reduce the Need for Guardianship
The benefit of having a Power of Attorney is that it can reduce the need for a court-monitored guardianship should the principal become incapacitated. If a Florida resident loses capacity and no Power of Attorney or Trust has been set up, a guardianship may become necessary. A guardianship is a legal proceeding in the circuit courts of Florida. In it, a guardian is appointed to exercise the legal rights of a person who lacks capacity.
The court must find the person incapacitated by clear and convincing evidence. Even then, under Section 744.331(6)(b), “the court must consider and find whether there is an alternative to guardianship” that will meet the person’s needs. A durable power of attorney can be one of those alternatives, but it does not guarantee that a guardianship will never be needed.
Despite the potential for discomfort, it is important not to wait until it is too late to plan. No attorney wants to turn away a client in need. The Florida Bar’s pamphlet explains that “The principal must understand what he or she is signing at the time the document is signed.” A diagnosis alone does not settle it, so if memory loss raises concerns, an attorney should assess whether the person understands the decision at that time.
Check your will and estate planning documents (will, trust, Power of Attorney, Health Care Surrogate and Living Will). Health care decisions are often made through a separate designation of health care surrogate. Under Section 765.202(1), it “shall be signed by the principal in the presence of two subscribing adult witnesses.”
How Rice Law Firm Can Help
Having a Power of Attorney is a good idea and certainly part of responsible estate planning. Even for those who are relatively young, estate planning can be crucial. If you have any questions about whom to appoint, what powers to grant, or how the document fits with your health care planning, please give our office a call. Matthew Shapiro handles wills, trusts, advance directives and estate planning at our Daytona Beach office, 386-257-1222. Rice Law Firm has been helping Volusia County families since 1983.
This article is for general information only and should not be construed as legal advice.