A durable power of attorney is a written document by which a person eighteen years or older designates another to transact his or her business. The person intending to create the document is referred to as the principal. The person granted the authority to transact business for the principal is referred to as the attorney-in-fact or the agent. The attorney-in-fact has the full authority to perform, without prior court approval, every action authorized and specifically enumerated in the durable power of attorney. This authorization may even include the authority to sell or mortgage the principal’s real property, including his or her homestead.
A durable power of attorney must be in writing and must be signed by the person intending to create it in the presence of two adult witnesses and a notary public. An existing power of attorney cannot be amended. This means that if a decision is made to change the terms of the durable power of attorney, the existing durable power of attorney will need to be revoked and a new durable power of attorney that contains the required amendment will have to be signed before two witnesses and a notary public. Before a durable power of attorney can be revoked, this intention must be stated by the principal in the revocation language of the new durable power of attorney or in another writing signed by the principal. However, the document revoking a durable power of attorney does not have to be witnessed or notarized unless it is going to be recorded where the person creating the revocation owns real property.
A durable power of attorney can be used by the agent upon delivery to the agent. A springing durable power of attorney is a document conditioned upon the principal first lacking the capacity to manage property as defined in the Florida guardianship statute. The new durable power of attorney statute that became law on October 1, 2011, states that a “springing” durable power of attorney can not be established after October 1, 2011. However, any springing durable power of attorney signed prior to October 1, 2011, will remain valid after October 1, 2011. This definition means that a person lacks the capacity to take those actions necessary to obtain, administer, and dispose of real and personal property, intangible property, business property, benefits and income. While a judicial determination that this person lacks the capacity to manage property was not required, the statute stated that this springing durable power of attorney can only be exercised by the agent upon the delivery of the primary physician’s affidavit to the third party intending to transact business with the agent, such as a bank. This affidavit had to state that this physician is licensed to practice medicine in the state of Florida, that he or she is the primary physician who has the responsibility for the treatment and care of the person who created the durable power of attorney, and that the person creating the durable power of attorney lacks the capacity to manage property as defined in the applicable Florida guardianship statute.
If a person declines to serve as the agent or dies or resigns, one or more successor agents named in the document may then serve. It is important to understand that the authority to designate a successor agent is limited to the principal. This authority may not be delegated by the principal to anyone else. A married agent’s authority is also terminated upon the filing of an action for dissolution, legal separation, or annulment of the marriage of the agent to the principal. Likewise, a durable power of attorney is terminated if the principal is adjudicated totally or partially incapacitated unless the circuit judge orders that the durable power of attorney shall remain in force as a less restrictive alternative. A durable power of attorney is also suspended upon the filing of a petition to determine the principal’s capacity.
The attorney-in-fact named in a durable power of attorney may continue to transact business for the principal until the principal dies, revokes the power, or is determined by a court to be incapacitated. Incapacity is defined under this statute as the “inability of an individual to take those actions necessary to obtain, administer, and dispose of real and personal property, tangible property, business property, benefits, and income.”
A power of attorney is durable if it contains these words, “this durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in chapter 709, Florida Statutes.” It is not required that these exact words be used in the durable power of attorney.
If a court proceeding is subsequently initiated to determine the principal’s incapacity, the authority granted to the agent under the durable power of attorney is suspended until this petition to determine incapacity is dismissed by the court. If the principal is determined to be incapacitated, a guardian of the property will be appointed to manage the principal’s assets. However, a court may determine that certain authority granted by the durable power of attorney is to continue to be exercised by the agent.
An agent is entitled to be reimbursed by the principal for his or her reasonable costs and expenses. Only a qualified agent or a natural person who is a resident of Florida and not in the business of serving as an agent can be paid for his or her services. The new Florida statute defines a qualified agent as a financial institution with trust powers that has a place of business in Florida, an attorney or certified public accountant licensed in Florida, the principal’s spouse, and any heir of the principal. Relatives of the last deceased spouse of the principal qualify as heirs of the principal. A qualified agent can also be any other natural person provided the person is a resident of Florida and the person is not in the business of serving as an agent. A person who has been an agent for more than three principals at the same time is considered to have been in the business of serving as an agent and cannot receive compensation.
A durable power of attorney may state that one person may serve as the agent or two or more persons may serve as co-agents. Each co-agent may act independently of the other agent or agents unless the document states otherwise.
The new Florida statute governing durable powers of attorney states that beginning October 1, 2011, certain authorities must be specifically granted to the agent. These powers relate to estate planning and there is potential for abuse. These are referred to as the “superpowers.” A common thread to these superpowers is that their exercise can impact a principal’s existing estate plan. These rules do not apply to powers of attorney created prior to October 1, 2011. If specifically authorized, the agent may on the principal’s behalf may exercise these superpowers. These are referred to as the “superpowers.” These rules do not affect pre-Act powers of attorney. If specifically authorized, the agent may on the principal’s behalf may exercise any or all of these superpowers:
• Create an inter vivos trust;
• Amend, modify, revoke or terminate a trust created by or on behalf of the principal;
• Make a gift;
• Create or change rights of survivorship;
• Create or change a beneficiary designation;
• Waive the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan; or
• Disclaim property and powers of appointment.
To ensure that the principal understands he or she is granting these special powers to the agent, the statute requires that the principal place his or her signature or initials next to the paragraph containing the enumeration of the agent’s authority of a power. It is not enough for the principal to sign or initial the page on which these powers appear. Because a gift of the principal’s property reduces the principal’s estate, the Act sets a per-donee limit on gift amounts. Unless the authorization provides otherwise, a gift by the agent may not exceed the annual exclusion amount that is presently $13,000 (or twice that amount in the case of a split gift between spouses).