On May 4 of this year, the Florida legislature passed Senate Bill 670, significantly revising Chapter 709 of the Florida Statutes (the power of attorney statute). This act’s effective date is October 1st of this year.
Here is a link to the CHAPTER 709 WHITE PAPER, which I have found to be very thorough and easy to understand.
Please note, that powers of attorney executed before October 1, 2011 (referred to as LEGACY POWERS) are still valid if their execution complied with the laws of Florida at the time they were executed. (F.S. 709.2106(2)) HOWEVER this act DOES apply retroactively to powers of attorney created before its effective date, unless the act provides otherwise. This is particularly important with respect to the duties of the attorney-in-fact, and “BLANKET” or “GENERAL” provisions in older powers of attorney.
The changes I feel you need to be aware of are set forth below:
NO MORE SPRINGING POWERS OF ATTORNEY: Powers of Attorney MUST be effectiveas of the time they are executed, thus, Springing powers of attorney, which do not become effective until the incapacity of the principal will no longer be valid. (However, springing powers that were executed prior to the effective date of the Act will still remain effective under the Act).
REVOCATION: The execution of a new power of attorney alone will no longer automatically revoke an existing power of attorney, the principal must also evidence an intent to revoke the power of attorney.
CO-ATTORNEYS-IN-FACT: Unless specifically stated in the power of attorney that two agents/attorneys-in-facts must act in unison, each attorney-in-fact may exercise his or her authority without the agreement or knowledge of the other. Additionally, the right to conduct banking transactions may be conducted by either agent alone, even with the presence of a provision in the Power of Attorney mandating joint action. Also newly added to the statute is that the last surviving attorney in fact has the right and power to choose the successor agent for the principal, unless the document otherwise states.
ACCEPTANCE OF ATTORNEY-IN-FACT: An attorney in fact accepts the appointment as such when he or she actually begins to act for the principal. HOWEVER, it is not mandated that this acceptance indicates an acceptance of ALL terms contained within the document. In order to ensure the agent has fully accepted all of the terms within the power of attorney at the time the document is executed, the document should set forth a method of acceptance of all terms, and ensure the attorney in fact accepts in that manner.
COMPENSATION OF ATTORNEY IN FACT: Reimbursement of expenses incurred while carrying out acts under the power of attorney are permissible to any acting attorney in fact. However, reasonable compensation for acting as attorney in fact has now been limited to: spouse or heir of the principal, financial institution with trust powers and place of business in Florida, an attorney or accountant licensed in Florida, or a natural person (Florida resident) who has not served as agent for more than 3 individuals at one time.
MANDATORY DUTIES OF ATTORNEY IN FACT: These duties apply regardless of whether or not the Power of Attorney specifies otherwise. These cannot be waived. Attorney in fact cannot act contrary to the KNOWN expectations of the principal and must act in good faith in the principal’s best interest. Attorney in Fact must attempt to preserve the principal’s estate plan when preservation is in the best interest of the principal, and may not delegate authority under the power of attorney to a third person. Relevant factors to consider whether preservation of the plan is in the best interest of the principal are: Value and nature of principal’s property, principal’s foreseeable obligations and need for maintenance, minimization of taxes, eligibility for statutory or regulatory benefit, program or assistance; and principal’s personal history of making or joining in the making of gifts.
ALSO Attorney in Fact must now maintain a record of all receipts, disbursements and transactions made on behalf of the principal, and must maintain an accurate inventory each time the attorney in fact accesses the principal=s safe deposit box.
DEFAULT DUTIES: These duties apply unless the power of attorney provides otherwise. Duty to act loyally and for the sole benefit of the principal so as not to create a conflict of interest that may impair the attorney in fact’s ability to act in the principal’s best interest, act with care, competence and diligence ordinarily exercised by attorneys in fact, and cooperate with any person who has authority to make health care decisions for the principal, and must also comply with Florida’s prudent investment rule.
NO BLANKET POWERS: General language such as “I give my attorney in fact/agent authority to perform all acts that I would otherwise be entitled to perform” or other language which does not grant a specific authority will result in a grant of no authority to the attorney-in-fact or agent.
INCORPORATION BY REFERENCE: The document may provide that the attorney in fact has the authority to conduct banking transactions as provided in Section 709.2208(1) F.S., and that the attorney-in-fact has the authority to conduct investment transactions as provided in Section 709.2208(2) F.S., but otherwise the document may not make any “incorporations by reference”.
(PLEASE NOTE THIS BOLDED SECTION IS NOT RETROACTIVE):
INITIALS/SIGNATURE REQUIRED!: This is one of the more significant changes to the power of attorney statute. In order to grant an attorney-in-fact with certain enumerated powers, the principal must either sign or initial next to the section of the power of attorney outlining those powers. A signature or initial on the page is NOT enough, it must be adjacent to the power described. These powers requiring an additional initial or signature include:
(1) Creating, Amending, revoking or terminating a trust created by the principal (trust must also specify this power);
(2) Making a gift;
(3) Creating or changing rights of survivorship;
(4) Creating or changing a beneficiary designation;
(5) Waiving Principal‘s right to be a beneficiary of a joint and survivor annuity, and
(6) to disclaim property and powers of appointment.
LIABILITY OF ATTORNEY IN FACT: The act sets forth more specifically the duties and obligations an attorney in fact has to the principal. It also sets forth damages and costs for violation of any of these duties to the principal and principal’s successors in interest.
Third parties now have an obligation to accept or reject a power of attorney within a reasonable time (4 days for a financial institution). If rejected, the third party must state the reasons for the rejection in writing. If accepted, the institution must accept the power of attorney as written, without changes, but may require an additional affidavit from the attorney in fact to establish the continuing validity of the power. If a third party refuses to accept a power of attorney in violation of the act, they will be subject to liability for damages, including attorneys fees and costs for any proceeding to enforce validity.
COURT INTERVENTION: A court may review and issue an order construing or enforcing a power of attorney, and may also terminate or remove an attorney in fact. These powers are more clearly defined in the act.
This is a condensed version of some of the statutory changes that have been enacted. This is not a complete list, and you should contact a licensed Florida attorney in order to ascertain whether your current power of attorney needs to be updated or changed.
Clients of my firm that are currently in good standing may be entitled to receive an updated Durable Power of Attorney, free of charge, in the event they purchased a power of attorney from my firm between May 4, 2011 and October 2, 2011. Please contact my office to see if you qualify for this offer.