Florida Legislature Enacts New Durable Power of Attorney Statute
Changes in the Law Require Florida Residents to Update Their Existing Power of Attorney
The State of Florida has enacted a new statute governing durable power of attorneys, found in Chapter 709 of the Florida Statutes. The new statute went into effect on October 1, 2011. Power of attorneys that were executed prior to that date are still valid, as long as they complied with Florida law at the time of execution. However, because of some significant changes with the new statute, it is wise for all individuals with a Florida power of attorney to review their existing document, and more than likely, execute a new power of attorney that properly complies with the updated law.
The new Florida statute contains several important differences from its prior version. First, under the new statute, so-called “blanket powers” are no longer effective. Most power of attorneys contain blanket powers, which authorize the agent to act broadly, and to take any reasonable actions that it is believed the principal would him-or-herself take. Such open-ended grants of power are now invalid in Florida, and instead, an agent is only permitted to exercise authority that is expressly granted in the document, and any additional authority reasonably necessary to give effect to the express grant of authority. This is a key change from the old statute, and general provisions are no longer valid or binding because of their lack of specificity. In order to have legal effect, all powers that the principal wishes the agent to possess must be expressly stated in the power of attorney (regardless of when the power of attorney was executed).
Another major change that was put into effect on October 1, 2011 is that springing power of attorneys are no longer allowed. A springing power of attorney is a power of attorney that is only activated at the time that the principal becomes incapacitated. In other words, an agent cannot act pursuant to the power of attorney unless the principal is disabled. The alternative to a springing power of attorney is commonly referred to as an immediate power of attorney, which is a power of attorney that fully authorizes the agent to act on behalf of the principal at the moment it is signed. In Florida, as a result of the new statute, only immediate power of attorneys are permitted. Existing springing power of attorneys are now void.
Furthermore, in regard to powers related to both banking and investing, the power of attorney should contain explicit language regarding the agent’s authority to conduct these types of transactions. The language used should directly reference the statute. By citing specific provisions of the statute, agents will avoid potential issues with banks or other financial institutions at the time the power of attorney is presented about the extent of the agent’s authority.
The Florida power of attorney statute does allow two or more persons to act as co-agents. In addition, it is important to note that unless the power of attorney provides otherwise, each co-agent may exercise authority independently. Also, if an alternate or successor fiduciary is appointed, the alternate may not act unless the predecessor agent has died, become incapacitated, is no longer qualified to serve, or has declined to serve (unless the power of attorney provides otherwise).
Certain powers (known as super powers) will now require the principal’s signature or initials next to the enumeration of the specific powers in the document. Powers that require such a signature generally deal with the agent’s authority to alter the principal’s estate plan, make gifts, change beneficiary designations or other documents effective at death, and to manage retirement plans. If the enumerated powers are not signed or initialed by the principal, then the agent is unable to exercise any of the aforementioned powers, without further court authorization.
The new statute also requires that the agent attempt to preserve the principal’s estate plan, to the extent actually known by the agent, if preserving the plan is consistent with the principal’s best interest based on all relevant factors. These factors include the value and nature of the principal’s property, the principal’s foreseeable obligations, minimization of taxes (including, income, estate, inheritance, generation-skipping transfer and gift taxes), eligibility for a benefit, program, or assistance under a statute or rule, and the principal’s personal history of gift making.
Although durable power of attorneys signed before October 1, 2011 will continue to be legally valid to some extent, third party institutions may fail to honor such documents. Therefore, it is important for all Florida residents with existing power of attorneys to review and update their documents in order to avoid future problems.