Do I Need a Florida Power of Attorney? Part 2 – How Much Power is Too Much Power?

Do I Need a Florida Power of Attorney? Part 2 – How Much Power is Too Much Power?

Last month I wrote about a Power of Attorney (“POA”) and the many little nuances that people do not think about when it comes to the execution, scope, and use of a POA. This month I cover the ‘Superpowers’ of the Florida POA statute - §709.2202 Florida Statutes. Superpowers are those certain actions which require the Principal’s specific authorization (via singing or initialing next to the specific Superpower) in order for the Agent to exercise authority. The Superpowers are as follows:

§709.2202(1)(a) - Create an inter vivos trust

This power allows an Agent to create, fund, and maintain an inter vivos trust (living trust) on the Principal’s behalf. This means they can setup a Trust to address your assets and debts, now and in the future. The Agent has the obligation to setup the Trust with the Principal’s intent and desires in mind. A Trust can address how property is maintained during a person’s lifetime as well as how it is handled or disposed after a person’s lifetime. EXAMPLE – An Agent can create a trust to address the handling and disposition of the Principal’s real property which is located in several states.

§709.2202(1)(b) - Amend, modify, revoke, or terminate a trust

This power allows an Agent to amend, modify, revoke, or terminate a Principal’s Trust. This means the Agent can change the purpose and intent of your Trust. Any changes should be made with the Principal’s intent in mind. EXAMPLE – An Agent can modify a trust to address a new family member (i.e. grandchild).

§709.2202(1)(c) – Gifts – Personal and Charitable

This power allows an Agent to make gifts to the Principal’s spouse, descendants and Agent ( him/herself) in amounts not to exceed the amount of the Principal’s gift tax annual exclusion under the IRS Code (or twice that amount for gifts other than to the Principal’s spouse, if married, and an election by the spouse under the IRS Code is anticipated). EXAMPLE – An Agent can make a gift to a child or spouse of funds or property up to a certain value (determined at time of transaction).

If it is desired that the Agent have the authority to make gifts in excess of the federal gift tax limits then it needs to be specifically stated.

The gifts can be of any property of the Principal. Of important note, an Agent’s authority under a POA is always limited by the Agent’s overriding fiduciary duty to the Principal (see previous article).

§709.2202(1)(d) - Create or change rights of survivorship

Right of survivorship is the concept referring to a person's legal right to assume ownership of another person's property upon his or her death. The right of survivorship supersedes typical probate proceedings, meaning the Property changes hands upon the passing of the individual. This allows your Agent to create or change certain rights you, the Principal, have during your lifetime. EXAMPLE – The Principal owns property jointly with a friend, title being held with as joint tenants with rights of survivorship between the two owners. The Agent can contract for the sale of the Principal’s share of the property and now the new owner and the “friend” own the property as joint tenants in common, the right of survivorship having been severed by the sale.

§709.2202(1)(e) - Create or change beneficiary designation

This power allows an Agent to create or change a beneficiary designation on policies and documents such as, but not to be limited to, life insurance, retirement plans, Individual Retirement Accounts, pension plans, profit sharing plans, 401(k) plans, and any other type of plan or trust with beneficiary designations. EXAMPLE – An Agent can change your life insurance beneficiary from your spouse to your child, or to anyone else.

§709.2202(1)(f) – Waive the Principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan

This power allows an Agent to waive the Principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan.

§709.2202(1)(g) - Disclaim property and powers of appointment

This power allows an Agent to disclaim any interest in property, real or personal, which would otherwise pass to a Principal by inter vivos (lifetime) transfer or by testate or intestate succession (upon death). It also allows an Agent to disclaim powers of appointment on behalf of the Principal. A power of appointment is the ability of the Agent to select a person who will be given the authority to dispose of certain property under a Will or Trust. EXAMPLE – An Agent could file a disclaimer of property in a probate case in which the Principal is a beneficiary.

Some other notes to consider:

- “§709.2202(3) - Notwithstanding a grant of authority to do an act described in subsection (1), unless the power of attorney otherwise provides, an agent who is not an ancestor, spouse, or descendant of the principal may not exercise authority to create in the agent, or in an individual to whom the agent owes a legal obligation of support, an interest in the principal’s property, whether by gift, right of survivorship, beneficiary designation, disclaimer, or otherwise.” This obviously has an effect on who can be your Agent and exercise these specific powers. This is something a party should consider and discuss with an attorney.

- The exercise of these Superpowers by the Agent shall be consistent with the Agent’s duties under law and the POA itself.

- The author also includes additional actions to be initialed or signed in order to have authority to act although not technically required by statute. Such actions include, but are not limited to, ability to seek public assistance (such as Medicaid or other public benefits) and Agent Self-Dealing.

In summary, the Principal needs to fully understand what each ‘Superpower’ means and what sort of authority and power it provides the Agent with, both good and bad. If you have questions it is always best to seek out legal advice before acting in regards to a POA. Because once the power is given and an action taken, it is a lot harder to undo the action than it would have been to prevent such action from occurring in the first place.

This article is for general information only and is not intended as and does not constitute legal advice or solicitation of a prospective client. It should not be relied on for legal advice in any particular factual circumstance.