A Power of Attorney (“POA”) is a legal document in which a person, known as a “Principal,” designates another person (18 or older) or financial institution to act on the Principal’s behalf. This person or the financial institution is known as the “Agent.” The Principal giving the POA may allow for broad powers or limit it to certain acts. A POA may be used to give another the right to sell a car, real property or personal property, to access bank accounts, sign contract(s), handle financial transactions and/or sign legal documents for the Principal. What authority is granted depends on the specific language of the POA.
There are little nuances about a POA and Florida law that many people do not think about when it comes to the execution, scope, and use. Below are a few facts to be aware of if you are the Principal, the Principal’s family members, potential Agents, or caregiver:
Execution Formalities/ Photocopies /Acceptance by Third Parties:
The Principal must be competent, meaning the Principal must understand what he or she is signing at the time the document is signed. The Principal must understand the effect of a POA, to whom the POA is being given and what and how property may be affected by the POA. When a POA is challenged incompetency at time of execution is one of the main allegations made.
Florida Statutes state a POA must be signed by the Principal in the presence of two witnesses and before a notary public. This allows for a POA to be used in the transfer of real property in Florida.
Unless provided otherwise in the POA, a photocopy or electronically transmitted copy of an original POA has the same effect as the original – a Principal should exercise due care. It is important to note that an original POA may be necessary for the transfer of title to real property.
A third party may require an Agent to sign an affidavit stating that the Agent is validly exercising authority granted to them under the POA. The affidavit seeks to relieve the third party of liability for accepting an invalid POA. The Agent should review any affidavit and as long as all statements are true, the Agent may sign it.
Agent Authority, Duties and Responsibilities
A Principal may list one, two, or more persons or financial institutions to act as Co-Agents. Unless stated otherwise, each Agent may exercise its authority independently of any other Agent. A POA can always be tailored to require complete agreement or majority consent to act.
An Agent is a fiduciary of the Principal. This means that the Agent has certain responsibilities it owes to the Principal, to include but not be limited to: acting within the scope of the authority granted in the POA and to act in good faith in doing so, attempt to preserve the Principal’s estate plan (to the extent known to the Agent), and keep records of its actions.
An Agent must keep a record of all receipts, disbursements, and transactions made on behalf of the Principal. This includes real property, personal property, and banking transactions. If the Principal has a safety deposit box and it is accessed by the Agent, the Agent must create and maintain an accurate inventory each time.
Signature when acting as Agent
When using a POA on behalf of a Principal the Agent wants to indicate they are signing as Agent for the Principal or something similar. As long as it is clear the document is being signed as an Agent, the Agent should be protected. If they fail to do so, they may be held liable for whatever is signed. An Example is as follows: “John Doe, as Agent for John Smith.”
Termination of POA
An Agent’s authority to act under a POA ends upon the following:
- The Principal dies; (This is when the Principal’s will, if any, would come into effect)
- The Principal revokes the POA;
- A Court suspends the POA;
- The purpose of the POA is accomplished (i.e. sale of a vehicle)
If the Agent acts after any of the above circumstances occur, he/she would be acting without authority.
Next month, I’ll tell you about the ‘Superpowers’ of the Florida POA statute, in Part II.
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.