A Power of Attorney delegates legal authority from one person to another. The maker of the Power of Attorney grants to another person, the right to act on their behalf in dealing with a third party (i.e. banks, stockbrokers and other financial institutions).
A Power of Attorney terminates if the principal becomes incapacitated, unless it is a special kind of Power of Attorney known as a “Durable Power of Attorney”. A Durable Power of Attorney remains effective even if a person becomes incapacitated.
In 2011, the Florida legislature enacted the “Florida Power of Attorney Act” (“FPOA”, Fla. Stat. §709.2101-.2402), fundamentally overhauling existing law, and making sweeping new changes. Even though the new law recognizes durable power of attorneys (“DPA’s”) executed under the prior law, we are advising all Florida residents to update their DPA, because the changes are so comprehensive.
It has been my experience that banks and other financial institutions dislike DPA’s and will look for any excuse not to honor one. In Florida, this means that a DPA needs to be up-to-date, Florida specific and compliant with Florida law. Given the sweeping changes of the new law, my advice to clients is to update your DPA.
The new DPA statute also gives banks the power to make you obtain a legal opinion that a DPA executed to prior to October 1, 2011, is legally effective. It also gives the bank time to review DPA’s to determine if they will accept them. The delay of having to obtain an attorney opinion letter, results in major inconveniences for families and potential loss of planning opportunities without paying for an expensive guardianship court proceeding.
Another key change to the statute is that powers granted to your agent must be explicitly stated. A popular blanket “general powers” provision that allows the agent to do “anything the principal could do if present” is no longer valid. The practical effect of this law is that a good DPA must set forth in fine detail – let’s call it excruciating detail – all powers. In addition, the you must sign or initial certain powers. These are special powers that would significantly alter your estate plan, such as the power to make gifts, disclaim interests, change rights of survivorship accounts, change beneficiary designations on IRA’s, or to create or modify a living trust.
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