Power of Attorney - new Act

Florida adopted a new Power of Attorney Act that took effect on October 1, 2011. Here are some points about the new Act that you should know:

General Nature of Powers of Attorney

• A power of attorney is a written instrument that grants authority to an “agent” to act in the place of the “principal.” A power of attorney may be “durable” (i.e., it is not terminated by the principal’s subsequent incapacity) if it contains language indicating that to be the principal’s intent. Absent such language, a power of attorney is non-durable, and it is terminated by the principal’s subsequent incapacity.

Scope of the Act

• The Act applies to both durable and non-durable powers of attorney created by individuals (with certain exceptions such as proxies and governmental powers of attorney).

• Powers of attorney executed before October 1, 2011 are not rendered invalid by the Act, but their meaning and effect is governed by the Act.

Authority that may not be given to an agent
• Certain types of authority may not be delegated to an agent under a power of attorney. 

Accordingly, an agent may not:

▫  perform duties under a contract that requires the exercise of personal services of the principal; 

▫  make an affidavit as to the personal knowledge of the principal; 

▫  vote in any public election on behalf of the principal; 

▫  execute or revoke any will or codicil for the principal; or 

▫  exercise powers and authority granted to the principal as trustee or as court-appointed fiduciary.

Co-agents 

• Unless otherwise provided in the power of attorney, each co-agent may exercise his authority independently.

Acceptance by agent

• An agent may accept his or her appointment by exercising authority or performing duties as an agent or by any other assertion or conduct indicating acceptance. 
• The scope of an agent’s acceptance is limited to those aspects of the power of attorney for which the agent’s assertions or conduct reasonably manifests acceptance.
  

Photocopies or Electronic Copies 

• Unless otherwise provided in the power of attorney, a photocopy or electronically transmitted copy of an original power of attorney has the same effect as the original.

Revocation

• A power of attorney may be expressly revoked in a subsequent power of attorney or other writing signed by the principal, so long as the principal is not incapacitated.

• The principal may, but is not required to, give notice of the revocation to the agent.

• Merely executing a power of attorney does not automatically revoke a power of attorney previously executed by the principal.

Provisions only applicable to powers signed on or after October 1, 2011

No Springing Powers

• “Springing” durable powers of attorney (i.e., those that only become effective upon the incapacity of the principal) are valid only if the durable power of attorney was executed before October 1, 2011 (with the exception of certain deployment-contingent military powers of attorney that are authorized under the Act).

Specific estate planning powers

• Preface: Under Florida law in effect prior to the Act, many durable powers of attorney granted to an agent, who was typically a trusted family member, friend or advisor of the principal, broad “estate planning” powers to make gifts, amend trusts, execute disclaimers, and other powers that could significantly affect the transfer of property of the principal during life or upon death. These powers, if contained in a valid power of attorney executed prior to October 1, 2011, and to the extent they were effective under applicable Florida law prior to the Act, are not rendered invalid by the Act.

• Under the Act, the following “estate planning” powers granted in a power of attorney executed on or after October 1, 2011, will be exercisable by the agent only if the principal signed or initialed next to each

specific enumeration of the authority, the exercise of the authority is consistent with the agent’s duties, and the exercise is not otherwise prohibited by another agreement or instrument:

▫ to create an inter vivos (lifetime) trust;

▫ with respect to a trust created by or on behalf of the principal, to amend, modify, revoke, or terminate the trust, but only if the trust instrument explicitly provides for amendment, modification, revocation, or termination by the settlor’s agent;

▫ to make a gift;
▫ to create or change rights of

survivorship;
▫ to create or change a beneficiary

designation;
▫ to waive the principal’s right to be

a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan; or

▫ to disclaim property and powers of appointment.

• Moreover, unless the power of attorney otherwise provides, a provision in a power of attorney granting general authority with respect to gifts authorizes the agent to only:

▫ make a gift of the principal’s property to or for the benefit of a person, including by the exercise of a presently exercisable general power of appointment held by the principal, in an amount per donee not to exceed the amount of the federal gift tax annual exclusion (or twice that amount if the principal’s spouse consents to split the gift for gift tax purposes); and

▫ consent to splitting a gift made by the principal’s spouse in an amount per donee not to exceed the aggregate annual gift tax exclusions for both spouses.

• Also, even if the principal has specifically signed or initialed one or more of the specific “estate planning” types of powers described above, unless the power of attorney provides otherwise, an agent who is not an ancestor, spouse, or descendant of
the principal may not exercise authority to create an interest in the principal’s property in the agent or in an individual to whom the agent owes a legal obligation of support.

Fiduciary issues

Agents are fiduciaries

• Agents who accept appointment are fiduciaries, and are liable to the principal for failing to carry out their fiduciary duties.

An agent’s fiduciary duties

• There are certain mandatory fiduciary duties (i.e., duties that cannot be altered or waived by the terms of the power of attorney) of an agent who has accepted appointment.
  ▫ E.g., to act in good faith. 
• There are certain default fiduciary
  duties (i.e., duties that can be altered or waived by the terms of the power of attorney) of an agent who has accepted appointment. 

▫ E.g., to 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.

Recommendations

Although each situation is unique, in view of the facts and issues described above, we recommend that you:

1. Consider executing a new durable power of attorney to include whatever specific “estate planning” type powers you may wish to include, rather than entirely relying on more general types of powers included in a pre-October 1, 2011 durable power of attorney. 
2. Consider executing a new durable power of attorney to make clear that all business and investment activities are included, including banking and investment powers listed in the Act that may be incorporated by reference in a power of attorney. 
3. Consider preserving a pre-October 1, 

2011 “springing” durable power of attorney that is conditioned upon your incapacity, since springing powers signed on or after October 1, 2011 will not be effective.