Substitute Decision-Making Powers
Substitute Decision Making Powers refers to those legal documents that govern your financial affairs and your medical decisions in the event that you become disabled. These powers are equally important as your Will or Trust that govern the
distribution of your assets at death.
Florida law provides a planning alternative to court intervention. Your substitute decision making powers are vital planning documents in managing your financial and medical matters.
With these powers in place, the likelihood of a court appointed guardian in the event of your disability is greatly diminished.
Historically, the common law has always recognized the ability of an individual to designate an agent to act on behalf of a principal. These directives, called powers of attorney (POA) were limited purpose documents designed to address specific duties on behalf of the principal.
For example, powers of attorney are typically used when a party cannot attend a real estate closing in person, or are recited on the back of a stock certificate, authorizing a company official the limited power to transfer shares of stock.
Unfortunately, under the common law, powers of attorney ceased to be effective on the disability of the principal. At the precise time when the power is needed most, the agent was prohibited from acting.
Recognizing this as a weakness, the legislature authorized the Durable Power of Attorney statute, permitting the creation of a Durable Power of Attorney (DPOA), authorizing an agent to act even if the principal is disabled. These popular documents enable an agent to conduct all financial transactions that the principal could undertake without the necessity of court supervision or intervention.
What is a Durable Power of Attorney
A power of attorney is a written document which authorizes a person to act on your behalf (the principal). The person appointed to act for you is called the “agent” or “attorney in fact”.
You can execute a power of attorney which grants the agent the authority to do only limited things, such as represent you in a real estate closing (often called a limited power of attorney).
You can also execute a power of attorney which grants the agent the authority to do virtually anything you could do. This is a general durable power of attorney. “General” means that it is a broad financial authority, covering all general matters. “Durable” means that the power is effective even if you are disabled and unable to act on your own behalf.
How does Florida’s Durable Power of Attorney statute affect me?
In late 2011, Florida revised its Durable Power of Attorney statute. The new statute provided greater clarity for parties accepting DPOAs, such as the express authorization to rely on photocopies, and clarification regarding successor and alternate agents. The act also broadened the powers that you can grant to your agent.
If properly executed, your DPOA can now permit your agent to make changes to your revocable trust, including changing your beneficiaries, and making changes to your retirement and life insurance policies.
I have a DPOA signed prior to October 1, 2011. Do I need to execute a new one?
The revised DPOA statute grandfathered all prior executed DPOAs. That being said, however, more than 6 years has passed since the revised statute. You may want to execute a “fresh” DPOA. This is a good time to review the selection of your agent and successor agents, and to see if any of the broader powers authorized by the revised statute might fit your needs.
Why would I want to give another person a power of attorney?
A power of attorney permits a trusted individual, such as your spouse or child, to act for you when it is not convenient for your to be present. Examples would include illness, disability, confinement to a hospital or nursing care facility. It may also permit someone to act on your benefit when you are not physically present.
Can I appoint more than one agent?
Yes, you can appoint more than one person as your attorney in fact. You can have multiple powers of attorney, appointing different agents. When signing a DPOA, you are appointing a “deputy” to act on your behalf. You can have multiple deputies.
Does my agent have to account to me?
Yes. An agent is your fiduciary, and must always act in your best interests. You have the right to ask your agent for an accounting of all of his actions at any time. An agent may be liable to you if the power is misused.
Does my agent have to account to my heirs?
Yes. During your lifetime, you can ask for a full accounting. Likewise, at your death, your estate has the right to ask your agent to account for all actions taken while you were alive. It is important, therefore, that you agent maintain and retain accurate records.
Will I lose control of my ability to make decisions?
No. You always retain the ability to make your own decisions, including the right to revoke the power of attorney.