A power of attorney is your written direction, as the maker of the power of attorney (the “principal”), that grants another person the authority to act as your agent or attorney-in-fact (“agent”) regarding legal and financial matters. In Florida, an agent under a power of attorney can be any competent person, who is age 18 years or older. Certain financial institutions with trust powers may also serve as agents.
However, when creating a power of attorney, you should consider appointing as your agent someone you trust, such as a family member. Your agent is a fiduciary, and as your fiduciary has a duty to do only those acts allowed by your power of attorney, to perform those acts according to your reasonable expectations, to act in your best interest, and to attempt to preserve your estate plan. If you grant your agent the power to make investment decisions, then your agent has a duty to invest and manage your assets as a prudent investor, using reasonable care and caution in managing your assets. Your agent is also required to keep careful records of his or her management of your assets and may be required to provide an accounting.
The type of power of attorney depends on the specific language of the power of attorney:
- A “general power of attorney” typically gives an agent very broad powers to perform any legal act on behalf of the principal. The types of activities the agent is authorized to perform under a general power of attorney must be described in the document.
- A “limited” or “special” power of attorney authorizes an agent to perform a specific or limited act. Examples of a limited power of attorney include a limited power of attorney to sell a home or a limited power of attorney to sign and file a tax return (e.g., for a military spouse who is on deployment).
- A power of attorney terminates if the principal becomes incapacitated unless it is a “durable power of attorney” (which remains effective even if the principal becomes incapacitated).
The principal may grant to his or her agent certain estate planning “superpowers”, which must be separately enumerated and signed or initiated by the principal next to each specific enumeration of authority. These superpowers include, for example, the ability of an agent to make certain gifts of the principal’s property, create a trust for the benefit of the principal during the principal’s lifetime, and to create or change a beneficiary designation.
Generally, a power of attorney becomes effective once it is properly signed according to Florida law, unless it is a durable power of attorney signed before October 1, 2011, that becomes effective upon the principal becoming incapacitated as certified by the principal’s physician. Unless it is a durable power of attorney, a power of attorney terminates if the principal becomes incapacitated. A power of attorney also terminates upon the death of the principal.
For a power of attorney to be valid in Florida, the principal must be competent to sign a power of attorney and understand what he or she is signing at the time the power of attorney is signed. The power of attorney must also be signed by the principal, by two competent, adult witnesses to the principal’s signature, and by a notary who acknowledges the principal’s signature for the power of attorney was properly executed and valid under Florida law. For the valid and effective grant of the estate planning superpowers to an agent, the principal must sign the durable power of attorney in the physical presence of the two witnesses.
Having a durable power of attorney in place before you become incapacitated may help avoid a court-supervised guardianship regarding the management of your property in the event you later become incapacitated. If you need help to prepare a power of attorney, please contact our office to set up an appointment.