Using the Power of Attorney
When is a power of attorney effective?
The power of attorney is effective as soon as the principal signs it. However, a durable power of attorney executed before Oct. 1, 2011, that is contingent on the incapacity of the principal (sometimes called a “springing” power) remains valid but is not effective until the principal’s incapacity has been certified by a physician.
Must the principal deliver the power of attorney to the agent right after signing or may the principal wait until such time as the services of the agent are needed?
The principal may hold the power of attorney document until such time as help is needed and then give it to the agent. Often, a lawyer may fulfill this important role. For example, the principal may leave the power of attorney with the lawyer who prepared it, asking the lawyer to deliver it to the agent under certain specific conditions. Because the lawyer may not know if and when the principal is incapacitated, the principal should let the agent know that the lawyer has retained the signed document and will deliver it as directed. If the principal does not want the agent to be able to use the power of attorney until it is delivered, the power of attorney should clearly require the agent to possess the original, because copies of signed powers of attorney are sufficient for acceptance by third parties.
How does the agent initiate decision-making authority under the power of attorney?
The agent should review the power of attorney document carefully to determine what authority the principal granted. After being certain that the power of attorney gives the agent the authority to act, the power of attorney (or a copy) should be taken to the third party (the bank or other institution, or person with whom the principal needs to deal). Some third parties may ask the agent to sign a document such as an affidavit, stating that the agent is acting properly. (The agent may wish to consult with a lawyer before signing such a document.) The third party should accept the power of attorney and allow the agent to act for the principal. An agent should always make it clear that documents are being signed on behalf of the principal.
How should the agent sign when acting as an agent?
The agent will always want to add after his or her signature that the document is being signed “as agent for” the principal. If the agent signs only his or her own name, the agent may be held personally responsible for whatever was signed. As long as the signature clearly indicates that the document is being signed in a representative capacity and not personally, the agent is protected. Though lengthy, it is, therefore, best to sign as follows:
Howard Rourk, as agent for Ellsworth Toohey. (In this example, Howard Rourk is the agent, and Ellsworth Toohey is the principal.)
What if the third party will not accept the power of attorney?
If the power of attorney was lawfully executed and it has not been revoked, suspended or terminated, third parties may be forced to honor the document. The third party is required to give the agent a written explanation of the refusal to accept the power of attorney within a reasonable time after it is presented to the third party.
Under some circumstances, if the third party’s refusal to honor the power of attorney causes damage, the third party may be liable for those damages and even attorney’s fees and court costs. Even a mere delay may cause damage, and this, too, may be actionable. It is reasonable, however, for the third party to have the time to consult with a lawyer or an internal legal department about the power of attorney. Delay for more than a short period may be unreasonable. Upon refusal or unreasonable delay, consult an attorney.
Why do third parties sometimes refuse powers of attorney?
Third parties are often concerned whether the document is valid. They do not know if it was executed properly or forged. They do not know if it has been revoked. They do not know if the principal was competent at the time the power of attorney was signed. They do not know whether the principal has died. Third parties do not want liability for the improper use of the document. Some third parties refuse to honor powers of attorney because they believe they are protecting the principal from possible unscrupulous conduct. If your power of attorney is refused, talk to your attorney.
What if a third party requires the agent to sign an affidavit before honoring the power of attorney?
A third party is authorized by Florida law to require the agent to sign an affidavit (a sworn or an affirmed written statement), stating that the agent is validly exercising the authority under the power of attorney. If the agent wants to use the power of attorney, the agent may need to sign the affidavit if so requested by the third party. The purpose of the affidavit is to relieve the third party of liability for accepting an invalid power of attorney. As long as the statements in the affidavit are true at that time, the agent may sign it. The agent may wish to consult with a lawyer before signing it.
What else may the third party require?
A third party also may make a reasonable request for an opinion of counsel as to any legal matter concerning the power of attorney, including its proper execution under the laws of another state. A third party may request a certified English translation if any part of the power of attorney is in a language other than English.
May the agent employ others for assistance?
Yes. The agent may hire accountants, lawyers, brokers or other professionals to help with the agent’s duties but generally may not delegate the responsibilities as agent. The power of attorney was given by the principal to the agent, and the agent does not have the right to transfer that power to anyone else. It is important that the agent keep in mind the fiduciary duties when hiring professionals to help. The agent is allowed to delegate investment responsibility if the requirements of Florida Statutes Section 518.11 are followed by the agent, unless the power of attorney prohibits such a delegation.