February 1, 2012
Authored by: Tiffany McKenzie and Stephen Daiker
Florida’s new Power of Attorney Act contained in the Florida Statute, Chapter 709, went into effect October 1, 2011. The new statute will affect how attorneys draft, utilize, and enforce powers of attorney (“POA”). Some of the more significant provisions of this new legislation are discussed below.
What is a POA?
A Power of Attorney is a writing in which an individual (the “principal”) grants authority to another individual (the “agent”) to act in place of the principal; each act performed by the agent pursuant to the Power of Attorney has the same effect and benefit to the principal and the principal’s successors in interest as if the principal had performed the act himself.
Why have a POA?
Having an executed Power of Attorney is important in situations where an accident or illness renders an individual incapable of making decisions for themselves. By having an attorney prepare a Power of Attorney, individuals can ensure that their property, assets, and bank accounts are managed by someone they trust to act in their best interests.
What happens to a POA executed before the new Act?
A Power of Attorney properly executed prior to October 1, 2011( including a “springing” POA) will remain valid, but in all other respects it will be subject to the new law as of the effective date.
What is important to know about the New Florida POA Act?
• No Springing or Contingent Power of Attorney: An individual can no longer make a springing Power of Attorney. A springing POA is a power of attorney that does not take effect until a triggering event occurs, such as a determination that the principal is disabled and can not manage property. The new statute provides that all POAs are effective once properly executed. (There is an exception allowing for military POAs to be made contingent on deployment).
• Execution Requirements: Durable and nondurable POAs must be signed by the principal in the presence of two subscribing witnesses, all before a notary public. An out-of-state POA is considered properly executed if it complies with the execution requirements for the state where it was executed. (Note: If the out-of-state POA includes a power not permissible in Florida, that power will not be given effect, even though the POA was properly executed).
• Durable Power of Attorney: A POA is not automatically durable. The POA must have express language stating that it is durable.
• Revocation: The principal may revoke a POA either by express revocation in a new POA or in any other writing signed by the principal. Simply making a new POA is not enough by itself to revoke a prior POA, the new POA must expressly state all other POAs are revoked.
• Notice: A notice of revocation, partial or complete termination, death of the principal, or other notice must be in writing and must be accomplished in a manner reasonably and likely to result in receipt of the notice.
• Divorce: Filing for divorce triggers revocation of a spouse’s authority. Simply filing a petition for divorce will terminate the authority of the principal’s spouse to act under the principal’s power of attorney.
• No Incorporation by Reference: The powers of the agent cannot be incorporated by reference; they must be specifically stated in the POA document. (There are two exceptions to this rule for banking and investment powers).
• Acceptance, Rejection, and Liability of Third Persons: A third person must accept or reject the POA within a reasonable time. Four days is considered a reasonable time for financial institutions. A third person must also provide a written explanation stating why the POA was rejected. Third persons are protected from liability if they rely, in good faith, on a POA that appears to be properly executed.
• Agent: Only a natural person at least 18 years old and certain financial institutions may be named agents. The statute allows for single agents, co-agents, and successor agents. Multiple agents named to act at the same time can act independently of each other, unless the POA specifies otherwise.
• Authority of the Agent: A general provision such as “my agent may do all acts in my place as I could do personally” by itself is insufficient to grant authority to the agent. An agent may only exercise authorities specifically granted to it.
• Duties, Powers, and Superpowers of Agent: The new POA act modifies the default and mandatory duties for the agent. Some of the mandatory duties include: not to act contrary to the principal’s actual known expectations, to perform personally, to preserve the principal’s estate plan, and to keep adequate records. Some of the default duties include: the duty to act with care, competence and diligence, the duty of loyalty, and the duty to cooperate with health-care providers. Further, the new POA act creates “super powers.” The super powers give agents the ability to make decisions regarding the principal’s estate plan, and include powers to create, amend, or terminate trusts.