Florida Has New Durable Power of Attorney Law--Do You Need to Update Yours?
October 1st, 2011, rings in brand new sweeping Florida legislation on Powers of Attorney (POA). Is your power of attorney still ‘up to snuff’? Check it out:
- The good news is that valid powers of attorney documents executed prior to October 1st are still valid. The bad news is that with the passage of time, financial institutions and other third parties may start to question “old" (i.e. pre-October 1st) powers of attorney knowing that they would not be valid under the current law.
- All Florida Powers of Attorney must now be executed in the presence of two witnesses and a notary. Although this was the practice in our office anyway, many form powers of attorney did not allow for two witnesses and notary to sign.
- The new law now prohibits “Springing" Powers of Attorney, or POAs contingent upon the happening of some future event, such as incapacity. The new Florida law mandates that all POAs are now effective immediately upon execution.
- Florida Powers of Attorney may no longer broadly authorize an agent to perform all acts which the principal (the person giving the power) could perform. Instead, authority to act must now be specifically granted and delineated as to certain matters, such as banking, dealing with property, handling stock matters, etc.
- There are now itemized “Super Powers" that specifically require the principal to sign or initial next to each such itemized authority before an agent is given authority to act. These include the right to settle/amend/revoke a trust, make a permitted gift, change survivorship or beneficiary designations, deal with annuities (including retirement), and disclaim property and powers of appointment.
- Unless the Power of Attorney says otherwise, the default rule for gifting is that an agent may only make gifts of the principal’s property up to the annual exclusion amount and gifts must be consistent with the principal’s overall estate plan and not inconsistent with prior gifting history. In other words, if the principal never any annual gifts of her property herself, then her agent may not start doing so acting under her power of attorney.
- The new law specifies the fiduciary duties of an agent, including the duty to act in good faith, to act consistently with the principal’s best interests, to preserve the principal’s estate plan, to act loyally on behalf of the principal and to avoid conflicts of interest, among other duties; any violations thereof now specifically subjects the agent to liability to restore the principal’s assets and to pay attorneys fees and costs.
- Third parties must accept the authority of an agent who presents the power of attorney to them and any refusal by the third party must be in writing within a reasonable time (4 business days) and be a reasonable refusal. Now, an improper rejection of a proper POA can subject the refusing third party to damages and costs.
- The filing for divorce, legal separation, or annulment of a marriage automatically terminates the authority of a spouse as agent under a POA unless the instrument specifically provides otherwise.
Bottom line: Many form Powers of Attorney floating around out there from office supply stores, online legal document services and even attorneys who don’t specialize in estate planning, will not conform to the new Florida legislation and won’t be legal if signed after October 1st. This makes it especially important to consult a qualified Florida estate planning specialist to draft your new POA and make sure it is legally executed.
However, if you do have a valid, reasonably current POA, you are probably ‘good to go’ for a little while at least. However, be sure that when you next meet with your estate planning attorney for your periodic review (rule of thumb: every 3 years or when you have a major life event in your family), that you update and sign a new POA at that time so you and your loved ones remain protected in the long run.