The Good News provides a monthly column with important content having to do with topics from the legal community. This month’s offering features a conversation with Jeff Fauer, a Tripp Scott director, who focuses his practice in estate, trust and complex, commercial litigation.
A power of attorney is a time-tested way to provide peace of mind that your personal, financial and legal affairs are kept in order, and your interests and intentions respected and carried out, in contexts ranging from business to healthcare. But it’s important to understand what a power of attorney is and how it works to ensure it serves those purposes.
Bill Davell: What is a power of attorney?
Jeff Fauer: Generally speaking, through a POA, a written legal document, a “principal” can grant the power, or “authority,” to an “agent” to make decisions and take action on his or her behalf.
BD: What are some different kinds of power of attorney?
JF: A limited POA gives an agent authority in a specific area or over a specific asset. Limited POAs are frequently used, for example, in real-estate closings when a buyer or seller cannot be physically present.
A general POA can provide broad powers to act on behalf of the principal, including financial decisions, asset management, signing deeds, entering contracts, even making gifts and creating trusts. A specific list of activities the agent is empowered to undertake is typically included in the document.
A durable POA, although it takes effect immediately, is designed to remain effective when the principal becomes mentally incapacitated, unfit or unable to make decisions for herself or himself. A durable POA is a therefore a staple of elder care planning, with a trusted loved one or child often granted authority to act on the principal’s behalf.
A medical power of attorney, commonly referred to as a designation of healthcare surrogate, gives the agent authority to communicate with doctors who might otherwise be constrained by HIPAA, and to make healthcare decisions on behalf of the principal.
BD: How do I make sure my agent under a power of attorney acts according to my wishes and in my best interests?
JF: That’s an important question, as once a power of attorney is executed, the agent can act and third parties can rely upon the POA alone.
It all starts with choosing an agent you trust, frequently either a family member, a colleague or someone you know well.
An agent also has a duty to act as a “fiduciary,” which under Florida statutes essentially means he or she must act:
- within the scope of the authority you grant
- in “good faith” – meaning dealing honestly, and
- not contrary to your best interest, or to your reasonable expectations as actually known by the agent.
In the last instance, it is best whenever possible to commit your expectations and wishes to writing, so they are clearly known to the agent.
If an agent breaches this fiduciary duty, for example through monetary transfers or self-dealing that benefit the agent at your expense, you have the ability to seek legal recourse.
BD: How long does a power of attorney last? Can it be revoked?
JF: Unless the POA is durable, a POA will last until the principal becomes incapacitated or dies. Durable POAs remain effective even in the event of incapacity. All POA’s terminate immediately upon the death of the principal. The agent cannot settle a decedent’s estate, sign documents, or pay final bills using a POA.
So long as the principal remains competent to make decisions, they can revoke the POA or remove the agent at any time through a revocation of the power of attorney. If the agent oversteps their bounds, they can be removed.
Tripp Scott’s teams are here to help with issues surrounding powers of attorney preparation and execution as part of our practices in Estate Planning and Probate, and Probate and Trust Litigation.
If you have any topics you think my be of interest to our readers, we encourage you to email us at [email protected]
Read more Ask Bill at: https://www.goodnewsfl.org/author/william-c-davell/