Power of Attorney Abuse

Powers of attorney are incredibly useful documents, which allow an individual to delegate decision-making to another. Durable powers of attorney are a common component to a Florida estate plan. However, a POA can also be the most “dangerous” document in the world. Why? Because sometimes bad people do bad things with a durable power of attorney in Florida and take money. You mean that people who are the power of attorney steal money in Florida? Sadly, the answer is “yes.” Just ask any Florida guardianship attorney or probate litigator. Many times, a senior citizen or elderly person who may have dementia ,or need a guardianship, is taken advantage of by one who gets a power of attorney. Yes, while a power of attorney document is an important part of your estate plan, when a POA is in the wrong hands, Florida probate litigation law firms have witnessed civil theft, financial exploitation and elder financial abuse. Family members have experienced loss of money, bank accounts and real estate when a power of attorney falls into the wrong hands. How can a Florida legal document be so good and possible dangerous or bad at the same time? POA’s can be mis-used and abused, and used fraudulently. Bad powers of attorney engage in acts of self-dealing, when they are really supposed to serve the person they agreed to help. A power of attorney in Florida is a fiduciary who is supposed to use the POA only for the purpose of helping the person who created the durable power of attorney. After all, a Florida power of attorney is not supposed to steal money, get rich, or take advantage of a senior citizen. In that instance the agent (“attorney-in-fact”) benefits to the detriment of the principal and, often the principal’s family and heirs.

In 2011, Florida got a new power of attorney law. Florida significantly modified Chapter 709 to create its Florida Uniform Power of Attorney Act.

Florida’s “new” Power of Attorney Law pertains to both durable and nondurable powers of attorney; the distinction between the two being that a durable power of attorney does not terminate upon the incapacity of the principal. The distinction is important; a durable power of attorney may provide a basis to avoid implementation of a guardianship whereas a nondurable power of attorney would become invalid upon a finding of incapacity of the principal.

As per F.S. 709.2114(1) the agent named in a power of attorney is a fiduciary; he or she thus has the duties of loyalty and accounting to the principal. Notwithstanding the provisions in the power of attorney, an agent who has accepted appointment:

(a) Must act only within the scope of authority granted in the power of attorney. In exercising that authority, the agent:

1. May not act contrary to the principal’s reasonable expectations actually known by the agent;

2. Must act in good faith;

3. May not act in a manner that is contrary to the principal’s best interest, except as provided in paragraph (2)(d) and s. 709.2202; and

4. Must attempt to preserve the principal’s estate plan, to the extent actually known by the agent, if preserving the plan is consistent with the principal’s best interest based on all relevant factors, including:

a. The value and nature of the principal’s property;

b. The principal’s foreseeable obligations and need for maintenance;

c. Minimization of taxes, including income, estate, inheritance, generation-skipping transfer, and gift taxes;

d. Eligibility for a benefit, a program, or assistance under a statute or rule; and

e. The principal’s personal history of making or joining in making gifts;

(b) May not delegate authority to a third person except as authorized under s. 518.112 or this part or by executing a power of attorney on a form prescribed by a government or governmental subdivision, agency, or instrumentality for a governmental purpose;

(c) Must keep a record of all receipts, disbursements, and transactions made on behalf of the principal; and

(d) Must create and maintain an accurate inventory each time the agent accesses the principal’s safe-deposit box, if the power of attorney authorizes the agent to access the box.

(2) Except as otherwise provided in the power of attorney, an agent who has accepted appointment shall:

(a) Act loyally for the sole benefit of the principal;

(b) Act so as not to create a conflict of interest that impairs the agent’s ability to act impartially in the principal’s best interest;

(c) Act with the care, competence, and diligence ordinarily exercised by agents in similar circumstances; and

(d) Cooperate with a person who has authority to make health care decisions for the principal in order to carry out the principal’s reasonable expectations to the extent actually known by the agent and, otherwise, act in the principal’s best interest.

(3) An agent who acts in good faith is not liable to any beneficiary of the principal’s estate plan for failure to preserve the plan.

(4) If an agent is selected by the principal because of special skills or expertise possessed by the agent or in reliance on the agent’s representation that the agent has special skills or expertise, the special skills or expertise must be considered in determining whether the agent has acted with care, competence, and diligence under the circumstances.

(5) Absent a breach of duty to the principal, an agent is not liable if the value of the principal’s property declines.

(6) Except as otherwise provided in the power of attorney, an agent is not required to disclose receipts, disbursements, transactions conducted on behalf of the principal, or safe-deposit box inventories, unless ordered by a court or requested by the principal, a court-appointed guardian, another fiduciary acting for the principal, a governmental agency having authority to protect the welfare of the principal, or, upon the death of the principal, by the personal representative or successor in interest of the principal’s estate. If requested, the agent must comply with the request within 60 days or provide a writing or other record substantiating why additional time is needed and comply with the request within an additional 60 days.

Florida Stat. § 709.2202 is a very powerful provision, although it must be noted that it does not apply to a power of attorney executed before October 1, 2011. This statute allows an agent to exercise certain rights but only if the principal signed or initialed next to each specific grant of the authority and the agent is not otherwise prohibited by another agreement or instrument. Can a Florida power of attorney make gifts to himself or herself? Can the Florida power of attorney change your beneficiaries on IRA’s, bank accounts, pay on death accounts and similar beneficiary designation accounts or properties? This is a very HOT topic for not only Florida estate litigators and attorneys, but also for estate planning lawyers. What gift rights or beneficiary rights can someone give to a power of attorney under Florida’s new law by “checking a box?” These rights include: creating an inter vivos trust, changing rights of survivorship, and changing a beneficiary designation. Do you want your power of attorney to take your daughter off the bank account title and put your power of attorneys’ daughter on the account? Do you want your power of attorney to change your IRA or retirement account beneficiary from your girlfriend to her boyfriend? The statute codified decades of caselaw regarding the necessity to strictly construe a power of attorney. As the Florida appeals court, for a power of attorney appeal, said in Dingle v. Prikhdina, 59 So. 3d 326, 328 (Fla. 5th DCA 2011):

Generally, the rule is that a power of attorney must be strictly construed and the instrument will be held to grant only those powers which are specified. Bloom v. Weiser, 348 So.2d 651, 653 (Fla. 3d DCA 1977). An agent cannot make a gift of his principal’s property to himself or others unless it is expressly authorized in the power. James v. James, 843 So.2d 304, 308 (Fla. 5th DCA 2003). A general power does not include the power to make a gift. See Johnson v. Fraccacreta, 348 So.2d 570 (Fla. 4th DCA 1977).Here, the power of attorney clearly included the power to convey real property, however, it did not specifically authorize its use to make a gift.

In Johnson, the Fourth District court reversed a summary judgment that had upheld a transfer pursuant to a power of attorney. There, a decedent owned real property during her lifetime and executed a power of attorney, appointing her daughter as her attorney in fact. The power of attorney gave the daughter the power to: “Bargain, sell, release, convey and mortgage lands … upon such terms and conditions, and under such covenants, as she shall think fit and also for me and in my name as my act and deed to sign, sell, execute and deliver and acknowledge such deeds….” Id. at 571. As attorney in fact, the daughter executed a warranty deed conveying the decedent’s property to the decedent and her husband as tenants by the entireties. The decedent died several months later.

The Fourth District concluded that no language in the subject power of attorney expressly or impliedly indicated an intention to authorize a gift of an interest in the principal’s property to the husband. An agent has no power to make a gift of his principal’s property unless that power is expressly conferred upon the agent by the instrument or unless such power arises as a necessary implication from the powers which are expressly conferred.

A power of attorney can be abused by exceeding its authority under the document, but likewise by the agent engaging in self-dealing, which constitutes a breach of their role as a fiduciary pursuant to Fla. Stat. § 709.2114(1). If you suspect improprieties by an agent under a power of attorney, an experienced probate litigator can assist in obtaining the necessary documents to help determine whether a cause of action exists for recovery of those assets.