A power of attorney is a writing signed by a principal granting authority to an agent to act on behalf of the principal. The agent is known as an attorney- in- fact. A power of attorney can be a very important document and can be as broad or limited as the principal desires.
Powers of Attorney are often used in commercial business transactions. They authorize agents acting on behalf of corporations or financial institutions. They can even be used to authorize someone to effect real estate transactions when the principal will be unavailable.
Most people are introduced to powers of attorney as part of their estate planning. As part of estate planning, the power of attorney is intended to provide protection for a principal during his or her life.
A power of attorney grants an agent authority to act on behalf of the principal, with the frequent intent that action only be taken when the principal is incapacitated. A regular power of attorney cannot be used if the principal cannot act, but statutes authorize creation of a durable power of attorney which survives incapacity. The durable power of attorney is the power of choice in estate planning where the intent is to provide protection for someone who may become incapacitated. A durable power of attorney must have specific language providing it is not terminated by incapacity of the principal except as provided in Chapter 709, Florida Statutes.
Many Floridians are uncomfortable granting a broad power of attorney to someone before it is needed. Since a power of attorney usually includes authority to deal with finances and contracts, many are concerned that granting authority, even to a trusted family member, could allow the agent to steal from the principal. In 2001, Florida passed legislation authorizing creation of a power of attorney that would only become effective when the principal was incapacitated (springing power). That power would not be effective until a physician signed an affidavit that the principal lacked capacity to manage property. In theory, the springing power of attorney was a great idea. In practice, few physicians would sign the affidavit and the powers proved ineffective. In 2011, the legislature ended the springing power of attorney but grandfathered those already signed.
Florida adopted a wholesale revision to statutes governing powers of attorney in 2011. Florida's new law is based largely on the Uniform Power of Attorney Act. The Uniform Power of Attorney Act was created after a national study revealed statutes concerning powers of attorney were growing increasingly different among states. The Uniform Act is an effort to bring the law in all 50 states to some degree of uniformity, in the belief that such will be in the interest of business and individuals. Different statutes make it possible that a power of attorney effective in one state might not be effective in another. The Uniform Power of Attorney Act was created by the National Conference of Commissioners on Uniform State Laws which proposes laws in areas where uniformity would be desirable. That group is an unincorporated association of "experts" in the field.
Florida law requires an attorney in fact be either a natural person 18 years or older or a financial institution with trust powers having a place of business in Florida and authorized to conduct trust business in Florida. A Florida power of attorney must be written, signed by the principal and signed by 2 witnesses. It must generally be acknowledged before a notary public or such other official as authorized by Florida statutes.
Florida Statutes recognize people in other states have powers of attorney and that those people do not know Florida requirements. If a power of attorney is executed in another state, the power of attorney is valid in Florida as long as it complies with the law of the state where it was executed, with one big exception. If the power of attorney is intended to authorize conveyance of real property, it must be executed with the formalities of a deed. Formalities of a deed require two signing witnesses and a notary acknowledgment.
The legislature thought long and hard about powers of attorney when it adopted its version of the Uniform Act. It decided that certain types of authority must be specifically granted. The principal must sign or initial next to a specific provision for each of the following powers for the attorney-in-fact to be granted such powers: create a living trust; amend, modify revoke, or terminate a trust created by or on behalf of the principal; make a gift; create or change survivorship rights; waive the principal's right to be a beneficiary of a joint and survivor annuity; disclaim property (refuse to accept property through a will, trust or operation of law) and powers of appointment (power to designate a beneficiary or fiduciary).
The principal can revoke a power of attorney at any time by a writing signed by the principal. A new power of attorney does not revoke an earlier power unless the document specifically states the earlier power is revoked.
A third person who in good faith accepts a power of attorney that appears to be properly executed may enforce any obligations created by the attorney-in-fact. Acting in good faith means the person does not have notice the power of attorney is void or terminated or that the attorney-in-fact's authority is invalid.
The statutes make an effort to make powers of attorney functional. They require acceptance or rejection of a power of attorney within a reasonable time. If a power is rejected, the reason must be stated in writing. The statutes provide bases for not accepting a power of attorney. If a person refuses a power of attorney, that person can be sued to force acceptance. If the court orders acceptance, the person can also be liable for damages, including attorney fees and costs incurred in connection with the court action. That means someone should not refuse to accept a power of attorney merely because they want to play it safe. Playing it safe can result in liability.
A power of attorney is a safety net for most people. It gives someone authority to act for the principal to pay bills, manage assets and perhaps more importantly deal with insurance companies. If properly drafted, a power of attorney provides protection for the principal. But, because Florida law has many requirements, a do-it-yourself power of attorney may not provide needed protection.
William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice.