Power Of Attorney Plays An Important Role In Your Estate Plan

A durable power of attorney gives authority to someone else (your “agent”) to make decisions on your behalf concerning your assets, such as money and property, and decisions about your health care. The agent may use your money or sell your property without letting you know and without your approval. Your agent will have these powers immediately when you deliver an original or a photocopy of the original to the agent.

A durable power of attorney is the most likely estate planning document that will be needed in the near term. For most clients, the durable power of attorney is more important than a last will and testament. If you do not have a durable power of attorney and incapacity occurs, court proceedings may be required for someone to handle your legal and financial affairs.

Whereas if you do not have a will, the law provides for the manner in which your assets are distributed to your family, typically the same as you would provide in a will. If you are in the hospital, your family may not be able to obtain medical information regarding your condition unless a family member has been named as an agent on a durable power of attorney.

At Delzer, Coulter & Bell, P.A., in Port Richey, we serve clients throughout Florida’s north Suncoast region. Our board-certified attorneys can advise on all aspects of estate planning, including creating durable powers of attorney.

Why You Need A Durable Power Of Attorney Before Incapacity

A durable power of attorney must be signed by you in advance of mental incapacity. Regrettably, many people fail to realize the importance of a durable power of attorney until it is too late.

For persons failing to have estate planning documents prepared in advance of incapacity, the family must often resort to a formal adjudication of incapacity by a court and have a guardian appointed for the incapacitated person. Guardianships are quite expensive and burdensome and should be avoided, if possible. It is important to note that spouses do not automatically have power of attorney over each other.

However, it is also important to keep in mind that revoking a power of attorney can be difficult. Your agent has the authority to use the durable power of attorney once you have signed the durable power of attorney and delivered an original or photocopy to your agent. Although the law provides means by which the power of attorney may be revoked, the only totally effective way of revoking a durable power of attorney is to destroy all originals, photocopies and electronic copies.

Power Of Attorney Agent Selection Process

Florida law permits you to give a durable power of attorney to anyone aged 18 or older, or certain financial institutions. You should, however, have total confidence that your agent will not abuse the authority and trust that you are placing in your agent. Your agent has a fiduciary responsibility to you and is required by law to act in your best interest and keep adequate records.

The durable power of attorney may not be used by the agent in transactions in which the agent has a self-interest, unless specific authority is given in the durable power of attorney. For example, the agent may not use the durable power of attorney to transfer real estate or other assets into the agent’s name. Once you have decided to whom to give the power of attorney, you should then discuss it with your agent to be sure your agent is comfortable with the responsibility.

Mandatory Duties Of Your Agent

Under the power of attorney law, your agent is required to uphold several responsibilities. These agent duties include:

• To act within the scope of the listed authority granted in the power of attorney and, to the extent actually known, in a manner that is not contrary to your reasonable expectations
• To act in good faith and in a manner that is not contrary to your best interests
• To attempt in good faith to preserve your estate plan
• To perform personally and to keep a record of all receipts, disbursements and transactions made on your behalf
• To create and maintain an accurate inventory each time your agent enters your safe deposit box

A person may not be made the agent of another against his or her will. Typically, an agent accepts a power of attorney by exercising authority or performing duties as an agent. The law provides that the scope of acceptance is limited to those aspects of the power of attorney for which the agent’s conduct indicates acceptance.

Agent liability is typically defined by the scope of the power of attorney. This aspect of the power of attorney law is of considerable importance in the liability assumed by an agent, and your agent should be fully informed of this aspect of the law.

Setting Limitations On Your Agent’s Authority

According to Florida Statute 709.2201, an agent may only exercise authority specifically granted to the agent in the power of attorney and any authority reasonably necessary to give effect to that express grant of specific authority. Each of our clients has different personal, legal and financial existing or future situations that may need to be addressed with the power of attorney.

Accordingly, our power of attorney lawyers can provide a comprehensive document that can give your agent numerous specific grants of authority. Although most of the specific grants of authority will not apply to you, we recommend our clients use this comprehensive list since it is difficult to anticipate every situation in which the power of attorney may be needed.

A Power Of Attorney Versus A Living Trust

A living trust should be established to provide protection in the event of incapacity and avoid probate. For most persons, a durable power of attorney should be used as a backup to their living trust, rather than as a substitute for a living trust. There are pitfalls with a durable power of attorney that are avoided with a living trust. Some of the potential pitfalls are as follows:

• Possible suspension of authority: If anyone files a petition to determine incapacity, the agent’s authority is suspended, except for authority to make health care decisions. However, if the agent is a parent, spouse, child or grandchild, the agent’s authority is not suspended. A judge eventually decides to what extent your agent will continue to have authority.
• Limited fiduciary obligations: The durable power of attorney does not create comprehensive fiduciary obligations by which the agent may be held accountable, as may be provided under a living trust. Under the durable power of attorney law, an agent may decide to only accept limited duties under the durable power of attorney and will only be held accountable for improperly handling the limited duties.
• Formal accountings are not required: Although an agent has a responsibility for keeping adequate records, the agent does not have the obligation, unless requested, to prepare and provide periodic accountings of all receipts and disbursements as required by a living trust.
• Difficulty in ensuring successors: A living trust may provide for a succession of alternate trustees. Providing for alternate agents on a durable power of attorney is difficult as a practical matter.

In many ways, a power of attorney can be limited in scope and duration. A living trust, on the other hand, provides for a comprehensive plan for your affairs in the event of death or incapacity without court supervision with the person(s) selected by you to be in charge of your affairs rather than persons appointed by the court.

Learn How Powers Of Attorney Can Meet Your Needs

Schedule a consultation to discuss your needs with one of our power of attorney lawyers. Call us at 727-361-2894 or complete our online inquiry form.