Out of State Powers of Attorney Are Valid in Florida, But Can Still Be Problematic

Posted by CSG Firm on

A Power of Attorney which was validly created in another state is valid in the state of Florida. However, many out of state Powers of Attorney do not comply with Florida law. Individuals using these documents in Florida on a regular basis should have them updated by creating Florida compliant instruments. This article will explore why someone who moves to Florida should update an out of state Power of Attorney and provide some options if a third party or financial institution denies the out of state Power of Attorney as well.

The Power of Attorney is an extremely important and valuable document which allows a selected third party (or multiple third parties) to manage one’s property and financial affairs as well as make healthcare decisions. This third-party Agent can manage bank accounts, sell or buy property on the Principal’s behalf (i.e., the one who created the power of attorney and who authorized the Agent to act on his/her behalf), move around investments, decide how assets should be used for the Principal’s benefit, and make a number of important decisions about one’s finances or medical care.

Since the Power of Attorney is such an important document, it is highly scrutinized by financial institutions and other third parties. Financial institutions in Florida often deny out of state Powers of Attorney because they do not contain “super-powers,” or the Power of Attorneys are a few pages long and just grant extremely broad powers to the Agent listed in Power of Attorney.

The Florida Power of Attorney laws changed significantly in 2011. The most important change was that the new Florida Power of Attorney laws created what is known as the super-powers. These super-powers are powers that the state legislature considered so important that each super-power must be clearly expressed in the Power of Attorney and the Power of Attorney creator or Principal must place their initials next to the super-power provision or paragraph.

Even if a super-power is expressly stated in a Power of Attorney, but it is not initialed, then the Agent of the said Power of Attorney will not be able to perform that super-power on behalf of the subject Principal. This situation becomes extremely important when an individual no longer has capacity to update their Power of Attorney, then a Legal Guardianship (an expensive and time-consuming legal proceeding) must be started so that the Agent of the said Power of Attorney can perform that super-power.

The following is a brief list of some super-powers designated by the Florida Statutes that a person must sign or initial next to the applicable provision or paragraph for the Agent of the said Power of Attorney to exercise these powers:

  • Create an intervivos trust (also known as a living trust or a revocable trust).
  • Amend, modify, revoke, or terminate a trust.
  • Make a gift.
  • Create or change rights of survivorship.
  • Create or change a beneficiary designation.
  • Waive the Principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor annuity, including a survivor benefit under a retirement plan.
  • Disclaim property and powers of appointment.

Consequently, what does all this mean and how does it affect a person’s life in Florida? It is rarely seen that an out of state Power of Attorney document which had these powers listed requires the creator or Principal to initial or sign next to each power. This would mean that if an Agent of the Power of Attorney had to create a trust on the Principal’s behalf here in Florida, the Agent under the said Power of Attorney would not be able to do so because the subject out of state Power of Attorney document does not have the Principal’s initial or signature next to the applicable provision authorizing the said trust power provision.

The following is an example of how an out of state Power of Attorney might complicate a person now residing in Florida: An individual’s parent is incapacitated and needs to be placed into a nursing home in Florida. The nursing home cost about $9,000 to $10,000 per month. The Agent hires an attorney to do Medicaid planning for the parent so that they can try to preserve all the parent’s remaining assets or life savings and not spend it down after a year in the nursing home.

The first thing to be requested is a copy of the parent’s Power of Attorney. Said parent most likely has a typical 4-5 page out of state Power of Attorney which was prepared

several years prior to the parent’s incapacity and move to Florida. Said parent is slightly over the income limit for Medicaid, and what is required to be created is a Qualified Income Trust so that the parent can qualify for Florida Medicaid.

Due to the out of state Power of Attorney not having the subject parent’s initials or signature next to the provision, paragraph, or power to create a trust, the attorney and family have to establish a legal Guardianship, which cost can average between $8,000 to $10,000 just to establish in order that the Agent can just set up the aforesaid trust and salvage the parent’s assets from the nursing home.

FURTHER, a third party can reject an out of state Power of Attorney in Florida within a “reasonable time.” This term customarily means four (4) business days for financial institutions or banks. The third party must provide a written statement explaining their basis or reasons for denying the Power of Attorney. A third party can also request an Affidavit from the Agent of the subject Power of Attorney stating that the Power of Attorney is still in effect.

If a third party or financial institution denies an out of state Power of Attorney in Florida, then the Agent of the Power of Attorney can sue the third party to force the third party to comply with, follow and/or accept the Power of Attorney. The third party can be liable for damages, including court costs and attorney’s fees, if the Agent for the subject Power of Attorney prevails in the lawsuit.

However, lawsuits cost a substantial sum of money and take considerable time. If an Agent under a Power of Attorney needs to act quickly (e.g., sell property or do Medicaid planning), then a lawsuit is not very practical. The best alternative is usually to have the creator or Principal of the Power of Attorney sign and execute a new Florida Durable Power of Attorney so that the Agent can act immediately. This option will only work if the creator or Principal of the Power of Attorney still has the legal capacity to sign and execute a new Florida Durable Power of Attorney.

If the creator or Principal of the Power of Attorney is no longer competent, then an experienced Florida Estate Planning or Elder Law attorney may have some success with the third party’s legal department or management team to try to convince them to accept the out of state Power of Attorney. This process can be more effective if the out of state Power of Attorney complies with Florida state law.

If you have any additional Questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI, in Miami Lakes, Florida.