New Florida Power of Attorney Act is a Big Change
By Robin M. Petersen, J.D., C.E.L.A.
The new Florida Power of Attorney Act becomes effective October 1, 2011 and affects many elements of existing powers of attorney ("POA") and all of those signed after October 1, 2011. This is a very complex piece of legislation making big changes. I can only summerize the basics of the changes here.
The "principal" is the one who creates a POA. The "agent" is the person nominated to carry out the principal’s wishes.
The new Act requires very specific authority granted to the agent. This alone will take many pages in the new POA to describe. The old language of "my agent can do everything I can do myself" will not work in POAs created after September 2011. As a practical matter, most current POAs probably won’t work in a few years if they lack the new changes described in this article. In a few years, the new law will become the standard operating procedure and that is what the financial institutions will be looking for, no matter when the document was signed. For this reason, it is important to update your current document before your agent needs to rely on them when you might need them most in the future.
The Act eliminates "springing" powers of attorney: those that spring into action only upon the incapacity of the principal. The change is probably a good thing because they are a good idea in the abstract, but unwieldy in action. The new Act requires all POAs to be effective when they are signed.
POAs have often been referred to as a "license to steal". Under the Act, even where the POA requires 2 or more agents to act jointly, there is a special exception for banking transactions to allow any one of the agents to sign checks or handle banking matters with a single signature. This is a huge change that will affect the oversight function that many people want in their POAs. If you want oversight protection of more than one agent, you may need to investigate a voluntary guardianship or properly drafted revocable living trust.
The Act states that the agent under the POA will have no authority over assets held in the principal’s revocable living trust. This alone requires forethought and careful planning.
Another big change: if you want your agent to have power over your banking, investments, and/or estate planning, you will need to have some very special language covering those actions and sign or initial next to each of those provisions in the document at the time you sign your document. This cannot be done later without executing a new POA. This can be a trap for the unwary, since these are the very actions that most folks want their agent to be able to perform.
If a bank or other third party rejects a POA, there are now very specific guidelines. This is a good thing, given the widespread problems in the past. On the other hand, as mentioned above, the new POAs will now have to contain special language and signature requirements to be enforceable, so rejection will probably be much more common when and if the bank wants to question the sufficiency of the document’s language. Therefore, once your new document is executed, you should present it to the bank and have them accept it before the document is needed.
The new law states that the filing of divorce proceedings will automatically terminate the authority of an agent who is married to the principal. This did not used to be the case.
The Act also imposes several new limitations if you want to compensate your agent. I would suggest you discuss this with knowledgeable legal counsel for further clarification.
In short, the POA cannot be reduced to a preprinted form any more and must be much more tailored to the principal’s individual needs. One size fits all forms will soon be obsolete.
Robin M. Petersen is a vet and military brat. He is a Board Certified Elder Law attorney in Indialantic and is the principal at The Estate Planning and Elder Law Center of Brevard. 321/729-0087.