On October 1, the new Florida power of attorney statute becomes law. One of the most highlighted provisions of this law is the fact that “springing” powers of attorney will no longer be possible. Powers of attorney executed before the new law takes effect, including springing powers, will continue to be valid.
Springing powers of attorney are popular for those who are unwilling to immediately delegate control over their affairs, usually because they are currently competent and do not want another to have any power over their assets until this changes. Thus, a springing power of attorney is one that becomes effective only upon the happening of a certain event, most commonly the legal disability of the principal. The use of a springing power requires a formal determination as to whether the principal is legally incompetent enough for the power of attorney to “spring” into action. In Florida, this often requires a sworn affidavit by both the agent (attorney in fact) and a licensed physician. Notwithstanding their popularity among some individuals, springing powers can cause problems, which likely led to their demise in Florida.
From an estate planning perspective, they are generally not as effective as immediate powers of attorney because of the formalities required at the time they are needed the most. For example, if one spouse is in a position where they need to utilize the other spouse’s power of attorney, then that often means that some sort of emergency has occurred. Many of us would agree that, in a time of emergency, observance of the required formalities would only serve as an unnecessary hindrance. This is why some estate planning attorneys were not in the practice of recommending springing powers, especially in marital situations, even before the new law.
To compound the problem, some financial institutions will refuse to work with the agent even if all formalities are followed. This is because banks and other financial institutions are concerned about their liability when honoring a springing power of attorney. For example, if a bank were to honor a springing power and the principal later claimed that they were not incapacitated and that the bank had acted in error, then the institution would open themselves up to legal liability. These disputes must then be resolved in court, which is a costly and unwanted procedure. Consequently, it was the banks and other financial institutions that led the charge to end the use of springing powers in Florida.
The new Florida power of attorney law provides that when one executes a power of attorney it is immediately active. This is true whether or not the grantor of the power is legally incapacitated. Thus, it is important to be extremely careful when selecting an agent to act as your power of attorney. If you have any suspicion that the person you name might one day come to abuse their authority, then it is better to err on the safe side and name someone else.
It is always a good idea to first discuss your expectations and wishes with a knowledgeable Florida estate planning attorney who can help you understand important documents such as a power of attorney before you sign them. If you need assistance or have questions, contact an Attorney in Jacksonville who can help you today.