Your POA: Why a Power of Attorney is the most Important document in your estate plan
A power of attorney (POA) is a key document that can help protect you and your family in the event that you become incapacitated. A POA appoints another person to make decisions for you regarding many aspects of your life, such as:
Healthcare or mental health decisions
Gifts of money or property
Sale or purchase of real estate
Sale of personal property
A POA is a powerful document that legally allows someone else to handle your business, financial, and legal affairs and to make healthcare decisions for you. You sign as the principal of the document, and the person you convey legal authority to is known as the attorney-in-fact. There are different types of POAs that should be used in different circumstances.
Durable Power of Attorney (DPOA)
What it is: A DPOA authorizes the appointed person to act on behalf of the signor. Typically, this type of POA allows for handling real estate transactions, buying or selling vehicles, dealing with taxes, writing checks, entering into contracts, and settling claims. A durable POA document does allow broad power, so consider specifying the exact types of transaction you want your POA attorney-in-fact to handle for you.
In 2011, the laws revolving around the DPOA changed. All DPOAs must have certain powers written out in the document and initialed by the principal. If this is not done properly your representative will not be able to do necessary things. This is why it’s imperative that you have an updated Florida durable power of attorney.
I have had many clients with loved ones who had to act on their behalf due to the client’s incapacitation. Unfortunately, because the client’s DPOA was from out of state or wasn’t updated to include the statutory changes of 2011, they were powerless to act. It’s a heartbreaking situation, because now the family not only had the stress of an incapacitated loved one, but also had to petition the court to become the guardian of the loved one. A guardianship proceeding can cost many thousands of dollars and can quickly deplete funds. Everybody over the age of 18 needs a Florida, updated durable power of attorney.
Limited Power of Attorney
What it is: A limited POA authorizes the attorney-in-fact to only take action during defined and specified circumstances. A limited POA can be used for certain types of transactions, or even a single transaction, or might only be valid for a limited period of time. These limited POAs are often used for real estate transactions, such as when a spouse must be absent on the closing date to buy a house, or to handle accounts at a specific bank or financial institution.
For example, some of my clients move to Florida, but still need to sell real estate or a vehicle in another state. If they are unable to be there in person to effectuate that transaction, we can create a limited POA so that their representative will have the power for that one transaction only. This can save a lot of time, travel, and money for the client.
Healthcare Power of Attorney
What it is: A healthcare power of attorney is also termed a healthcare proxy. This POA allows your representative to make medical and psychological care decisions for the principal in the event they are unable to act on their own behalf. As with the other types of POAs, the limits of the agent’s authority are clearly defined in the document.
The healthcare power of attorney is a vital estate planning tool for all Florida residents over the age of 18. I’ve seen many situations where a loved one becomes incapacitated but didn’t execute a healthcare power of attorney. Worse case scenario, if a family doesn’t agree on the type of care for the loved one, it can develop into a serious problem for all involved. As you can imagine, these situations can quickly turn bad and create long-lasting resentment in families that can last generations.
Limitations of POAs
Once the document is signed, a durable power of attorney remains in effect until it is either legally revoked by the principal or until the principal’s death. A POA can give an agent broad authority for a variety of actions, but there are still limitations on its use. A POA cannot be used to:
Transfer the POA to a new agent
Make any decisions after the principal’s death
Change the Last Will and Testament of the principal
Violate the fiduciary duty an attorney-in-fact owes to the principal
A POA is key to your overall estate plan
Your durable power of attorney and healthcare POAs are the centerpiece of any good estate plan. It’s the most important estate planning tool because it’s the only document that protects you while you are actually alive. Everyone over the age of 18 needs an updated, Florida durable power of attorney. I have seen too many clients who did not have this document, became incapacitated through an illness or accident, and their families had to deal with the health of their loved one, and also had to hire an attorney and petition the court to become a legal guardian. It could have been avoided with an updated POA. Don’t wait until it’s too late to execute this vital document.
Hollander Law has years of experience in handling all types of POAs. Trust their expertise to help protect yourself and your loved ones with these vital documents. As always, questions and consultations are complimentary at Hollander Law. Call us at 352-406-2092.