ABOUT
THE POWER OF ATTORNEY
What
is a Power of Attorney?
A
Power of Attorney is a legal document delegating authority from one person to
another. In the document, the maker of the Power of Attorney (the “principal”)
grants the right to act on the maker’s behalf to an agent. What authority is
granted depends on the specific language of the Power of Attorney. A person
giving a Power of Attorney may make it very broad or may limit it to certain
specific acts.
Unless otherwise specified, the information in this
booklet applies to Powers of Attorney signed on or after Oct. 1, 2011. Consult
a lawyer regarding use and enforceability of Powers of Attorney executed prior
to Oct. 1, 2011. The information in this booklet applies to all Powers of
Attorney although special rules for Durable Powers of Attorney are noted.
What
are some uses of a Power of Attorney?
A
Power of Attorney may be used to give another the right to sell a car, home or
other property. A Power of Attorney might be used to allow another to access
bank accounts, sign a contract, make health care decisions, handle financial
transactions or sign legal documents for the principal. A Power of Attorney may
give others the right to do almost any legal act that the maker of the Power of
Attorney could do, including the ability to create trusts and make gifts.
Where
may a person obtain a Power of Attorney?
A
power of attorney is an important and powerful legal document as it is
authority for someone to act in someone else’s legal capacity. It should be
drawn by a lawyer to meet the person’s specific circumstances. Pre-printed
forms may fail to provide the protection desired.
Does
a power of attorney need witnesses or a notary?
A
Power of Attorney must be signed by the principal and by two witnesses to the
principal’s signature, and a notary must acknowledge the principal’s signature
for the Power of Attorney to be properly executed and valid under Florida law.
There are exceptions for military Powers of Attorney and for Powers of Attorney
created under the laws of another state.
What
is a “principal?”
The
“principal” is the maker of the Power of Attorney - the person who is
delegating authority to another. This is the person who is allowing someone
else to act on his or her behalf.
What
is an “agent?”
The
“agent” is the recipient of the Power of Attorney - the party who is given the
power to act on behalf of the principal. The agent is sometimes referred to as
an “attorney-in-fact”. The term “attorney-in-fact” does not mean the person is
a lawyer.
What
is a “third party?”
As
used in this pamphlet, a “third party” is a person or institution with whom the
agent has dealings on behalf of the principal. Examples include a bank, a
doctor, the buyer of property that the agent is selling for the principal, a
broker, or anyone else with whom the agent must deal on behalf of the
principal.
What
is a “Limited Power of Attorney?”
A
“Limited Power of Attorney” gives the agent authority to conduct a specific
act. For example, a person might use a Limited Power of Attorney to sell a home
in another state by delegating authority to another person to handle the
transaction locally through a “limited power of attorney.” Such a power could
be “limited” to selling the home or to other specified acts.
What
is a “General Power of Attorney?”
A
“General Power of Attorney” typically gives the agent very broad powers to
perform any legal act on behalf of the principal. A specific list of the types
of activities the agent is authorized to perform must be included in the
document.
What
is a “Durable Power of Attorney?”
A
Power of Attorney terminates if the principal becomes incapacitated, unless it
is a special kind of Power of Attorney known as a “Durable Power of Attorney.”
A Durable Power of Attorney remains effective even if a person becomes incapacitated.
However, there are certain exceptions specified in Florida law when a Durable
Power of Attorney may not be used for an incapacitated principal. A Durable
Power of Attorney must contain special wording that provides the power survives
the incapacity of the principal. Most Powers of Attorney granted today are
durable.
Must
a person be competent to sign a Power of Attorney?
Yes.
The principal must understand what he or she is signing at the time the
document is signed. The principal must understand the effect of a Power of
Attorney, to whom he or she is giving the Power of Attorney and what property
may be affected by the Power of Attorney.
Who
may serve as an agent?
Any
competent person 18 years of age or older may serve as an agent. Agents should
be chosen for reliability and trustworthiness. Certain financial institutions
with trust powers may also serve as agents.
What
happens if the Power of Attorney was created under the laws of another state?
If
the Power of Attorney was properly executed under the other state’s laws, then
it may be used in Florida but its use will be subject to Florida’s Power of
Attorney Act and other state laws. The agent may only act as authorized by
Florida law and the terms of the Power of Attorney. There are additional
requirements for real estate transactions in Florida and if the Power of
Attorney does not comply with those requirements its use may be limited to
banking and other non-real estate transactions. The third person may also
request an opinion of counsel that the Power of Attorney was properly executed
in accordance with the laws of the other state.
POWERS AND DUTIES OF
AGENT
What
activities are permitted by an agent?
An
agent may perform only those acts specified in the Power of Attorney and any
acts reasonably necessary to give effect to the specified acts. If an agent is
unsure whether he or she is authorized to do a particular act, the agent should
consult the lawyer who prepared the document or other legal counsel.
Two
types of acts may be incorporated by a simple reference to the statutes in the
Power of Attorney – the “authority to conduct banking transactions as provided
in section 709.2208(1), Florida Statutes” and the “authority to conduct
investment transactions as provided in section 709.08(2), Florida Statutes.”
When either of these phrases is included in the Power of Attorney, all of the
acts authorized by the referenced statute may be performed by the agent even
though the specific acts are not listed in the Power of Attorney itself.
May
an agent sell the principal’s home?
Yes.
If the Power of Attorney has been executed with the formalities of a deed and
authorizes the sale of the principal’s homestead, the agent may sell it. If the
principal is married, however, the agent must obtain the authorization of the
spouse.
What
may an agent not do on behalf of a principal?
There
are a few actions that an agent is prohibited from doing even if the Power of
Attorney states that the action is authorized. An agent, unless also a licensed
member of The Florida Bar, may not practice law in Florida. An agent may not
sign a document stating that the principal has knowledge of certain facts. For
example, if the principal was a witness to a car accident, the agent may not
sign an affidavit stating what the principal saw or heard. An agent may not
vote in a public election on behalf of the principal. An agent may not create
or revoke a will or codicil for the principal. If the principal was under
contract to perform a personal service (i.e., to paint a portrait or provide
care services), the agent is not authorized to do these things in the place of
the principal. Likewise, if someone had appointed the principal to be trustee
of a trust or if the court appointed the principal to be a guardian or
conservator, the agent may not take over these responsibilities based solely on
the authority of a Power of Attorney.
What
are the responsibilities of an agent?
While
the Power of Attorney gives the agent authority to act on behalf of the principal,
an agent is not obligated to serve. An agent may have a moral or other
obligation to take on the responsibilities associated with the Power of
Attorney, but the Power of Attorney does not create an obligation to assume the
duties. However, once an agent takes on a responsibility, he or she has a duty
to act prudently. (See Financial Management and the Liability of an Agent).
Is
there a certain code of conduct for agents?
Yes.
Agents must meet certain standards of care when performing their duties. An
agent is looked upon as a “fiduciary” under the law. A fiduciary relationship
is one of trust. If the agent violates this trust, the law may punish the agent
both civilly (by ordering the payment of restitution and punishment money) and
criminally (probation or jail). The standards of care that apply to agents are
discussed under Financial Management and the Liability of an Agent.
USING THE POWER OF ATTORNEY
When
is a Power of Attorney effective?
The
Power of Attorney is effective as soon as the principal signs it. However, a
Durable Power of Attorney executed prior to Oct. 1, 2011 that is contingent on
the incapacity of the principal (sometimes called a “springing” power), remains
valid but is not effective until the principal’s incapacity has been certified
by a physician. Springing Powers of Attorney may not be created after Sept. 30,
2011.
Must
the principal deliver the Power of Attorney to the agent right after signing or
may the principal wait until such time as the services of the agent are needed?
The
principal may hold the Power of Attorney document until such time as help is
needed and then give it to the agent. Often, the lawyer may fulfill this
important role. For example, the principal may leave the Power of Attorney with
the lawyer who prepared it, asking the lawyer to deliver it to the agent under
certain specific conditions. Because the lawyer may not know if and when the
principal is incapacitated, the principal should let the agent know that the
lawyer has retained the signed document and will deliver it as directed. If the
principal does not want the agent to be able to use the Power of Attorney until
it is delivered, the Power of Attorney should clearly require the agent to
possess the original because copies of signed Powers of Attorney are sufficient
for acceptance by third parties.
How
does the agent initiate decision-making authority under the Power of Attorney?
The
agent should review the Power of Attorney document carefully to determine what
authority the principal granted. After being certain that the Power of Attorney
gives the agent the authority to act, the Power of Attorney (or a copy) should
be taken to the third party (the bank or other institution, or person with whom
you need to deal). Some third parties may ask the agent to sign a document such
as an affidavit, stating that the agent is acting properly. (The agent may wish
to consult with a lawyer prior to signing such a document.) The third party
should accept the Power of Attorney and allow the agent to act for the principal.
An agent should always make it clear that he or she is signing documents on
behalf of the principal.
How
should the agent sign when acting as an agent?
The
agent will always want to add after his or her signature that the document is
being signed “as agent for” the principal. If the agent only signs his or her
own name, he or she may be held personally responsible for whatever was signed.
As long as the signature clearly indicates that the document is being signed in
a representative capacity and not personally, the agent is protected. Though
lengthy, it is, therefore, best to sign as follows:
Howard Rourk, as
agent for Ellsworth Toohey. In this example, Howard Rourk is the agent, and
Ellsworth Toohey is the principal.
What
if the third party will not accept the Power of Attorney?
If
the Power of Attorney was lawfully executed and it has not been revoked,
suspended or terminated, third parties may be forced to honor the document. The
third party is required to give the agent a written explanation of why they are
refusing to accept the Power of Attorney within a reasonable time after it is
presented to the third party.
Under
some circumstances, if the third party’s refusal to honor the Power of Attorney
causes damage, the third party may be liable for those damages and even
attorney’s fees and court costs. Even mere delay may cause damage and this,
too, may be actionable. It is reasonable, however, for the third party to have
the time to consult with a lawyer or an internal legal department about the
Power of Attorney. Delay for more than a short period may be unreasonable. Upon
refusal or unreasonable delay, consult an attorney.
Why
do third parties sometimes refuse Powers of Attorney?
Third
parties are often concerned whether the document is valid. They do not know if
it was executed properly or forged. They do not know if it has been revoked.
They do not know if the principal was competent at the time the Power of
Attorney was signed. They do not know whether the principal has died. Third
parties do not want liability for the improper use of the document. Some third
parties refuse to honor Powers of Attorney because they believe they are
protecting the principal from possible unscrupulous conduct. If your Power of
Attorney is refused, talk to your attorney.
What
if a third party requires the agent to sign an affidavit prior to honoring the
Power of Attorney?
A
third party is authorized by Florida law to require the agent to sign an
affidavit (a sworn or an affirmed written statement), stating that he or she is
validly exercising the authority under the Power of Attorney. If the agent
wants to use the Power of Attorney, the agent may need to sign the affidavit if
so requested by the third party. The purpose of the affidavit is to relieve the
third party of liability for accepting an invalid Power of Attorney. As long as
the statements in the affidavit are true at that time, the agent may sign it.
The agent may wish to consult with a lawyer prior to signing it. (You may find
a sample Affidavit of Agent at the end of this booklet.)
What
else may the third party require?
A
third party may also make a reasonable request for an opinion of counsel as to
any legal matter concerning the Power of Attorney, including its proper execution
under the laws of another state. A third party may request a certified English
translation if any part of the Power of Attorney is in a language other than
English.
May
the agent employ others to assist him or her?
Yes.
The agent may hire accountants, lawyers, brokers or other professionals to help
with the agent’s duties, but may generally not delegate his or her
responsibility as agent. The Power of Attorney was given by the principal to
the agent and the agent does not have the right to transfer that power to
anyone else. It is important that the agent keep in mind his or her fiduciary
duties when hiring professionals to help. The agent is allowed to delegate
investment responsibility if the requirements of Florida Statutes section
518.11 are followed by the agent, unless the Power of Attorney prohibits such a
delegation.
RELATIONSHIP OF POWER
OF ATTORNEY TO OTHER LEGAL INSTRUMENTS
What
is the difference between an agent and an executor or personal representative?
An
executor, termed a “personal representative” in Florida, is the person who
takes care of another’s probate estate after that person dies. An agent may
only take care of the principal’s affairs while the principal is alive. A
personal representative may be named in a person’s will and is appointed by the
court to administer the estate.
What
is the difference between a “trustee” and an “agent”?
Like
a Power of Attorney, a trust may authorize an individual (the “trustee”) to act
for the maker of the trust during the maker’s lifetime. Like an agent, the
trustee may manage the financial affairs of the maker of the trust. A trustee
only has power over an asset that is owned by the trust. In contrast, an agent
may have authority over all of the principal’s non-trust assets. Another
important distinction is that a trustee may continue acting for the maker of
the trust after the maker of the trust dies. In contrast, the Power of Attorney
expires upon the death of the principal. Whether a trust or an agent is the
most appropriate tool for a specific situation is a question that should be
addressed to an attorney.
What
if the principal has a “guardian” appointed by the court?
If
no less restrictive appropriate alternative is available, then a guardian may
be appointed by the court for a person who no longer can care for his or her
person or property. A person who has a guardian appointed by the court may not
be able to lawfully execute a Power of Attorney. If an agent discovers that a
guardian has been appointed prior to the date the principal signed the Power of
Attorney, the agent should advise his or her lawyer. If a guardianship court
proceeding is begun after the Power of Attorney was signed by the principal,
the authority of the agent is automatically suspended until the petition is
dismissed, withdrawn or otherwise acted upon. The law requires that an agent
receive notice of the guardianship proceeding. If a guardian is appointed, the
Power of Attorney is no longer effective unless it is a Durable Power of
Attorney and the court allows the agent to continue to exercise certain powers.
A power to make health care decisions, however, is not suspended unless the
court specifically suspends this power. If the agent learns that guardianship
or incapacity proceedings have been initiated, he or she should immediately
consult with a lawyer.
May
a Power of Attorney avoid the need for guardianship?
Yes.
If the alleged incapacitated person executed a valid Durable Power of Attorney
prior to his or her incapacity, it may not be necessary for the court to
appoint a guardian since the agent already has the authority to act for the
principal. As long as the agent has all necessary powers, it may not be
necessary to file guardianship proceedings and, even when filed, guardianship
may be averted by showing the court that a Durable Power of Attorney exists and
that it is appropriate to allow the agent to act on the principal’s behalf.
HEALTH CARE AND THE
POWER OF ATTORNEY
What
is the relationship between a Declaration of Living Will and Power of Attorney?
A
declaration of living will specifies a person’s wishes as to the provision or
termination of medical procedures when the person is diagnosed with a terminal
condition, has an end-stage condition, or is in a persistent vegetative state.
A living will and a health care surrogate designation are termed “health care
advance directives” because they are made in advance of incapacity and need. If
a person is unable to understand or unable to communicate with a doctor, a
living will is a legally enforceable method of making sure the person’s wishes
are honored. Whether a person has a living will, a person’s agent may make
health care decisions if the Durable Power of Attorney specifically gives this
right.
What
is a Health Care Surrogate Designation and how does it differ from a Power of
Attorney?
A
Health Care Surrogate Designation is a document in which the principal
designates someone else to make health care decisions if the principal is
unable to make those decisions. Unlike a Power of Attorney, a health care
surrogate decision-maker has no authority to act until such time as the
attending physician has determined the principal lacks the capacity to make
informed health care decisions. (In instances where the attending physician has
a question as to whether the principal lacks capacity, a second physician must
agree with the attending physician’s conclusion that the principal lacks the
capacity to make medical decisions before a surrogate decision-maker’s
authority is commenced.) Many medical providers prefer a designation of health
care surrogate for health care decisions because the document is limited to
health care. However, a Durable Power of Attorney specifically for health care
may enable the agent to assist the principal in health care decisions even
though the principal may not completely lack capacity.
TERMINATION OF THE
POWER OF ATTORNEY
When
does a Power of Attorney terminate?
The
authority of any agent under a Power of Attorney automatically ends when one of
the following things happens: (1) the principal dies, (2) the principal revokes
the Power of Attorney, (3) a court determines that the principal is totally or
partially incapacitated and does not specifically provide that the Power of
Attorney is to remain in force, (4) the purpose of the Power of Attorney is
completed, or (5) the term of the Power of Attorney expires. In any of these
instances, the Power of Attorney is terminated. If, after having knowledge of
any of these events, a person continues to act as agent, he or she is acting
without authority.
When
does a particular agent’s authority terminate?
The
authority of an agent under a Power of Attorney automatically ends when one of
the following things happens: (1) the agent dies, (2) the agent resigns or is
removed by a court, (3) the agent becomes incapacitated, or (4) the filing of a
petition for dissolution of marriage if the agent is the principal’s spouse
unless the Power of Attorney provides otherwise.
What
is the procedure for a principal to revoke a Power of Attorney?
The
revocation must be in writing and may be done by a subsequent Power of
Attorney. Notice should be served on the agent and any other party who might
rely on the power. The notice should be served either by any form of mail that
requires a signed receipt or by certain approved methods of personal delivery.
Special rules exist for serving notice of revocation on banks and other
financial institutions. Consult with your lawyer to be sure proper procedures
are followed.
Court
proceedings were filed to appoint a guardian for the principal or to determine
whether the principal is incapacitated. How does this affect the Power of
Attorney?
If
a court proceeding to determine the principal’s incapacity has been filed or if
someone is seeking to appoint a guardian for the principal, the Power of
Attorney is automatically suspended and an agent must not continue to act. The
power to make health care decisions, however, is not suspended unless the court
specifically suspends this power.
Authority
as agent has been suspended because guardianship proceedings are pending for
the principal. Now there is an emergency but no guardian has been appointed
yet. What now?
The
agent may ask the court for special permission to handle the emergency even
though the Power of Attorney remains otherwise suspended. Contact your lawyer.
FINANCIAL MANAGEMENT
AND THE LIABILITY OF AN AGENT
What
is “fiduciary responsibility?”
An
agent is a fiduciary and as such has multiple duties when acting for the
principal. These include an overriding duty to do only those acts authorized by
the Power of Attorney, and when performing those acts to act in accordance with
the principal’s reasonable expectations, to act in the principal’s best
interest, and to attempt to preserve the principal’s estate plan. The
preservation of the estate plan is dependent on a number of factors, including
the agent’s knowledge of the plan and the needs and desires of the principal.
If the agent assumes responsibility for the principal’s investments, the agent
has a duty to invest and manage the assets of the principal as a prudent investor.
This standard requires the agent to exercise reasonable care and caution in
managing the assets of the principal. The agent must apply this standard to the
overall investments and not to one specific asset. If an agent possesses
special financial skills or expertise, he or she has an obligation to use those
skills. The agent is required to keep careful records and may be required to
provide an accounting. Everything the agent does for the principal should be
written down, and the agent should keep all receipts and copies of all
correspondence, and consider logging phone calls so if the agent is questioned,
records are available. Agents should consult with lawyers to be sure they
understand all of the duties applicable to them.
How
should the agent sign when acting as an agent?
The
agent will always want to add after his or her signature that the document is
being signed “as agent for” the principal. If the agent only signs his or her
own name, he or she may be held personally responsible for whatever was signed.
As long as the signature clearly indicates that the document is being signed in
a representative capacity and not personally, the agent is protected. Though
lengthy, it is, therefore, best to sign as follows:
X__________
Howard Rourk, as
agent for Ellsworth Toohey.
In
this example, Howard Rourk is the agent, and Ellsworth Toohey is the principal.