Earlier this week, the CPA for a client called to determine that all of the client’s estate planning documents were up to date and in good order. The reason for the call was that the client has been diagnosed with Alzheimer’s disease and is beginning to show the effects of diminished memory and cognitive abilities.
My response to her, after reviewing the file, was that the documents were in good order, but that the client may want to consider a new durable power of attorney since Florida has a new power of attorney statute that became effective October 1, 2011. The client’s existing power of attorney was signed in 2009. The CPA asked me why the client would need a new power of attorney when the one she has is only three years old and otherwise represents her desires.
Here is my response to her:
“Her durable power of attorney is a “springing” power of attorney, which means it doesn’t take effect until she has been declared incapacitated by a physician. Obviously, if it is being used presently and the third parties with whom you are dealing are working with you, then no problem.
Florida adopted a new power of attorney statute that took effect October 1, 2011. The client’s power of attorney was executed prior to that date, so the new statute does not literally apply to her power of attorney, and it is valid for all legal purposes.
However (us attorneys like words like “however”, “but for”, “except”, or our favorite “it depends.”), the new statute eliminates “springing” powers of attorney dated after October 1, 2011, although it grandfathers in those signed prior to October 1, 2011. The problem is, we already are getting reports in from various institutions that their employees have been instructed not to honor springing powers of attorney, which has created some issues for some clients.
Another element of the new power of attorney statute provides that if certain “special powers”, mostly associated with transferring ownership of assets, are desired to be included in the power of attorney, then those specific paragraphs must be initialed by the principal. For powers of attorney signed prior to October 1, 2011 there is no such requirement. Notwithstanding the statute’s plain language that the initialing is not required for powers of attorney signed prior to October 1, 2011, we already are getting reports from clients that powers of attorney signed prior to October 1, 2011 are not being honored for those special powers.
None of these reports from clients are widespread, but we are expecting that they will become more widespread with the passage of time. Accordingly, if the client has “good” days where she is lucid and in control of her faculties, it might be a good idea for her to sign a new durable power of attorney to eliminate the potential problems referred to above.
There is one other significant advantage to having a durable power of attorney that complies with the new statute. The new statute has provisions that allow an action against third parties to force them to honor the power of attorney – the old statute has no such provision. That enforcement provision can be extremely useful when dealing with a third party who doesn’t want to honor the power of attorney.
In summary, there is nothing that compels that the client sign a new durable power of attorney. But, there could be some significant advantages by having one that complies with the new statute, if she is competent to sign a new one. “
The bottom line is people want, and expect, that their validly signed and legally sufficient durable power of attorney be honored by third parties when the need arises. However, many institutions and third parties will not honor a power of attorney that is not current, and contains language that specifically allows the attorney in fact to engage in the transaction that is purpose behind the use of the power of attorney.
This is especially true if there is the possibility that you may need to apply for Medicaid or VA Pension or VA Aid and Attendance benefits to pay for nursing home costs. The statutes governing Medicaid requires that a power of attorney specifically allow the agent or attorney in fact to enter into contracts and to establish trusts for the benefit of the principal if the power of attorney is to be used for Medicaid planning purposes.
If you have a Florida power of attorney that was signed prior to October 1, 2011, you should consult with your estate planning attorney or elder law attorney to determine whether there is sufficient reason for you to execute a new durable power of attorney that complies with all of the provisions of the new Florida statute.
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