On October 1, 2011, Florida’s new Power of Attorney Act will become effective for all powers of attorney used in the state of Florida. While the goal of the Florida legislature in adopting the Act was to address perceived defects in the current law, the new Act contains many new execution and other requirements that differ significantly from the existing law. This post will help you understand the changes and identify some of the ways in which the new law differs from current law.
Any person who signs a power of attorney on or after October 1, 2011 should be aware of the requirements imposed by the new law or risk signing a power of attorney that does not comply with the new law and which is therefore invalid.
Some examples of the changes that will become effective on October 1, 2011 under the new Act include:
- In order to be valid, a power of attorney will need to be signed before two witnesses and a notary.
- An agent under a power of attorney is not obligated to act with respect to all powers granted by the principal in the document; rather, the agent may be able to select only those transactions he or she wishes to accept authority for, leaving areas of a principal’s affairs unattended. For example, if a principal grants an agent banking powers and investment powers in the power of attorney, but the agent only wishes to handle banking transactions, this could result in a situation where the principal’s investments remain unsupervised, since the agent has decided not to get involved with the principal’s investments. In order to avoid this result, we are advising our clients that a power of attorney signed on or after October 1, 2011 should contain an agent acceptance with respect to all the powers contained in the power of attorney, so as to assure that a person’s affairs will be managed completely, and not selectively in the discretion of the appointed agent.
- The new Act permits incorporation by reference of banking and investment transactions, which means that a principal no longer has to specify all of the banking powers to be authorized or all of the investment powers to be authorized. Instead, a simple reference that “my agent has authority to conduct banking transactions” or “my agent has authority to conduct investment transactions” can be used, while still conferring on the agent the whole host of powers that would typically be associated with such authority.
- The new law does not recognize “springing” powers of attorney that are signed after October 1, 2011. Many people historically have relied on “springing” powers of attorney that limited or delayed the effectiveness of the power of attorney until the principal actually suffered an incapacity. For powers of attorney signed after October 1, 2011, such “springing” powers of attorney will not be valid.
- The authority to amend a trust by the agent on behalf of the principal will need to be specifically enumerated in the power of attorney and either signed or initialed by the principal at the time the power of attorney is executed. However, if the trust document itself does not allow for amendment by an agent acting under a power of attorney, then under the new Act, the agent would not have the requisite authority to amend the trust on behalf of the principal. The principal of the power of attorney will need to update his or her trust now to add a provision allowing for an agent under a power of attorney to modify the trust.
Although the new Act provides that any right acquired under the current law will survive the effective date of the Act, there is a practical reason for updating your power of attorney. Once the Act has been in existence for a while, third persons relying on a power of attorney will be accustomed to the requirements of the new Act. If a pre-October 1, 2011 power of attorney is presented sometime down the road, it may come under heightened scrutiny, making it more difficult to have it honored by third persons. This would undermine the reason to have a power of attorney in the first place.
As a simple example of the many changes, the new act requires the authority to conduct some banking transactions to be initialed (or signed), such as adding a joint owner to a bank account or brokerage account. Even though a pre-October 1, 2011 power of attorney is technically valid without the initials, it won’t be long before bank personnel and other third parties will look for properly initialed provisions in powers of attorney and will likely question those that don’t comply. This could lead to delays in getting a power of attorney accepted or an outright refusal to honor the power of attorney.
Another important reason to consider obtaining a new power of attorney that complies with the new statute involves the effectiveness of the power of attorney. For powers of attorney signed before the effective date of the new statute, there is no effective method to “force” third parties to honor the power of attorney. Under the new statute, there is now a process through which you can require a third party to specify the reason the third party does not honor the power of attorney. If the reason is not legally sufficient, your agent (attorney-in-fact) can file a legal action challenging the third party’s refusal to honor the power of attorney, and if the court determines the reason is not legally sufficient, the court can award your agent damages, including legal fees, to be paid by the third party for causing the need for the legal action. While this may seem a heavy burden, at least there will now be a method for enforcing the acceptance of a valid power of attorney – short of a court supervised guardianship.
To take advantage of the provision allowing your agent to force a third party to honor the power of attorney, the power of attorney must be signed after October 1, 2011 and must specifically incorporate the new statute’s provisions into the power of attorney.
The power of attorney is one of the most useful legal documents that you can have in place. While those that are signed before October 1, 2011 will continue to be legally valid, the failure of third party institutions to honor such powers of attorney may ultimately force you to update your power of attorney to comply with the new Act.
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