Powers of Attorney
Many people find it helpful at some point – or at several points – in their lives to designate someone to act as their agent for the conduct of business. An agency relationship is created by agreement between the person appointing the agent, who is known as the principal, and the agent. One of the most common types of agency relationship is established when the principal gives the agent a power-of-attorney, thereby appointing the agent the principal’s attorney-in-fact.
A power-of-attorney may be very limited, such as that given when a person wishes to trade cars and appoints the dealer his attorney-in-fact to sign the title to the vehicle. It can also be very broad, enabling the attorney-in-fact to sign checks, withdraw funds from bank accounts, borrow money, sell real estate, and transact other kinds of business on behalf of the principal. Those last four words are essential to understanding the workings of a power of attorney. Whether the power is narrow or broad, its most important aspect is that it only authorizes the attorney-in-fact to act on behalf of the principal. The attorney-in-fact is a fiduciary, that is, he stands in a position of trust, confidence, and responsibility to the principal, and owes the principal a duty of loyalty, honesty and fidelity whenever she uses the power over the principal’s assets or affairs. The attorney-in-fact must always act in the best interest of the principal, without regard for the attorney-in-fact’s interests. Whatever type of power the principal gives to her attorney-in-fact, in creating the power, she never gives up the right to act on her own behalf, and always has the right to revoke the power.
Much of the law governing powers-of-attorney is common law, that is, the law which has developed when the courts have decided cases over the years, establishing precedent based on legal principles. Various statutory provisions apply to powers-of-attorney; for instance, section 695.01 Florida Statutes states that no conveyance, transfer or mortgage of real property executed by virtue of a power of attorney shall be good and effectual against a creditor or subsequent bona fide purchaser unless the power was recorded before the accruing of the right of the creditor or subsequent purchaser.
Chapter 709 Florida Statutes is the main statutory authority regarding powers-of-attorney, addressing such matters as the authority of the attorney-in-fact when the principal is dead (the attorney-in-fact’s authority terminates when he learns of the principal’s death, but acts performed by the attorney-in-fact holding a good faith belief that the principal was alive at the time are binding on the principal’s estate) or missing while a member of the U.S. Armed Forces.
One of the most commonly used types of power-of-attorney in Florida is the “durable” power, which is governed by section 709.08 Florida Statutes. Formerly, powers-of-attorney were determined to be invalid in the event the principal lost his capacity to contract, but as the business affairs of individuals became more and more complex, it became clear that many people wanted to appoint an attorney-in-fact for the purpose of handling those affairs if the principal ever became unable to conduct them herself. For that reason, the legislature created the durable power-of-attorney, which can be used even if the principal becomes incapacitated. In order to be clear that the principal wants the power to survive his incapacity, it must state that it “is not affected by subsequent incapacity of the principal except as provided in §709.08” or words to that effect.
The power must be signed by the principal, and by two witnesses to the principal’s signature. The principal’s signature need not be acknowledged before a notary public to be effective, but it must be “notarized” in order to be recorded in the public records, and it must be recorded to protect the principal in many different situations, so it is good practice to have the power authenticated by a notary public who will sign and affix his seal to the power. Generally, anyone over the age of 18 and of sound mind can serve as an attorney-in-fact, as can a financial institution with trust powers, and a not-for-profit corporation which is organized for charitable or religious purposes and has qualified as a court-appointed guardian prior to January 1, 1996 and which is tax-exempt.
One of the most recent aspects of the durable power is what some lawyers refer to as a “springing” power, that is, a power which will only be effective if the principal develops a lack of capacity to manage his property. This is a very useful provision, since many people do now want to enable anyone to act for them if they can act for themselves, but recognize that the time may come when they need help, and want to make provisions for the protection of themselves and their property if that day comes. Such a power will include a statement by the principal that the power is conditioned upon the principal’s lack of capacity to manage property; that determination must be made by a physician licensed to practice medicine, and evidenced by an affidavit to that effect signed by the physician.
The authority of the attorney-in-fact under a durable power is suspended in the event someone files a petition to determine the principal’s capacity (the filing of such a petition is a prelude to establishing a guardianship) but may be continued in effect by the court supervising the guardianship proceedings in the event of an emergency. The power terminates immediately if the principal is adjudicated to be incapacitated (when a guardian will be appointed by the court) or when the attorney-in-fact learns of the principal’s death.
There are limits on the use of a durable power-of-attorney, even when stated in the broadest of terms. Attorneys-in-fact may not perform duties under a contract calling for the personal services of the principal, make affidavits as to the personal knowledge of the principal, vote on behalf of the principal, execute or revoke a will or codicil for the principal, create, modify or revoke a document which directs the disposition of the principal’s assets after the principal’s death, or exercise powers granted to the principal to administer a trust or as a court appointed fiduciary.
Powers of attorney can be very useful documents. A power must be written to serve the purposes of the principal, and must be duly executed by the principal. Most important of all, of course, is that a person, or entity, whose judgment and integrity are trusted by the principal is selected to serve as attorney-in-fact. – Harry G. McConnell
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