Estate Planning Legal Documents

What is a Durable Power of Attorney?
Under a power of attorney, you name someone who steps in your shoes and becomes you, legally. Using a written legal instrument, you, as principal, appoint another person as your agent (known as your “attorney-in-fact” in Florida) and confer authority on the agent to perform certain specified acts on your behalf – just as if you had signed your name yourself. Common powers of attorney include those for finance and health care. A durable power of attorney is a document that, when you need it, you really, really need it. Let Your Caring Law Firm create a document that protects you and your loved ones.

Who Would Use a Durable Power of Attorney?
Let’s imagine that you are married, and you own your homestead as tenants-by-the-entirety (jointly) with your spouse. If your spouse became incapacitated, and you had to sell the house, how would you do this legally if your spouse cannot sign the deed? Without a durable power of attorney, you likely will end up in guardianship court to get permission to sign on behalf of your incapacitated spouse.

Or, perhaps your son is away at college. Although it may not be apparent to you, legally your son is an adult at age 18. You no longer have an “automatic pass” as parent to take care of things for him. A durable power of attorney would allow the bank manager to talk to you about his car loan, or the university administrator to tell you if your son is struggling at school.

At Your Caring Law Firm, we can name a gazillion ways in which your durable power of attorney just might be the single most important document you sign in your lifetime. It helps protects your financial and civil rights. Without a durable power of attorney, if you become incapacitated, very often the only way to handle your affairs is to have you named a ward of the court with a court-appointed guardian.

Why Durable versus NonDurable?
A “durable” power of attorney is legally viable whether or not the principal has capacity. It was signed at a time when the principal had capacity, and is not terminated at the future incapacity of the principal. A nondurable power of attorney is not valid once the principal becomes incapacitated. The problem with a nondurable power of attorney is that it cannot be used on your behalf precisely when you need it to be used on your behalf! Your attorney-in-fact is acting in your stead to avoid guardianship court for you. The durable power of attorney may help keep you out of guardianship court.

What Makes a Power of Attorney Durable versus NonDurable?
Magic. Or, more correctly, magic language. The document must include language similar to “[t]his durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in chapter 709.2104, Florida Statutes.” If the document does not include reasonably similar language, it is a nondurable power of attorney.

How Should the Attorney-in-Fact Sign a Document on the Principal’s Behalf?
The attorney-in-fact must remember that she is signing, not as herself, but on behalf of the principal. She is transacting business for the principal, not for herself. If the attorney-in-face merely signs her own name, she may be held personally liable for the obligations under whatever agreement she signed. This may be shocking to the attorney-in-fact.

Particularly be aware of this issue when you are admitting your loved one to the hospital or skilled nursing facility. The admissions papers very often include fine print that says the person signing the documents is guaranteeing payment of the bill. If the attorney-in-fact signs properly on behalf of the principal, only the principal (patient) will be responsible for his hospital bill. It can be hard in a crisis to remember to sign as attorney-in-fact. That excuse and a dollar will get you a hot-fudge sundae at McDonald’s. It probably will not get you out from under liability for the principal’s hospital bill if you sign as yourself, and not as attorney-in-fact on behalf of the principal.

For example, if Scarlett O’Hara were the attorney-in-fact for Rhett Butler, Scarlett would sign:

Rhett Butler, by Scarlett O’Hara, his attorney-in-fact; or Scarlett O’Hara, as attorney-in-fact for Rhett Butler.

What Happened in Florida on October 1, 2011 Regarding Powers of Attorney?
The Florida law controlling powers of attorney changed drastically, effective October 1, 2011.

I Signed my Florida Durable Power of Attorney Before October 1, 2011. Is it Still Legally Valid?
Yes. Florida durable powers of attorney that were legally valid when they were signed prior to October 1, 2011 continue to be legally valid after October 1, 2011.

Why Should I sign a New Durable Power of Attorney after October 1, 2011?
While your “old” durable power of attorney (signed prior to October 1, 2011) may continue to be legally valid in Florida, the “new” durable power of attorney (signed October 1, 2011 or later) has a completely different look to it. It has “superpowers” that you must separately initial, for example. It likely is much longer and more detailed than the “old” form.

We are encouraging our clients to come in to sign a “new” durable power of attorney. We are concerned that, although the “old” form durable powers of attorney will continue to be valid legally, employees at financial institutions or other third parties quickly will become accustomed to the look of the “new” form and will challenge the “old” form. They will not recognize that the “old” form is fine and will not want to accept it.

What is a SuperPower?
Beginning October 1, 2011, the Florida Statute regulating powers of attorney requires that the principal specifically grant certain authorities to the attorney-in-fact. The principal must sign or initial next to the specific “superpower” being granted to the attorney-in-fact. These superpowers, or “authorities requiring separate signed enumeration” include the power to:

1. create an inter vivos trust,

2. amend, revoke or terminate a trust created by the principal,

3. create or change rights of survivorship,

4. create or change a beneficiary designation,

5. waive the principal’s right to be a beneficiary of a joint and survivor annuity, and

6. disclaim property and powers of appointment,

7. make a gift.

Why Would I Want Someone to Make Gifts of My Money?
You probably do want your attorney-in-fact to have the superpower to make gifts on your behalf using your money. Why? First, without this authority, your attorney-in-fact cannot buy birthday or graduation or holiday presents to give to your loved ones in your name while you are alive but incapacitated. Second, many of our clients have formal gifting programs that are in place to transfer wealth to younger generations of your family in a transfer-tax-advantageous manner. Without the power to make gifts, your attorney-in-fact may not be able to continue your gifting program, and your estate will pay more estate taxes at your death than you anticipated. Finally, there are government benefits that you may need to qualify for in the future that might require you to be impoverished. Your attorney-in-fact may need to give away your wealth for your benefit.

The authority to make gifts has other decisions that must be built into your power of attorney. Your attorney-in-fact may not feather his/her nest using your wealth unless you agree to allow it in your document. In other words, your attorney-in-fact may not gift your wealth, or change a right of survivorship or beneficiary designation, or disclaim on your behalf resulting in a benefit to him/herself or his or her dependent, unless your power of attorney says it is okay to do so. The rules are different if the attorney-in-fact is a family member versus a non-family member. There are reasons you would want your wealth to go to your attorney-in-fact, however, so don’t be too hasty to say “never.”

In addition, your attorney-in-fact only may make gifts to each person of $13,000 per year, unless your power of attorney gives permission for a larger amount. The $13,000 per year is tied to the annual federal gift tax exclusion. If your spouse agrees to split the gifts, your attorney-in-fact may gift $26,000 to each person per year. There are very legitimate reasons why you would want to give your attorney-in-fact the authority to make gifts in excess of $13,000 per year.

What Happens if My Durable Power of Attorney is Challenged?
A financial institution or other third party must, within a reasonable time, accept or reject your power of attorney. Four business days is presumed to be a reasonable amount of time for a financial institution. An actual number of days is not defined for non-financial-institution third persons to decide; instead the circumstances and terms of the power of attorney will be included in the calculus of reasonable or unreasonable amount of time.

Must a Third Party Accept My Power of Attorney?
No! But there are consequences to a third person to rejecting your valid power of attorney. If someone incorrectly refuses to accept your valid power of attorney, you or your attorney-in-fact enforce the document by going to court and having a judge issue an order recognizing the authority of your durable power of attorney, and mandating the third party’s acceptance of it. If the court orders the third party to do so, the third party must accept your power of attorney, plus pay you damages, including your attorney’s fees and costs, that resulted because of the third party’s rejection.

I Have Been Presented with a Durable Power of Attorney. Do I Have to Honor It?
If you have been asked to honor a power of attorney, you have multiple choices.

1. You may accept it as is.

2. You may accept it, but require the agent-in-fact to sign an affidavit confirming the validity of the document.

3. You may request an English translation of the document if it is not written in English.

4. You may, if your request is in good faith, require the attorney-in-fact to provide you with an opinion of counsel as to any matter of law concerning the power of attorney.

5. You may reject it, but there are procedures to follow to do so, and consequences to you if you reject a valid document. If you refuse to accept a legitimate power of attorney, the attorney-in-fact may hire an attorney to enforce the document with a court order. If the court orders you to do so, you must accept the power of attorney, plus pay damages, including attorney’s fees and costs, to the attorney-in-fact or the principal that resulted because of your rejection.

What Reasons may a Third Person Give for Rejecting a Durable Power of Attorney?
A third person may reject your power of attorney. However, the third person must reject your power of attorney in writing, stating the reasons for his/her rejection. The third person does not have to accept a power of attorney if the third person:

1. is not otherwise required to engage in the transaction with the principal; or

2. knows that the attorney-in-fact’s authority has been terminated or suspended; or

3. knows that the power of attorney has been terminated or suspended; or

4. has requested, on a timely basis, an affidavit, English translation or opinion of counsel, and the attorney-in-fact has denied the request; or

5. believes in good faith that the power is not valid; or

6. believes in good faith that the attorney-in-fact does not have authority; or

7. knows that someone in good faith has reported to Adult Protective Services that the attorney-in-fact or someone in cahoots with the attorney-in-fact may be subjecting the principal to physical or financial abuse.

What Happens to Me as a Third Party if I Reject a Legitimate Power of Attorney?
If you incorrectly refuse to accept a valid power of attorney, the attorney-in-fact or principal may enforce the document by going to court and having a judge issue an order recognizing the authority of the durable power of attorney, and mandating your acceptance of it. If the court orders you to do so, as a third party you must accept the power of attorney, plus pay damages, including attorney’s fees and costs, to the attorney-in-fact or the principal that resulted because of your rejection.

If the Durable Power of Attorney Looks Good, But is Bad, What Happens to Me as a Third Party?
If you are handed a power of attorney that appears legitimate and accept it in good faith, you may rely upon the power and the actions of the attorney-in-fact so long as those actions are reasonably within the scope of the attorney-in-fact’s authority. If you, in good faith, act upon the representation, direction, or action of the attorney-in-fact, you will not be held liable to the principal, or the principal’s estate, beneficiaries, or joint owners for those acts. If you act, and then, later, after you act, learn that the attorney-in-fact has been stripped of his/her authority to act on behalf of the principal, you will be held harmless by the principal for any loss or liability caused by your actions taken before you knew the attorney-in-fact did not have authority.

How Does the Court Get Involved with My Durable Power of Attorney?
One of the purposes of the durable power of attorney is to keep you as principal and your attorney-in-fact out of court. You are giving your attorney-in-fact authority to act on your behalf via contract. Like any other contract, however, different parties may disagree as to the terms or validity of the contract. The court may construe or enforce the document, review the attorney-in-fact’s conduct, terminate the attorney-in-fact’s authority, remove the attorney-in-fact, and grant other judicial relief.

The principal (you) and attorney-in-fact are not the only people who can look to the court for action on a durable power of attorney. Any fiduciary acting on behalf of the principal (guardian, conservator, or trustee) or the principal’s estate may petition the court. The surrogate under a health care power of attorney may turn to the court if the principal’s health care is the issue. Florida is fairly liberal in that any interested person can jump in and have a moment in court to talk about you so long as the interested person can demonstrate that s/he is interested in your welfare or has a good faith belief that the court’s intervention is necessary, and a governmental agency having regulatory authority to protect your welfare might jump in, too. (Remember when Governor Jeb Bush got involved in the Terri Schiavo case?) And a third party asked to accept the power of attorney has the right to ask the court to rule on the validity of the document, as well. Remember that the loser in the court action may have to pay attorneys fees and costs for both sides.