Posts Tagged With: Durable Power of Attorney

What is a Durable Power of Attorney in Florida and Why Should I have One

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.—

(1) Except as provided in this section, a power of attorney is exercisable when executed.
(2) If a power of attorney executed before October 1, 2011, is conditioned on the principal’s lack of capacity and the power of attorney has not become exercisable before that date, the power of attorney is exercisable upon the delivery of the affidavit of a physician who has primary responsibility for the treatment and care of the principal and who is licensed to practice medicine or osteopathic medicine pursuant to chapter 458 or chapter 459 as of the date of the affidavit. The affidavit executed by the physician must state that the physician is licensed to practice medicine or osteopathic medicine pursuant to chapter 458 or chapter 459, that the physician is the primary physician who has responsibility for the treatment and care of the principal, and that the physician believes that the principal lacks the capacity to manage property.
(3) Except as provided in subsection (2) and s. 709.2106(4), a power of attorney is ineffective if the power of attorney provides that it is to become effective at a future date or upon the occurrence of a future event or contingency.

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.—

(1) An agent is a fiduciary. Notwithstanding the provisions in the power of attorney, an agent who has accepted appointment:

(a) Must act only within the scope of authority granted in the power of attorney. In exercising that authority, the agent:

1. May not act contrary to the principal’s reasonable expectations actually known by the agent;
2. Must act in good faith;
3. May not act in a manner that is contrary to the principal’s best interest, except as provided in paragraph (2)(d) and s. 709.2202; and
4. Must attempt to preserve the principal’s estate plan, to the extent actually known by the agent, if preserving the plan is consistent with the principal’s best interest based on all relevant factors, including:

a. The value and nature of the principal’s property;
b. The principal’s foreseeable obligations and need for maintenance;
c. Minimization of taxes, including income, estate, inheritance, generation-skipping transfer, and gift taxes;
d. Eligibility for a benefit, a program, or assistance under a statute or rule; and
e. The principal’s personal history of making or joining in making gifts;
(b) May not delegate authority to a third person except as provided in s. 518.112;
(c) Must keep a record of all receipts, disbursements, and transactions made on behalf of the principal; and
(d) Must create and maintain an accurate inventory each time the agent accesses the principal’s safe-deposit box, if the power of attorney authorizes the agent to access the box.
(2) Except as otherwise provided in the power of attorney, an agent who has accepted appointment shall:

(a) Act loyally for the sole benefit of the principal;
(b) Act so as not to create a conflict of interest that impairs the agent’s ability to act impartially in the principal’s best interest;
(c) Act with the care, competence, and diligence ordinarily exercised by agents in similar circumstances; and
(d) Cooperate with a person who has authority to make health care decisions for the principal in order to carry out the principal’s reasonable expectations to the extent actually known by the agent and, otherwise, act in the principal’s best interest.
(3) An agent who acts in good faith is not liable to any beneficiary of the principal’s estate plan for failure to preserve the plan.
(4) If an agent is selected by the principal because of special skills or expertise possessed by the agent or in reliance on the agent’s representation that the agent has special skills or expertise, the special skills or expertise must be considered in determining whether the agent has acted with care, competence, and diligence under the circumstances.
(5) Absent a breach of duty to the principal, an agent is not liable if the value of the principal’s property declines.
(6) Except as otherwise provided in the power of attorney, an agent is not required to disclose receipts, disbursements, transactions conducted on behalf of the principal, or safe-deposit box inventories, unless ordered by a court or requested by the principal, a court-appointed guardian, another fiduciary acting for the principal, a governmental agency having authority to protect the welfare of the principal, or, upon the death of the principal, by the personal representative or successor in interest of the principal’s estate. If requested, the agent must comply with the request within 60 days or provide a writing or other record substantiating why additional time is needed and comply with the request within an additional 60 days.
Can I Revoke a Power of Attorney?
Yes.  Fla. Stat. 709.2110 provides as follows:
709.2110 Revocation of power of attorney.—

(1) A principal may revoke a power of attorney by expressing the revocation in a subsequently executed power of attorney or other writing signed by the principal. The principal may give notice of the revocation to an agent who has accepted authority under the revoked power of attorney.
(2) Except as provided in subsection (1), the execution of a power of attorney does not revoke a power of attorney previously executed by the principal.
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