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Is Your Florida Durable Power of Attorney Unplugged [3 Common Short Circuits]

This article was inspired by a discussion with a colleague who works in financing mortgage banking.  He mentioned that title companies were starting to get very careful when scrutinizing a Florida durable power of attorney as part of a Florida real estate transaction.

We speculated that title and escrow companies were becoming wary of these powers of attorney due to potential abuse even if they have the appropriate real estate powers included among the other specific powers featured in the document. He suggested that a very specific real estate power of attorney should be created for clients as an enhanced Florida estate planning option. Without discussing whether that is necessary, this discussion raises the importance of having a current and effective durable power of attorney in Florida.

The Redefining of the Florida Durable Power of Attorney

A few years ago, Florida lawmakers completely redefined the Florida durable power of attorney and many other states have been following the same course of action. The focus of the revision in Florida was to essentially get rid of what is called a “springing power of attorney”.

A springing power is a type of durable power of attorney that becomes effective only when certain conditions are met such as verification of the incapacity of the one who granted the power.

Legislators have determined that these types of powers may lend themselves to abuse and have opted for immediate powers to become the norm. The draw back with immediate powers of course is that the become effective when signed, and thus folks need to be careful about who they’re given to.

3 Ways that Your Florida Durable Power of Attorney May Be Short Circuiting

1. Outdated powers of attorney may not clearly state all of the necessary powers that may be required of your appointee.

For example, the right to sell real estate or the right to change beneficiary designations on insurance policies. Modern laws require that each specific power be described in detail and an many jurisdictions each specific power must be separate initialed by the appointee.

2. Outdated powers of attorney may be “springing” powers of attorney which means that they are only effective upon the disability of the appointee.

However, many states have eliminated springing powers in favor of the clearer and easier to enforce immediate power of attorney.  In short, springing powers of attorney are becoming obsolete.

3. Powers of attorney must be signed with appropriate formalities (i.e. notarized) and they must appoint persons with the capacity to serve.

So an outdated power of attorney may not be legally enforceable due to missing legal formalities in Florida or may not have an adequate Florida appointee and thus be ineffective. One example of this problem is a power of attorney appointing the spouse who is now deceased…yes this happens and people forget to update their Florida estate plan.

So those are 3 situations where powers of attorney become unplugged…ok enough with the bad puns.

I also would be remiss not to point out that your Florida power of attorney should be a “durable” power because the “durability” means that it will remain effective if the appointee (you) is disabled. Other kinds of powers such as special powers of attorney for real estate transactions will be rendered void in the event of disability.

Haggling with banks, investment companies and real estate professionals over powers of attorney is nothing new. Many service providers have their own forms for liability reasons.  There may be circumstances where old power of attorney documents are deemed to be “grandfathered” but for all the reasons discussed above, the best policy is always to have all estate planning documents reviewed at regular intervals and update them to comply with recent changes in the state law and the ever increasing demands of those in the banking, real estate and wealth management arenas.

This is an updated version of an article originally dated December 6, 2014.  

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