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Uncategorized Dec 17, 2013

Did someone you know use a Florida power of attorney to take someone’s assets or money?

Was a Florida power of attorney mis-used, and were Palm Beach bank accounts, Miami brokerage accounts, and Aventura financial accounts re-titled or taken from you or someone you love?

A Florida durable power of attorney is one of those legal relationships, expressed in a written document, that can be amazingly helpful for an individual, such as a Florida resident. But there are two sides to that coin. Powers of attorney can pose risk when the power of attorney is in the wrong hands. Putting it bluntly, people misuse powers of attorney to take money. Is a power of attorney a license to steal?

A Florida power of attorney is a written document that permits you, the creator, to give someone, called an attorney-in-fact, or an agent, the authority to do certain things. The list of things that a Florida resident may permit someone to do under a power of attorney may be very limited. For example, a person may grant to you the authority to file his or her federal income taxes, or to pay your Palm Beach County real estate taxes on an annual basis. Pretty harmless, right? Yes, as long as your attorney in fact doesn’t tried to exceed his or her authority, and as long as a person or a financial institution which is presented with the power of attorney actually reads the Florida power of attorney and understands the limited nature of your Florida power of attorney.

However, powers of attorney pose a risk.   Will the power of attorney be used to steal your money?  Change your beneficiaries?

Florida powers of attorney may be very broad. You may give great authority to your attorney in fact. This is very common. Florida estate planning attorneys draft, prepare and help execute, powers of attorney which permit your Florida agent, or attorney-in-fact, to perform many, many acts for you. It is common for a Florida attorney-in-fact to be able to perform a laundry list of acts if you are incapacitated. Durable powers of attorney, when in the right hands, and when drafted properly, can provide you with management of your financial and other affairs during your incapacity. If you are incompetent, or just need a little help with your day-to-day living, or with your financial affairs, a power of attorney in the right hands can be an incredible help.

A power of attorney can also govern you and your financial affairs if somebody wants to create a guardianship of your property. Guardianship courts generally cannot permit a guardianship to be established for your property if you have a valid Florida power of attorney. That’s because a power of attorney in Florida is considered to be a lesser restrictive alternative to a full-blown, court intervention guardianship. When presented with a guardianship lawsuit, a guardianship court judge will ask you if you ever had a power of attorney. If there is a valid power of attorney, the court will often understand that you have already chosen, in essence, who is going to be the guardian of your property if you are incapacitated, or, simply need help with your financial affairs, like paying your bills— your Florida attorney in fact. So, the short of it is, if you have a valid power of attorney, if somebody files a guardianship action saying that you are incapacitated, you should be able to have that guardianship dismissed, because you’re Florida power of attorney should prevail.  There are many issues surrounding a guardianship action in Florida. There is a guardianship of the person, and a guardianship of the property, and there may be a guardianship of both your person and property. You should have a full understanding of how your Florida power of attorney will function if there is a guardianship lawsuit.

So let’s get back to whether or not the power of attorney is a power to steal.

An attorney-in-fact, in Florida, is a fiduciary. Florida law places the greatest burdens found in the law upon a fiduciary. Your agent, your attorney in fact, your fiduciary under the power of attorney document is required to take actions in your best interests. Although the attorney-in-fact, in limited circumstances, may be entitled to some compensation, an attorney-in-fact should not benefit from his or her service to you. Put another way: in Florida, under your power of attorney, an attorney in fact must place your interests above everybody else’s —including your agent’s own interests. That’s what it means to be a fiduciary in Florida.

What does this mean? It means your fiduciary under your Florida power of attorney can’t steal from you. Your Florida attorney-in-fact can’t take your bank accounts, can’t retitle your Fort Lauderdale brokerage accounts, can’t steal from you. A Florida attorney-in-fact is only supposed to take steps and actions with your Florida power of attorney that helps you.

A Florida durable power of attorney is not a license to steal. However, we all know this happens. So here are three quick tips for Florida powers of attorney. One, choose your attorney-in-fact very, very carefully. Make sure that person is someone you absolutely trust. And, also have alternatives in place. List backup attorneys in fact in case someone you nominated to serve as your attorney-in-fact is unable or unwilling to serve. If you don’t have someone you can absolutely trust, speak to an experienced and qualified estate planning attorney who can assist you with finding an attorney-in-fact.  If one cannot be found, he or she may have suggestions for how to manage your property if you become incapacitated, such as funding a Florida revocable trust or a living trust. Two, you should spell out, in your Florida power of attorney document, on the front page, and in capital letters, bold, large font:  MY ATTORNEY-IN-FACT MAY NOT STEAL FROM ME OR TAKE MY ASSETS. MY ATTORNEY IN FACT MAY NOT USE MY POWER OF ATTORNEY DOCUMENT FOR HIS OR HER OWN BENEFIT.  MY ATTORNEY IN FACT MAY NOT TRANSFER FUNDS TO HIS OR HER INDIVIDUAL NAME OR ACCOUNT, MAY NOT RE-TITLE MY ASSETS INTO AN ACOUNT WITH HER SOLE NAME, MAY NOT GIVE HERSELF MY PROPERTY AND MAY NOT TRANSFER PROPERTY TO HIS FAMILY MEMBERS.

Finally, you should make a determination as to whether your power of attorney document will permit your Florida attorney-in-fact to change beneficiary designations. Do you want to give to your Florida attorney-in-fact the authority to determine who will inherit some of your assets? For example, if there is a beneficiary named on a bank account or an annuity, or your IRA, do you want your attorney-in-fact to have the power to change that beneficiary?

The issues raised in this commentary should be discussed in depth with your estate planning attorney in Florida. Take the time to carefully review your power of attorney document, to consider, and reconsider, who you have named as your attorney-in-fact, or Florida fiduciary, and review with your Florida estate planning lawyer the powers which you have given to your attorney in fact or those powers which you want to give to your Florida attorney-in-fact. You may find out after some careful and thoughtful analysis and consideration, that you need a new power of attorney document, new attorneys in fact, or you need to restrict the power and authority of your Florida attorney-in-fact.

In the end, it’s your money. Everyone who you hire, or who you ask to serve in a fiduciary capacity, should be looking out for you, and attending to your needs and wishes. Your attorney in fact should not be acting in their self-interest. Be smart. Be cautious. And be careful. It’s your money. And as my dad used to say, since he came back from the Pacific in World War II—– for every guy that’s staying up late at night thinking of a way to make a buck, there’s 10 guys thinking of a way to steal it.