Concerns with Durable Powers of Attorney
In a recent meeting with an Estate Planning client, a simple yet very important issue arose with respect to Durable Powers of Attorney (DPA). The concern of the client was the following: “Once the DPA is created, how do the Florida statutes ensure it is legally valid? Additionally, how is the abuse of the privilege of being the attorney-in-fact avoided?” These are legitimate concerns from educated clients.
First of all, let’s set the definition of a DPA. Simply stated, a durable power of attorney is a document allowing a person to designate another individual to transact business on their behalf. The designated individual has the full authority to transact, without court approval, all actions specifically enumerated in the DPA.
The State of Florida has enacted legislation in an effort to avoid abuse of power by mandating three requirements for a DPA to be valid and deemed “durable.” According to Florida Statute §709.08, the DPA:
1. Must be in writing;
2. Must be executed with same formalities required as Florida Will; and
3. Must contain the words: “This durable power of attorney is not affected by subsequent incapacity of the principal except as provided in s. 709.08, Florida Statutes.”
Once a valid DPA is created and delivered to the attorney-in-fact, he may continue to transact business for the principal until the principal dies, revokes the power or is determined by a court to be incapacitated.
For the attorney-in-fact to exercise his/her rights established by the DPA, he/she needs only to deliver the document to the third party along with certain statutorily specified affidavits (Florida Statute §709.08). The third party is then authorized to require the agent to sign an affidavit stating that he or she is validly exercising the authority under the DPA.
Attorneys should take great care while drafting a DPA. Powers should be conferred with the greatest specificity possible to avoid the possibility of a court interpreting any clause to the detriment of the principal. An estate planning attorney can help you understand how our statutes can affect your asset distribution. Be sure to consult an expert on your financial plan.