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02/07/13 It's The Law: Power of Attorney is Important

It's The Law

Power of Attorney is Important

(2/7/13)

Question:

My attorney recommended I have a Power of Attorney as part of my estate planning documents. I already have a Living Trust, a Will, and have designated a health care surrogate to make medical decisions for me if I am incapacitated. Why would I need a Power of Attorney?

Answer:

A Power of Attorney ("POA") can be a very important, but often overlooked, part of estate planning. A POA can help make sure that you are protected during life and potentially avoid costly court guardianship proceedings.

A POA grants someone authority to act on your behalf. To the extent of authority in the POA, the designee (attorney-in-fact) stands in your shoes and can do anything you could do that is authorized by the POA.

The POA can be as broad or as narrow as fits your needs. In estate planning, we are using a POA to empower someone to act on your behalf in the event you are incapacitated. That means, the person holding the power will be able to access your bank accounts, pay your bills, deal with contractors, and arrange for services. Because most POAs authorize access to financial accounts, it is important that you choose someone in whom you have absolute trust and confidence. Most often that would be a close family member. But, if there is still some concern, you can limit the financial access under the POA to specific assets or accounts.

Many people believe they do not need a POA if they have a will and have appointed someone to make health care decisions in the event they are incapacitated (known as a Health Care Surrogate in Florida). But, that leaves a gap between theory and operation. For example, most health insurance companies will not discuss payment or other issues under someone else's insurance policy unless you have a POA. Even if you are authorized to make health care decisions, you will not be able to deal with the insurance company to pay the bill. That can add significant stress, especially to a spouse taking care of the other spouse, when the insurance company will not speak with you.

POAs can come in all shapes and sizes. A general POA, as it name implies, is quite broad. Limited POAs can be tailored to specific needs. Limited POAs might be used for authorizing signing of documents in a real estate transaction. Limited POAs are not much use if needed in the future should you become incapacitated.

If the POA is part of a plan to protect during incapacity, it should be a durable POA. A non durable POA ends when the principal is incapacitated or otherwise unable to act. A durable POA does not end with the principal's incapacity. To make the POA durable, Florida Statutes require inclusion of the following: "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.

By statute effective January 1, 2002, Florida provided for creation of springing powers of attorney, which would become effective by delivery of an affidavit signed by the physician with primary responsible for treatment of the principal stating that the physician believes the principal lacks the capacity to manage property. Due to the variety of problems with the springing power of attorney, most notably the difficulty in obtaining the physician affidavit, authority to create springing powers of attorney in Florida was terminated by the Legislature effective October 1, 2011. Springing POAs executed prior to that date remain valid, although the anticipated difficulty in obtaining the physician affidavit may render the POA useless.

Florida statutes make it clear that an agent may only exercise authority specifically granted in any POA. The statutes also address specific language that should be included for authority to conduct banking transactions, investment transactions, and even gifts.

Form POAs are readily available at office supply and stationary stores. But, they may cause more harm than good. The forms are generic and contain little specific authority. They are less likely to be accepted as authority to act because of their lack of detail with respect to authority and the appearance of careful and detailed is absent.

Florida statutes also require that a POA be signed by the principal and by two subscribing witnesses and be acknowledged by a notary public or similar official (as listed in the statute). POAs executed in another state that comply with the requirements of that state, and military POAs executed in accordance with federal law, are also valid in Florida.

A POA is a very important, if not essential, part of a comprehensive estate plan. It should not be taken lightly, which means you should not substitute the supply store for the advice and drafting experience of an experienced attorney. I suggest you further explore content, benefits and possible designees for a POA with your attorney.

By: William G. Morris, Esquire

William G. Morris is an attorney with offices at 247 North Collier Boulevard on Marco Island, Florida. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney.

Questions for this column can be sent to: William G. Morris, e-mail: wgmorrislaw@embarqmail.com or by fax, (239) 642-0722 or

The Marco Island Eagle

Other articles of interest can be viewed at our website, www.wgmorris.com.

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