The Florida legislature recently adopted changes to the state laws governing powers of attorney. The new laws, which took effect on October 1, 2011, make some significant changes to the treatment of powers of attorney under Florida law. And because some provisions or retroactive, they could affect people who already have a power of attorney in place.
What is a Power of Attorney?
A “power of attorney” is a legal document executed by one person, called a principal, giving another person, called an agent, the ability to act on the principal’s behalf.
Powers of attorney are most often used for incapacity planning. If the principal becomes unable to manage his or her own affairs, the agent can step into the principal’s shoes. For example, the agent can access the principal’s bank accounts, sell the principal’s real estate, or take other actions to pay for the principal’s care.
Powers of attorney can automatically terminate when the principal becomes incapacitated—for example, when the principal is declared insane or is in a persistent vegetative state. But this would defeat the purpose of having a power of attorney to begin with. In practice, post powers of attorney are durable, meaning that the power of attorney will continue to be effective even after the principal’s incapacity.
Powers of attorney must be given before the principal becomes incapacitated. By definition, a person who is already incapacitated lacks the ability sign a valid legal document. To be effective, the power of attorney must be signed by a principal who is “competent” at the time she signs it. This usually means that the principal must understand:
- that she is signing a power of attorney;
- what a power of attorney is;
- the agent to whom she is giving the power of attorney; and
- what property is covered by the power of attorney.
Note: We occasionally get calls from people who have been told that they need a power of attorney to manage an incapacitated spouse or loved one’s affairs. At that point, it is too late. The incapacitated person cannot sign a valid power of attorney. At that point, the only alternative is to pursue a guardianship proceeding through the court system. To avoid this in your own estate, you should include a power of attorney as part of your estate plan.
Changes to the Florida Power of Attorney Laws
The recent amendments to the Florida power of attorney statutes made several changes in the way powers of attorney can be used in Florida.
Agents May not Take Any Actions not Clearly Granted to Them
Under prior law, it was common for powers of attorney to include general language that authorized the agent to take “any action not otherwise mentioned in this document” or “any action that I could take myself.” Courts recognized these provisions as granting broad powers to the agent.
Under the new law, general language of this nature has no legal effect. An agent may only exercise authority specifically granted to him in the power of attorney, as well as any authority reasonably necessary to give effect to express grants of authority.
This is arguably the most critical change to the Florida power of attorney laws. It will require detailed changes to most existing powers of attorney. Under the new law, durable powers of attorney should detail all of the powers granted to the agent.
New Springing Powers of Attorney Are No Longer Recognized
One type of power of attorney is known as a “springing” power of attorney. It is intended to take effect at a later date or upon the occurrence of a future event.
Under the new law, “springing” powers of attorney may no longer be created in Florida. The only exception is for powers of attorney contingent on military deployment.
Springing powers of attorney executed before October 1, 2011, are grandfathered in, but only take effect when accompanied by an affidavit of the principal’s duly licensed primary care doctor. The physician must affirm that she believes that the principal lacks the capacity to manage property.
Certain Delegations of Authority Require the Principal’s Initials or Signature
The new law requires the principal to sign or initial certain powers given to the agent. This new requirement is designed to protect the principal by ensuring that the principal knows what powers he or she is giving. The new requirement applies to the following powers:
- Creating an inter vivos trust
- Amending, modifying, revoking, or terminating an existing trust (additionally, the trust instrument must explicitly authorize the settlor’s agent to exercise such authority)
- Making gifts, subject to statutory limits
- Creating or changing rights of survivorship
- Creating or changing a beneficiary designation
- Waiving the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan
- Disclaiming property and powers of appointment
Some Delegations of Authority are Ineffective (Even With the Principal’s Consent)
The new law restricts the principals right to delegate certain powers. Even if the power of attorney expressly allows it, the agent may not take any of the following actions:
- Perform a contract under which the principal was obligated to provide “personal services”
- Make an affidavit as to the personal knowledge of the plaintiff (in other words, take an oath affirming facts which the principal did or did not know)
- Vote in a public election on behalf of the principal
- Execute or revoke a will for the principal
- Exercise authority granted to the principal in her capacity as trustee or as a court-appointed fiduciary
General Language No Longer Sufficient to Revoke Prior Powers of Attorney
Under the new law, to revoke a power of attorney, the principal must execute a document (it need not be another power of attorney, but it may be) clearly expressing his intent to revoke the power of attorney.
Co-Agents Can Act Independently on the Principal’s Behalf
Prior law required co-agent to act in concert (if two co-agents) or by majority (if three or more co-agents). Under the new rule, each co-agent may exercise his authority without consulting his fellow co-agents unless the principal provides otherwise in the power of attorney.
The law also clarified the duties of co-agents to report wrongdoing. If a co-agent has actual knowledge of another co-agent breach of her fiduciary duty to the principal, the innocent co-agent must act to safeguard the principal’s best interests. Failure to do so could make her liable for the wrong-doers breach of fiduciary duty.
As mentioned above, the new statute applies in most cases to existing durable powers of attorney. If your durable power of attorney was executed before October 1, 2011, you may need to update it to ensure that the statutory changes described in this post do not alter its legal effect. Contact us today a free consultation with a Florida estate planning attorney regarding your durable power of attorney, contact us by e-mail or telephone.