A power of attorney is document in which the principal (person granting the authority) grants to another person (the agent) the ability to act legally for the principal. A power of attorney may be broad in scope giving the agent the ability to perform almost any legal act that the principal could do, or it may be a very narrow power such as granting the agent the ability to write utility checks from a principal’s bank account. Powers of attorney may be created for business purposes or they may be created for health care purposes. Under prior law, powers of attorney were deemed to terminate upon the disability of the principal. Subsequent legislation has provided that the principal may incorporate language into the power of attorney document which provides that the disability of the principal shall not affect the validity of the agent’s continuing ability to act under the power of attorney. This type of language if included in the power of attorney document makes the power “durable” in that the power of attorney survives the principal’s subsequent incompetence. Powers of attorney terminate upon the death of the agent.
One of the most important things to understand about a power of attorney is that there is no excuse for not reading the power of attorney before you sign it. Words mean things. Persons who have a power of attorney explained to them as “boilerplate” or “generic” must understand that they are signing a document which in many cases gives the agent broad powers over their persons and or estates. Before you sign a power of attorney you should read and understand the authority you are giving to your agent.
Florida in October of 2011 and Ohio in March of 2012 have both revisited their power of attorney statutes in an attempt to clarify some of the grey areas in prior legislation. The primary grey area was what was meant by a general grant of authority in any one area. For example, under the recent legislation Ohio has provided that a general grant of authority for real estate without further explanatory text is deemed to incorporate the agent’s ability to sell, exchange, convey, quitclaim, release, surrender, retain title for security, encumber, partition, consent to partition, subject to an easement, subdivide, apply for zoning, plat or consent to platting, develop, grant options, lease, sublease, contribute to an entity in exchange for ownership in that entity, mortgage, execute deeds, insure, deal with all tax matters relating to the property, install or remove structures, change the form of ownership and or dedicate the property to public use.
In addition Ohio and Florida have provided that certain areas pertaining to grants of authority will not be deemed to be automatic. See Florida Statutes § 709 (2011), at www.leg.state.fl.us/statutes; and Ohio Revised Code § 1337 (2012), at www.codes.ohio.gov/orc. For these areas the principal must place his or her initial beside the pertinent provision for that ability to be included among the agent’s authority powers. These areas include the agent’s authority to create trusts, amend or terminate existing trusts, make gifts, create or change rights of survivorship, create or change beneficiary designations, delegate authority granted a power of attorney, waive the principal’s right to be a beneficiary under certain investments, and to exercise any fiduciary powers that the principal has the authority to delegate.
Florida has undertaken additional legislation which provides that a third party who rejects an agent’s ability to act under a power of attorney must explain in writing why he or she rejects the agent’s authority to act in a given situation. If it is proven that the rejection of the agent’s authority is rejected without demonstrated cause, in certain circumstances the rejecting third party may be held accountable in damages.
Powers of attorney given prior the enactment dates of the new legislation should still be honored for the purposes for which they were intended. However, it is prudent for everyone to review any existing powers of attorney they may have given to any agent and consider re-executing old powers to conform with the new laws now in effect. Many previously “grey areas” in the law are now clarified by the new legislation.
This article was written by David F. Bacon, Attorney licensed in Ohio and Florida. David Bacon, Jeffrey Roth, and Jessica Moon are members in the law firm of Roth and Bacon Attorneys, LLC. Their Offices are located in Upper Sandusky, Marion, and Port Clinton, Ohio, and Fort Myers, Florida. They have focused their practice to provide estate and business planning concepts to their clients. Nothing in this article is intended for, nor should be relied upon as individual legal advice. The purpose of this article is to help educate the public on concepts of law as they pertain to estate and business planning. Copyright @ David F. Bacon 2012.