Power of Attorney Defined
The Importance of Delegation
In life, you can’t do everything yourself and you can’t be everywhere at once.
Think about it, should you represent yourself in front of the Internal Revenue Service (the “IRS”)? Is waiting in line at the DMV really the best use of your time?
I get it though; things still need to get done.
What if someone could act for you?
Like, you give someone permission to act on your behalf. Kind of like an employee or an assistant, but without the impersonal employer-employee dynamic. Someone you’d feel comfortable with if they learned your personal information.
Speaking of personal, who’d make sure your loved ones are okay if you became incapacitated? Who would legally be able to sign a contract or have access to your bank accounts to make sure the bills get paid?
If you become incapacitated. you haven’t passed away, so Will won’t take effect (and even if it did, you’d still have to go to probate). And if your Trust Agreement doesn’t address incapacity (you’d be surprised how many don’t), it won’t be much help either.
So how do you go about giving someone that isn’t your employee the legal authority to act on your behalf?
The answer is called a Power of Attorney.
What Does a Power of Attorney Do?
This legal document creates an Agent-Principal relationship between two people. As the name implies, in an Agent-Principal relationship, there’s two roles: the Principal and an Agent.
The Principal gives the Agent authority to act on their behalf, while the Agent agrees to be the Principal’s fiduciary, meaning the Agent has a legally-enforceable duty to use the Principal’s authority in the Principal’s best interests.
This means the Principal is legally responisble for the Agent's actions. If the Agent signed a contract with a third party, the Principal has to follow its terms. If the Principal doesn't follow its terms, the third party can bring a lawsuit to have it enforced against the Principal. While this may seem like a huge risk, and it definitely can be, in return, the Principal can leverage the Agent's time and authority to delegate tasks to the Agent. An effective Agent allows the Principal more freedom and peace of mind.
Power of Attorney Forms
Powers of Attorney are governed by state law, meaning that each state gets to decide the rules about how the document becomes effective and what needs to be done so that it’s enforceable. Further, private entities like banks, state and local government agencies like the Department of Motor Vehicles, and federal agencies like the IRS have their own Power of Attorney forms you might have to use when interacting with them.
But, like everything, there’s commonalities regardless of jurisdictions, including:
Unless a Power of Attorney states otherwise, it will terminate if the Principal becomes incapacitated.
But in any & all circumstances, a Power of Attorney terminates if the Principal dies.
A General Power of Attorney will grant the Agent broad authority to make binding decisions on the Principal’s behalf.
A “Limited” or “Special” Power of Attorney will restrict the authority granted to matters listed in the document itself.
The Principal must be of sound mind (i.e. must understand what is happening and what is being done) at the time the Power of Attorney is created.
An individual must be at least 18 years old to be appointed an Agent.
Florida Power of Attorney: Requirements & Restrictions
In Florida, Powers of Attorney are governed by Part II of Chapter 709 of the Florida Statutes. Some states have Power of Attorney template called a statutory power of attorney form, but Florida does not. Some other quirks in Florida’s approach to Powers of Attorney are:
According to Florida Statute 709.2104, the “magic language” that makes a Florida Power of Attorney survive the incapacity of the Prinicpal is “This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in chapter 709, Florida Statutes.” Other language can work as long as it communicates that the Principal wanted it to survive incapacity.
Florida Statute 709.2105(2) requires a Power of Attorney to be signed by two subscribing witnesses and be acknowledged by the Principal before a notary.
All Powers of Attorney created under the laws of Florida after October 1, 2011, are effective upon being executed. Unlike other states, which allow for Powers of Attorney to take effect at a later date or upon an event happening (called a “Springing” Power of Attorney), Florida Statute 709.2108 explicitly states a Power of Attorney is ineffective if it “provides that it is to become effective at a future date or upon the occurrence of a future event of contingency.”
To give an Agent certain powers, the Principal must sign or initial next to the paragraph explicitly granting the Agent those powers, a general statement like “any and all powers” is not enough. These certain powers include:
Executing stock powers or similar documents
Delegating to a transfer agent the authority to register stocks, bonds or other securities into or out of the Principal’s name
Conveying or mortgaging the Principal’s homestead (if the Principal is married, the Agent would need the Principal’s spouse to agree to the conveyance or mortgage.)
Making healthcare decisions
Create an intervivos trust
Amend, modify, revoke a terminate a trust of which the Principal is a Grantor (i.e. creator of the trust)
Make a gift in excess of the federal Annual Exclusion Amount.
Create or change rights of survivorship
Create or change a beneficiary designation
Waive the Principal’s right to be a beneficiary of a joint and survivor annuity
Disclaim property and powers of appointment.
According to Florida Statute 709.2201(3), there are also authority a Power of Attorney cannot grant to an Agent. These are the powers to:
Perform duties in a personal services contract for the Principal
Make an affidavit as to the Principal’s personal knowledge
Vote in any public election on the Principal’s behalf
Execute or revoke a will or codicil on the Principal’s behalf
Exercise the powers of Trustee or a Court-appointed fiduciary that were initally granted to the Principal.
How to Use Your New Freed Up Time
By using a Power of Attorney to appoint an Agent or multiple Agents (either consecutively or in succession), you can successfully delegate aspects of your life, both personal and professional, to trusted individuals and free up your time to do what you do best, whether that means spending more time with your loved ones, focusing on those important but non-urgent tasks to reach your business goals, or making sure you can still provide for your family even if you're incapacitated.
Tell TealAcre To Tackle The Task
You read this far because have questions. These questions can be related to what will happen to your family, your assets, or business should anything happen to you. Instead of going at it alone, let TealAcre help you get the clarity and peace of mind you’re looking for. To contact us you can:
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