Durable Powers of Attorney
On October 1, 2011, Florida’s power of attorney law changed when the state adopted large parts of the Uniform Power of Attorney Act. This law introduced significant changes to how power of attorney documents are regulated and the duties an attorney-in-fact owes to the principal. The principal is defined as the individual granting certain decision-making authority over the individual’s finances and the attorney-in-fact, or agent, is the individual authorized to exercise such decision-making authority on behalf of the principal. A major impetus for the change in law was to address and prevent power of attorney abuse, which generally refers to circumstances where the agent conducts transactions that: exceed the intended scope of authority granted by the document, contravene the principal’s expectations, or lead to the self-enrichment of the agent at the expense of the principal’s assets.
One of the major changes under the new law was the promulgation of mandatory duties the agent owes to the principal. This enhanced the statutory protection afforded to a principal by requiring the agent to: preserve the principal’s estate plan, refrain from acting in a manner that is contrary to the principal’s known expectations, and refrain from acting in a manner that is contrary to the principal’s best interest. Prior to the new law, attorneys-in-fact were held to the same fiduciary standard of care as a trustee, but enforcement of this less clear standard made it more difficult to prevent power of attorney abuse from occurring.
Another significant change to the power of attorney law is its allowance for granting “superpowers” to attorneys-in-fact, each of which must be authorized by the principal’s initials on the document. “Superpowers” are significant grants of authority such as: the power to create, amend, or revoke an inter vivos trust on behalf of the principal, the power to make gifts, the power to create or change beneficiary designations, and the power to disclaim property. Under prior law, attorneys-in-fact were prohibited from creating, amending, or revoking documents on the principal’s behalf. The rationale for such a restriction was a desire to prevent an agent from disrupting the estate plan created by the principal. Although the new law expands an agent’s potential authority, it balances that additional authority by placing a duty on the agent to exercise the granted power in a manner consistent with preserving the principal’s estate plan. While a principal may still decide against granting the full extent of authority allowed, if the principal wishes to plan for the possibility of needing public benefits, such as Medicaid, it is important for the principal to consider granting the agent some or all of the referenced superpowers.
By making these changes to the power of attorney law, among others, Florida law expanded the potential authority of agents while simultaneously granting additional protection to principals in the form of specific duties an agent must obey. The new law also provided greater flexibility and efficiency by clearly allowing principals to designate one or more successor agents. Given the extensive power an individual may confer on an agent through a power of attorney document, it is advisable to consult with an attorney to fully understand the authority being given and any potential risks.