WHAT YOU SHOULD KNOW ABOUT A POWER OF ATTORNEY

Do you need to create a power of attorney? A power of attorney is a legal document that authorizes someone (called an “agent” or “attorney-in-fact”) to conduct personal business on behalf of another person (called the “principal” or “grantor”).

The abilities and powers given to an agent may be extensive, such as handling all of the principal’s financial affairs, or those abilities may be narrow, such as merely paying the bills each month on behalf of the principal. If you have questions about these specific roles you will want to seek out a West Palm Beach estate planning attorney.

ARE THERE DIFFERENT KINDS OF POWER OF ATTORNEY DOCUMENTS?

People create a power of attorney for many reasons, but before any discussion of those reasons – and whether establishing a power of attorney is something you need to do with the help of a West Palm Beach estate planning attorney – it’s important to define some confusing legal terms:

  1. A general power of attorney authorizes an agent to handle all types of financial business on a principal’s behalf.
  2. A special or limited power of attorney restricts an agent’s authorization to certain dates, certain transactions, or particular types of transactions.
  3. A durable power of attorney is a power of attorney that is not voided if the principal becomes incapacitated. Typically, it is a healthcare or medical power of attorney. (You’ll read more about that below). It is a widely-used document in south Florida.
  4. A power of attorney in Florida goes into effect immediately, but a “springing” power of attorney only takes effect when a principal becomes incapacitated. A springing power of attorney is no longer recognized in Florida unless it was created before October 1, 2011.

HOW IS A POWER OF ATTORNEY LEGALLY ESTABLISHED IN FLORIDA?

 

Florida law requires a principal to have his or her power of attorney document notarized and to sign it in front of two witnesses, although the notary public who notarizes the document may be one of the witnesses. Powers of attorney established legally in other states are valid in Florida.

A power of attorney must be filed with the county clerk’s office in the Florida county where you reside if it authorizes your agent to purchase or sell real estate on your behalf.

Conducting business on another person’s behalf can be time-consuming. Florida law entitles an agent to receive compensation. Spouses, heirs, financial institutions, attorneys, and CPAs who are licensed or registered in Florida may be named as agents and paid for their efforts.

WHAT IF YOUR SPOUSE IS YOUR AGENT, AND YOU’RE DIVORCING?

Filing a petition for divorce in Florida immediately removes the authority of a principal’s spouse to act as the agent under that principal’s power of attorney. The divorce merely has to be initiated, not finalized.

Florida law does not spell out what can or should be included in a power of attorney, except that a durable power of attorney must state, “This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in Chapter 709, Florida Statutes.”

Florida law requires your agent to be either a person age 18 or older or a Florida-based financial institution that is authorized to do trust business in this state. Your agent should be a person or institution that you trust to act in your interests and make sound business and financial decisions.

AN AGENT’S POWERS MUST BE SPELLED OUT PRECISELY

Under Florida law, any powers that are granted to an agent by a power of attorney must be spelled out precisely in the document. Broad grants of authority are not legally valid. The law lets an agent perform only those acts specifically allowed by the document.

In Florida, a healthcare or medical power of attorney is called a “Designation of Health Care Surrogate.” It lets you name a surrogate and an alternate surrogate to make healthcare decisions if you become incapacitated and unable to communicate your wishes to healthcare providers.

What legally constitutes incapacitation in this state? Florida law defines incapacitation as: “The inability of an individual to take those actions necessary to obtain, administer, and dispose of real and personal property, intangible property, business property, benefits, and income.”

WHAT POWERS MAY BE GRANTED BY A FINANCIAL POWER OF ATTORNEY?

A financial power of attorney allows a person to designate an agent to assist with his or her finances. Specific powers granted to the agent may include the power to:

  1. conduct financial transactions, deal with legal claims or manage properties
  2. manage retirement and insurance benefits, submit tax returns, or fulfill contracts
  3. collect social security benefits, plan Medicaid, and manage a trust

WHAT DOES AN AGENT NEED TO KNOW?

 

An agent in Florida must act in good faith, maintain the principal’s estate plan, and may not delegate responsibilities to a third party. Agents must maintain comprehensive records of all disbursements and transactions made on behalf of the principal.

If the power of attorney gives an agent access to a safe-deposit box, that agent is required to complete an inventory of the contents whenever he or she has accessed the box.

An agent must adhere to a principal’s oral and written instructions – or the agent may be liable for damages. You should also name a secondary agent in case your agent dies, resigns, or suffers incapacitation.

WHAT IF A POWER OF ATTORNEY ISN’T ACCEPTED BY A THIRD PARTY?

Some third parties may hesitate to act or may even refuse entirely to do business with an agent. Often in these cases, the third party is uncertain about the validity of the power of attorney. Third parties may ask an agent to sign an affidavit affirming that the agent is acting properly.

In Florida, a third party must provide a written explanation regarding why he or she is unwilling to work with an agent. Third parties must offer this explanation within a “reasonable” amount of time. Third-party financial institutions have four days to provide a written explanation.

If a power of attorney was lawfully created and has not been terminated, suspended, or revoked, third parties in Florida may be ordered by a court to honor the document.

If a third party’s unreasonable or undue delay causes financial losses or damages to the principal, a third party may be held liable for those damages (as well as for attorney’s fees and court costs).

TO GET STARTED – OR TO LEARN MORE

Powers of attorney may be created as single documents, but a power of attorney is also one of the key documents in a well-drafted estate plan.

Don’t try to write up your own power of attorney using the various forms or estate planning “kits” that are available online. The law is way too complicated in Florida, and if you make a mistake, it could cost you.

If you need to establish a power of attorney in South Florida, or if you need to learn more about estate planning, it’s important that you work with the right West Palm Beach estate planning attorney. It’s never too early to consider the future.

Read one of our recent blogs here: THE DIFFERENT TYPES OF WORKPLACE DISCRIMINATION (AND HOW TO PROTECT YOUR RIGHTS)