Power of Attorney Options in Florida
Typically, a person entering into a contract, opening an account or purchasing an asset must do so by signing the relevant document themselves. However, on occasion they may be unable to handle these matters by themselves due to incapacity, unavailability, inconvenience or some other valid reason. In such cases, Florida law allows for the use of a Power of Attorney that permits an individual to give a specified person the power to act of his/her behalf without the need for formalized court proceedings.
According to Florida Power of Attorney Act, a power of attorney is a written document where an individual, known as the “principal”, authorizes one or more people, referred to as the “agent” or “attorney-in-fact”, to act on the individual’s behalf regarding property and/or financial matters.
This law allows the principal to permit the agent to handle various real estate, financial and other matters related to personal care (such as living arrangements, transportation etc.). Matters addressed in a Power of Attorney are typically not related to medical or healthcare which, although can be listed in a power of attorney in Florida, are usually granted in a separate document known as a Health Care Designation.
When a person is named as an agent, they do not have a personal interest in the subject property or matter. Instead, the agent owes a fiduciary duty to the principal and usually manages the property or asset within the scope allowed in the power of attorney document. An agent can only act in a manner that is explicitly allowed in the power of attorney document, which can be either a general or limited/specified purpose.
Power of Attorney as an Estate Planning Instrument
Powers of attorney are usually drafted during the principal’s estate planning process and are created after great deliberation and for a specific purpose. They are often times granted between spouses as it is imperative that such broad powers are granted only to the most trusted individual.
There are several uses for a power of attorney, including:
- Helping facilitate a specific transaction, purchase or contract
- Helping in case of incapacity of the principal
- To generally permit the agent to act on behalf of the principal in various financial transactions.
Benefits of having a validly executed power of attorney include:
- Allowing the principal to choose a trusted agent to act on his or her behalf, as well as, customizing the powers being granted
- Allowing an agent to act on behalf of the principal in the event of unexpected incapacity (see § 709.2104, Fla. Stat.)
- Avoiding the need for guardianship court proceedings
While powers of attorney are commonly used to assist elderly individuals conduct their affairs or for spouses to act on behalf of each other, it is a powerful tool for almost anyone. For example, young adults are a perfect candidate for a power of attorney. Often times, parents remain actively involved in the financial or medical affairs of their 18-year-old children who have recently become adults, but may still be living at home or attending college. Since parents are no longer legally allowed to act on their young adult child’s behalf, a power of attorney (and designation of healthcare surrogate, for that matter!) can prove very helpful to families.
Various Kinds of Powers of Attorney in Florida
In Florida, there are two main forms of powers of attorney that can be created. These forms depend on the purpose for which the document is being created, such as General purposes or Specific purposes.
A general power of attorney can authorize an agent to act for one transaction or provide wide-ranging authority to act in general on behalf of the principal. However, it is worth noting that general powers of attorney that provide on a limited authority are different from special/limited powers of attorney.
The following are examples of general powers of attorney:
- Durable Power of Attorney: These documents are typically prepared as part of the estate planning process and drafted to ensure they remain effective during incapacity of the principal. In Florida, a durable power of attorney must include the following language: “This durable power of attorney is not terminated by subsequent incapacity of the principal, except as provided in chapter 709, Florida Statutes.” (see § 709.2104, Fla. Stat.)
- Non-Durable Power of Attorney: Unlike durable powers of attorney, non-durable powers of attorney terminate upon the principal becoming incapacitated. Usually, non-durable powers of attorney are those granted only for a specific transaction, such as the purchase of real estate, where the principal would not want the agent to act on her/her powers after the principal has become incapacitated. (see § 709-2109, Fla. Stat.)
- Springing Power of Attorney: Although in Florida powers of attorney usually become effective when signed by the principal, springing powers of attorney are those that become effective sometime in the future, usually after the occurrence of a particular event (such as when the principal becomes incapacitated). These powers of attorney are not effective in Florida expect for (a) powers of attorney conditioned on the principal’s incapacity that were executed before October 1, 2011 and have not become exercisable before October 1, 2011 or (b) military powers of attorney that are contingent on deployment.
- Statutory Short Form Power of Attorney: Florida does not have a statutory short form power of attorney.
A specific/limited power of attorney are those that are limited by their nature to clearly delineated situations or transactions. Examples of specific limited purpose powers of attorney are:
- Internal powers of attorney at financial institutions: Although a valid power of attorney drafted in accordance with Florida law should be accepted by all third parties, most financial institutions have forms that they require a principal to sign in order to permit an agent to act on that principal’s behalf.
- Power of attorney for Tax Purposes: These powers of attorney are executed for specific purposes of allowing the named agent represent the principal with respect to tax matters, including appearing before the various federal and state agencies.
- Power of attorney for Veteran’s Benefits: These documents are used to assist with a claim for disability benefits from the US Department of Veterans Affairs.
- Powers for Health Care: Although a power of attorney can speak to an agent’s authorization to make health care decisions on behalf of the principal in Florida, it is uncommon that such authority will be given in a typical power of attorney. As such, there are several forms used, together with a power of attorney, that gives an agent the ability to make health care decisions on behalf of the principal. (see 765.101 Fla. Stat.) They are knowns as (a) a Designation of Health Care Surrogate, which permits the agent to make health care decisions for the principal when they cannot make them, (b) a Living Will, which states the principal’s end-of-life decisions and (c) Declaration of Nominating Pre-Need Guardian, which allows the principal to designate who they would like to act as guardian over him/her if they become incapacitated.
What is needed for a Valid Power of Attorney in Florida?
In Florida, a Power of Attorney must satisfy the following three requirements:
- The principal must have the requisite mental capacity to sign the power of attorney document.
- While Florida’s statute does not specify the mental capacity required to execute a power of attorney, incapacity is defined as the inability of an individual “to take those actions necessary to obtain, administer, and dispose of the real and personal property, intangible property, business property, benefits and income”.
- The document must be executed with the formalities as stated in § 709.2105(2), Fla. Stat.
- Similarly to the execution of a Will in Florida, a power of attorney must be signed by the principal and two witnesses, as well as, be acknowledged by the principal before a notary public. In addition to signing the document, the principal must also initial certain enumerated powers if the principal intends to grant those powers to the agent as well.
- An appropriate agent must be appointed and accept the appointment
- Florida laws requires an agent to be 18 years or older or a financial institution that has trust powers, has a place of business in Florida and is authorized to conduct trust business in Florida.
Despite Powers of Attorney being very common tools in real estate and estate planning, they are very powerful documents with significant impact. As such, anyone considering executing a Power of Attorney must understand the rights they are handing over to their agent and ensure that they coincide with their estate planning or other objectives. It is always advised to consult with an attorney to determine which Power of Attorney is best suited for your needs.