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The new and improved (?) power of attorney law

by The JBA Elder Law Section member Robert Morga

In June, Gov. Rick Scott signed into law SB 670 (the ”Law”), completely rewriting the Florida Durable Power of Attorney Act, formerly Section 709.08, Florida Statutes.

The Law creates Sections 709.2101, et. seq; the Law’s new title is the, “Florida Power of Attorney Act (the “Act”). The Act creates a new statutory framework for ALL powers of attorneys, not just those that are durable. The Law takes effect Oct. 1.

The Law is intended to follow the Uniform Durable Power of Attorney Act; however, the changes made to the Act in Florida reflect more than just substantive state law changes.

The Law was a product of The Florida Bar‘s Real Property, Probate and Trust Law Section’s desire to create a “better” law in this area. There were many concerns expressed by the Section for its purpose in proposing the law, including helping protect the vulnerable from exploitation and overreaching by friends and family.

There seemed to be concern that powers of attorney were not being adequately explained to clients or vendees of forms purchased for this purpose (or that attorneys and persons using the Internet and online programs did not appreciate the significance of the authority being granted by this document).

This article addresses the major issues practitioners should consider in drafting a power of attorney document once the Law takes effect.

First, there are some new terms. The Law no longer uses the term “attorney in fact.” Instead, it uses the term “Agent.” There is now a Principal and an Agent as parties to the power of attorney.

The term “knowledge” also is more fully defined; this is one of the provisions that financial institutions and title insurance companies (hereinafter, collectively referred to as “financial institutions”) wanted included to assist in dealing with the ability for its legal counsel to review powers that may be ambiguous or problematic. This is especially true for financial institutions located out of state.

To provide “notice” to a financial institution, you must deliver it to an officer or manager of the institution in Florida; however, if the institution does not have a Florida office or location, you may have to look on the Internet at www.ffiec.gov/nicpubweb/nicweb/s... (this site is not in the law but included in the White Paper prepared by the scrivener).

This extra notice requirement for financial institutions is required due to some institutions being Internet-based or filed outside of Florida. Notice to a financial institution or title company is not deemed given until five business days after it is received.

Once notified of the existence of the power of attorney, the financial institutions then have four (4) business days to review and either accept or reject the power. The wording of the law seems to give financial institutions up to at least nine business days to accept or reject the power.

Since presentation of a power may be done for estate planning at or close to the death of a principal, this delay could cause concern for families failing to preplan their estates. If the party reviewing the power requests, it is deemed reasonable to require an affidavit similar to the one used in the current law or an opinion of counsel to confirm, among other things, the validity of the power. This new requirement of an opinion of counsel may be problematic as, unlike the affidavit, there is no form of opinion contained in the Law. If an opinion of counsel is requested, this could be expensive and time-consuming since no one knows what will be expected of the attorney preparing this opinion.

The Law also requires reasonable acceptance or denial requirements by third parties who are delivered a power of attorney. The Law provides a procedure that a power of attorney must be accepted within a reasonable time; if not accepted, written notice of declination and the reason must be presented.

There is no incorporation by reference of actions or laws or other provisions in a power of attorney. For example, you cannot incorporate by reference the laws of a statute or other authority as a substitute for a specific grant of authority in a power. This means those using “check the box” or “initial the box” type of forms of powers incorporating certain statutory provisions do not have to be accepted in Florida under the Law.

Forms on the Internet and from other states that have this type of format (for example, states who have adopted the form of power of attorney suggested under the Uniform Durable Power of Attorney Act) will likely be worthless in Florida when dealing with a third party expecting strict compliance with the Law.

The only exception to this “no incorporation by reference” rule is if the scrivener follows the rules for financial and security transactions outlined in the Law. Certain enumerated and specific powers contained in a power of attorney must be initialed or signed by the paragraph where the particular power is located; this is in addition to the execution requirements for powers. For example, the power to create an inter vivos trust, to amend, modify revoke or terminate a trust, to make a gift, change rights of survivorship, disclaim and the authority to change a beneficiary designation must all be initialed and/or signed by the paragraph authorizing this specific authority in addition to having the power properly signed at the end.

In addition to the items mentioned, the Law also deals with the following:

1. To make a power durable, the same language as currently required under Section 709.08, Florida Statutes is still required.

2. The execution requirements of a power of attorney are the same as that of a deed. A power of attorney requires two witnesses and a notary.

3. A photocopy or electronically transmitted power of attorney should be considered as an original for purposes of delivery and notice of the same.

4. No more springing or conditional powers of attorney. All powers of attorney must be self-executing at time of execution. A power of attorney executed prior to Oct. 1 is still supposed to be accepted as valid, including springing powers.

5. To clear up a perceived ambiguity in the current law, the law permits the appointment of multiple agents and successor agents. There is no need to have a power of attorney for each person; one power of attorney may be used for more than one agent; in the event multiple agents are chosen, then either has the authority to act alone unless otherwise provided by the power of attorney.

6. There is a limitation on agents who may be compensated when performing under a properly executed power of attorney. This provision may cause some concern for professional guardians who act as an agent for more than three people if they want to be compensated for their work.

7. Acceptance of an agent under a power of attorney is limited to the specific action taken; so, you can have partial acceptance of an agent under a power of attorney. This is important as there are now reporting requirements for agents under the Law for those who have accepted appointment acting for a principal for financial issues and property of the principal.

8. Attorneys’ fees are still available to those aggrieved persons who have a power of attorney unreasonably refused by a third party, just as in the current law.

9. All powers of attorney must be specific; no general statement of “whatever I can do you can do” is sufficient. Also, unless as permitted in the context of certain financial transactions, no incorporation by reference or “check the box” or “initial the box” forms should be acceptable under the Law.

10. The gifting of a principal’s property is restricted unless the power of attorney permits otherwise, as provided in the Law.

The RPPTL section will be sponsoring seminars on the Law; the times and dates are still being finalized.

Those attorneys who prepare powers of attorney or have to deal with them for their clients are encouraged to attend these seminars to insure a complete and thorough understanding of the Law and its impact on your clients and your practice.

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