Durable Power of Attorney
Q: What is a Durable Power of Attorney for Property?
A Durable Power of Attorney for Property (DPA) is a document that allows you (the principal) to give authority to another person (youragent or attorney-in-fact) to make financial/legal decisions and financial transactions on your behalf. It is called “durable” when, by its terms, it remains effective even if the principle becomes mentally incompetent.
Q: Who can serve as attorney-in-fact?
It need not be an attorney: any trusted adult, such as a spouse, partner, relative or friend, can serve as attorney-in-fact. Also, there are several nonprofit agencies that can fill this role. It is always a good idea to name at least one alternate attorney-in-fact to serve in the event that your first choice becomes disabled or dies. Your attorney-in-fact will have broad authority, and it is critical that the person or agency you choose be trustworthy and sensitive to your wishes.
Q: What powers can I give to my attorney-in-fact?
The powers you give your attorney-in-fact can be as limited or as broad as you like, and can include the power to buy property, to invest, to contract, to engage in tax planning, to make gifts, and, very importantly, to plan for government benefits, such as Supplemental Security Income and Medicaid (Medi-Cal in California).
Q: What is a “springing” Durable Power of Attorney?
Ordinarily, a DPA is effective as of the day it is signed and executed. This means that even if you are competent to make your own decisions, your attorney-in-fact will also have the legal authority to act on your behalf and engage in financial transactions.
A “springing” DPA, on the other hand, becomes effective at a later date, usually when the principal becomes mentally incompetent – it “springs” into effect at the point you lose capacity, as certified by a physician or other designated individual. Fla. Stat. 709.2108 provides as follows:
709.2108 When power of attorney is effective.—
Note: Some banks are reluctant to accept a “springing” DPA because of the possible ambiguities involved in deciding when a person is “mentally incompetent.” You should consult with your bank about its requirements for accepting a DPA.
Q: What are the advantages of a Durable Power of Attorney?
A DPA is a relatively easy, inexpensive mechanism for allowing another person to handle your legal and financial affairs. The main advantage for your loved ones is that if you have a DPA in place, your loved ones can avoid having to file a guardianship proceeding, which is extremely costly. Unlike a joint tenancy bank account, which people often use as a management device in the event of incapacity, a DPA does not give your attorney-in-fact legal access for his or her own use. Your attorney-in-fact must use your assets for your benefit. However, sometimes DPA’s are abused by the holder of the same because of the broad grant of powers. So, be careful who you choose.
Also unlike joint bank accounts, a DPA allows you to transfer decision-making power without disrupting your estate plan. When you create a joint tenancy bank account, you not only give your “joint tenant” access to your funds, but on your death, all of the funds in that account will automatically go to the joint tenant by right of survivorship. Assets in a joint tenancy account are not subject to your Will. A Durable Power of Attorney, on the other hand, in no way affects the disposition of your assets upon your death and, in fact, ceases to be effective when the principal dies.
A properly drafted DPA can give you the flexibility to plan for government benefits such as Medicaid. For example, the attorney-in-fact can be given authority to transfer the principal residence to your spouse if you need to be in a nursing home or require government assistance.
Q: What are the disadvantages of a Durable Power of Attorney?
The main disadvantage of a DPA is that it is subject to abuse because there is no ongoing court super-vision of the attorney-in-fact. This differs from a conservatorship or guardianship, under which a conservator is required to submit an ongoing accounting to the court. If the attorney-in-fact abuses his or her authority and acts improperly, a court may step in and take action. However, in many cases, the damage is already done, and it is difficult to undo it. Thus, you should take great care in selecting your attorney-in-fact. Many times, elderly people are taken advantage of by caregivers, maids, home health aids, etc. and give a DPA to them. If this occurs, immediate action needs to be taken to correct the situation. Joe Gufford Attorney has litigated several cases where this has occurred to stop the damage from continuing to accrue. However, the incapacitated person’s estate in one case was literally decimated and it took thousands of dollars to correct the situation. In that particular case, the caregiver called the Department of Children and Families in an attempt to get the incapacitated person’s daughter arrested for elder abuse. The caregiver also took the incapacitated person to an attorney to have them execute a new will. Although it is extraordinary, we were able to get the DPA invalidated and, in the guardianship action, we were able to engage in estate planning so that the incapacitated person’s true wishes as set forth in the valid will were put back into place.
Q: Do I need a lawyer to have a Durable Power of Attorney drafted?
Yes. Although there are “forms” available on the internet and even at your local Staples store, they are often not valid. They are worded broadly and may not succeed in delegating the range of authority you intend. First, a qualified attorney will be familiar with the state-specific requirements for DPA forms. Second, an attorney can draft the DPA to meet your individual needs. Third, since a DPA is subject to abuse, it is a good idea to meet with an attorney to make sure both the principal and attorney-in-fact understand the document and the attorney is assured of the principal’s competency.
Q: How do I execute a Durable Power of Attorney?
An adult must be competent in order to execute a valid DPA. If there is a question regarding competency, it is a good idea to get a doctor’s letter or declaration regarding the principal’s capacity to understand and sign a DPA at the time the document is executed. You must sign your DPA in the presence of two qualified witnesses and a notary public.
For real estate transactions, you will have to file your DPA with a county land records office. To be sure you meet your state’s legal requirements for a DPA, you should consult with a qualified attorney.
What are the Duties of the Agent?
The duties of the agent are outlined in Fla. Stat. 709.2114 which provides as follows:
709.2114 Agent’s duties.—