Durable Power of Attorney
by: Nicolas S. Robinson, Esquire
A Durable Power of Attorney is a document in which a person, or “principal”, appoints another person, or “agent” to act on his or her behalf. The word Durable simply means that the powers given to the agent extend even when the principal becomes incapacitated (although it should be duly noted that these powers expire immediately on a principal’s death). Powers of Attorney can be medical, i.e. the power to make medical decisions for a principal. They can also be financial, i.e. the power to act in a fiduciary capacity for a principal (buy, sell, transact, invest, sue, etc.). The following blog deals primarily with financial/fiduciary Durable Powers of Attorney.
What powers does an Agent have under a Durable Power of Attorney?
That depends on the terms of the document. A Power of Attorney can be limited, meaning that it only provides an agent the power to do a specific act, like selling a vehicle, for example. However, it is advisable for all people, not just the sick, injured, or elderly, to have a general Durable Power of Attorney in place which gives an agent broad power to be able to act on his or her behalf. More on the reasons why below. A general Durable Power of Attorney should specifically enumerate expansive powers to allow your agent to act in whatever circumstances may become necessary in the event of your incapacity. Note, however, that these powers are active the moment your document is executed. It should also be noted that your agent does NOT have the power to use your Power of Attorney to serve his or her own needs or wants. All actions under Power of Attorney should be for the benefit of the principal, or in the accordance with the principal’s wishes as permitted within the document.
How specific must my Durable Power of Attorney be?
In the past, these documents tended to be much shorter, and much more general in terms of the language used. However, in October, 2011, Florida passed the “Florida Power of Attorney Act,” which is now codified under Florida Statute Chapter 709. This Act came as a result of complaints by Florida’s constituents that Banks and other institutions were not honoring their Powers of Attorney. The resulting legislation now requires that these documents be much more specific and detailed than Florida Law previously mandated in order to delegate certain powers. Under Fla. Stat. 709.2202, this Act now even requires that certain delegations of power include separate signed enumerations on the document to effectuate them. In other words, the paragraphs that delegate these powers must be individually initialed in order to be valid. These powers include creating inter vivos trusts; amending, modifying, revoking or terminating trusts as allowed by the trust document; making gifts; creating or changing rights of survivorship; creating or changing beneficiary designation; and waiving or disclaiming property and/or powers of appointment. If you have a Durable Power of Attorney that was drafted in Florida prior to October 2011, it would definitely be a good idea to meet with an attorney to have your document updated. Even though your document may still be valid for some delegations of authority, it almost certainly will not allow your agent to be able to do all things that you might conceivably want or need of them in the event that you become incapacitated. In addition to the special transactions enumerated under Fla. Stat. 709.2202, you also want to be sure that your document gives your agent the power to apply and for Medicaid or other benefits, and the power to take whatever other steps may be necessary to get you qualified to receive these benefits. This is why it is especially important to have your Durable Power of Attorney drafted by an Elder Law Attorney who is familiar with long term care considerations so that they can incorporate these provisions in your document that simple estate planning attorneys may not be familiar with.
Why is having a Durable Power of Attorney in place so important?
Durable Powers of Attorney are incredibly important in that they allow a person to prepare for incapacity before it is too late. Perhaps the best way to illustrate why this document and these powers are so important is through a discussion of their alternative. If a person becomes incapacitated, either from illness, accident, or aging, and they have NOT executed a valid durable power of attorney, then the only way for someone else to be able to act on their behalf is through Florida’s Guardianship Laws, which are very Court involved and expensive. Under Guardianship Law, a person must first be adjudicated incapacitated by a Judge at a hearing upon the Petition of someone with knowledge of the alleged incapacitated person’s condition. Then, the Judge must appoint a someone to serve as Guardian for the Ward (person who is adjudicated incapacitated). Depending on the extent of the incapacity, the Judge will remove certain civil rights from the Ward and delegate those delegable rights to the Guardian. The Judge will then issue Letters of Guardianship stating exactly what powers the Guardian will have. The Guardian can then exercise some of those delegable rights without Court approval. Some of those rights require a Petition to the Court, and in some cases will even require an evidentiary hearing before the Court will permit a Guardian can act. And, because Guardianship are so Court involved, Florida Law requires that Guardians must be represented by an attorney. The Court will also appoint the alleged incapacitated person an attorney during the initial proceedings, and in certain other situations. Throughout a Guardianship, the Guardian will be supervised by the Court and will be required to file regular accountings and reports. The Guardianship will last as long as the Ward is incapacitated. Under Florida law, all of this is to be paid for with the Ward’s assets! It is easy to see how Guardianships can cost a whole of money. This is why a Durable Power of Attorney, in nearly every circumstance, is favorable because it is a much cheaper and less restrictive alternative to Guardianship.
Who should I choose to be my agent?
Many people often have trouble deciding who they want to appoint as their agent. You want to pick someone who you trust, and who you know will be able to handle your affairs when you need them to. You should not necessarily worry about hurting people’s feelings by not picking them. This decision is your decision, and your decision alone. It should be made based on who you feel comfortable appointing. If you have a few people in mind, you can always appoint someone to serve as your primary agent, but name one or two other alternatives in case your preferred agent is unable or unwilling to serve for some reason. You can even appoint two or more people to serve as Co-Agents if you truly cannot decide. Your agent has the right to decline to serve, just as you have the right to revoke or terminate your Power of Attorney at any point if you become uncomfortable with the agent you have chosen, or if you simply change your mind. If you do not have family or loved ones nearby who are willing and able to serve as your agent, most Elder Law attorneys are connected to a network of professional fiduciaries and guardians who will serve as agents for hire. Just like with a family member, it is still important that you meet a for-hire agent first, so you know you are comfortable having him or her serve as your agent.
While it is possible to draft and execute your own Durable Power of Attorney, odds are that whatever document you draft yourself or find on the internet will not be as expansive as a Durable Power of Attorney drafted by an Elder Law attorney. It is truly unfortunate to meet with a client’s family member who has Durable Power of Attorney only to have to tell them that the document their loved one executed cannot be used because it does not include the language needed for a certain situation, or worse because it was not properly executed. Make an appointment to meet with an Elder Law Attorney today, so you can rest assured that your needs have been properly planned for.