THE POWERS AND LIMITATIONS OF POWERS OF ATTORNEY
With Great Power Comes Great Responsibility. Voltaire
There are important differences between standard powers of attorney and durable powers of attorney but each document is ripe for being abused. A standard power of attorney document provides the authority for another person (the agent or attorney-in-fact) to make decisions and take actions on the principal’s behalf when the principal is unable to do so for himself or herself. In the event, the principal becomes physically incapacitated, and not able to pay bills or banking transactions or the principal plans to travel and needs to have documents signed while away, then the ordinary or standard power of attorney document would authorize the principal’s chosen agent or attorney-in-fact to execute documents, receive and pay bills and make banking transactions on the principal’s behalf. A standard power of attorney would become invalid if the principal became mentally incapacitated.
A durable power of attorney (even more likely to be used for improper, illegal, and selfish reasons) is a document that authorizes the principal’s chosen agent or attorney-in-fact to execute documents, receive and pay bills and make banking transactions on the principal’s behalf, but would remain effective even if the principal became mentally incapacitated. It is possible to have the power of attorney document drafted to be broad in scope, giving the agent or attorney-in-fact the authority to make any and all property, financial, medical, and personal decisions for the principal; or the power of attorney document could be drafted to authorize the agent or attorney-in-fact to perform very limitedly, specific duties for the principal.
Florida Statute 709.08 outlines how to create a durable power of attorney, who may serve as the agent or attorney-in-fact, and provides information as to the durability of the power of attorney in Florida Statute 709.08(3)(b), which states: “The attorney, in fact, may exercise the authority granted under a durable power of attorney until the principal dies, revokes the power, or is adjudicated totally or partially incapacitated by a court of competent jurisdiction unless the court determines that certain authority granted by the durable power of attorney is to remain exercisable by the attorney in fact.” So, if the durable power of attorney is drafted to include specific language granting the attorney in fact authority to act, even after the principal has been deemed incompetent, that authority will remain intact until the death of the principal.
A little known fact is Florida law (Florida Statute 709.08(7)) outlines the powers and limitations of the durable power of attorney. The attorney in fact has full authority to perform, without prior court approval, every act authorized and specifically enumerated in the durable power of attorney, but may not:
1) perform duties under a contract that requires the exercise of personal services of the principal;
2) make any affidavit as to the personal knowledge of the principal;
3) vote in any public election on behalf of the principal;
4) execute or revoke any will or codicil for the principal;
5) create, amend, modify or revoke any documents or other disposition effective at the principal’s death or transfer assets to an existing trust created by the principal unless expressly authorized by the precise language of the power of attorney because when the principal dies, the attorney in fact has no further authority to act for the principal; or
6) exercise powers and authority granted to the principal as trustee or as court-appointed fiduciary. The attorney in fact cannot execute documents for the principal as trustee if the principal had been appointed the trustee of a trust.
The attorney in fact is held to a high standard of care pursuant to Florida Statute 709.08(8). They must exercise a standard of care applicable to a trustee of a trust, and if the attorney in fact’s exercise of power is improper, they will be liable to interested persons for damage or loss resulting from their breach of fiduciary duty as the attorney in fact to the same extent as a trustee of an express trust. If the power of attorney exceeds their power, exercises improper powers, breaches their fiduciary duty, self-deals, acts as a trustee for the principal, or does not invest the principal’s assets prudently, the interested persons may have the standing to initiate litigation against the power of attorney.
Inevitably, relatives abuse powers of attorney. They confuse the power granted to them with the improper use of that power by serving their own selfish financial gain. With great power comes great responsibility to protect the person granting the power. Far too often, my clients hear the threat “I can do whatever I want to with the power of attorney.”
If you believe a person holding the power of attorney is breaching their fiduciary duty, self-dealing, squandering assets, or not investing the principal’s assets prudently, it is imperative that you promptly contact a skilled and competent attorney so that the appropriate action can be taken, including the commencement of litigation against the person abusing the power of attorney.