The short answer is yes. If a Power of Attorney was validly created in another state, then the Power of Attorney is valid here in Florida. However, many out of state Powers of Attorney do not comply with Florida law. We often advise clients to have the Power of Attorney updated. This article will explore why you should update an out of state Power of Attorney and also provide some options if a third party or financial institution denies your out of state Power of Attorney.
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Why Should I Update an Out of State Power of Attorney if I live in Florida?
The Power of Attorney is an extremely important and powerful document that allows a selected third party (or multiple third parties) to manage your property and financial affairs. This third party can manage your bank accounts, sell or buy property on your behalf, move around investments, decide how your assets should be used for your benefit, and make a number of other extremely important decisions about your finances.
Because the Power of Attorney is such an important document, it is highly scrutinized by financial institutions and other third parties. Financial institutions in Florida frequently deny out of state Powers of Attorney because they do not contain “super powers,” or the Power of Attorneys are a few pages long and just grant extremely broad powers to the Power of Attorney.
How Do Out of State Powers of Attorney Not Meet Florida Law?
The Florida Power of Attorney laws significantly changed in 2011. The most important change is that the new Florida Power of Attorney laws created what we call the super powers. These super powers are powers that the legislature deemed so important that each super power must be clearly expressed in the Power of Attorney AND the super power must be initialed next to by the Power of Attorney creator.
If a super power is expressly stated your Power of Attorney, but it is not initialed, then your Power of Attorney will not be able to perform that super power on your behalf. This is extremely important because if you no longer have capacity to update your Power of Attorney, then a guardianship (very expensive and time consuming) must be sought so that your Power of Attorney can perform that super power.
Here’s a quick list of super powers designated by the Florida Statutes that must you must sign or initial next to in order for your Power of Attorney to exercise these powers:
- Create an inter vivos trust (also known as a living trust or a revocable trust);
- Amend, modify, revoke, or terminate a trust;
- Make a gift
- Create or change rights of survivorship
- Create or change a beneficiary designation
- Waive the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor annuity, including a survivor benefit under a retirement plan;
- Disclaim property and powers of appointment
You may be wondering, what does all of this mean and how does it affect me? I have never seen an out of state Power of Attorney document that had these powers listed where the creator needed to initial or sign next to each power. This would mean that if your Power of Attorney had to create a trust on your behalf here in Florida, the Power of Attorney would not be able to do so because your out of state Power of Attorney document does not have your initial or signature next to the create a trust power.
Here’s a real life example of how an out of state Power of Attorney might hurt you here in Florida:
A client’s Mom was incapacitated and she needed to be placed into a nursing home here in Florida. The nursing home cost roughly $9,500 per month. The client hired us to do Medicaid planning for her Mom so that we could preserve all of Mom’s remaining assets so that her life savings would not be spent down after a year in the nursing home.
The first thing we asked for was the Mom’s Power of Attorney. Mom had a typical 4-5 page out of state Power of Attorney that was created a few years before Mom’s incapacity. Mom was unfortunately slightly over income for Medicaid and we needed to create a Qualified Income Trust (QIT) so that Mom could qualify for Florida Medicaid.
Because the out of state Power of Attorney did not have Mom’s initials or signature next to the power to create a trust, we had to establish a guardianship—$8,000 to $10,000 just to set up—so that our client could establish a QIT and save Mom’s assets from the nursing home.
Can a Third Party or Financial Institution/Bank Deny My Out of State Power of Attorney in Florida?
The short answer is yes. A third party can reject a out of state Power of Attorney in Florida within a “reasonable time.” This typically means for business days for financial institutions/banks. The third party must provide a written statement that explains their reasoning for denying the Power of Attorney. A third party can also ask for an affidavit from the Power of Attorney stating that the Power of Attorney is in effect.
What Happens if a Third Party or Financial Institution/Bank Denies an Out of State Power of Attorney in Florida?
If a third party or financial institution denies an out of state Power of Attorney here in Florida, then the Power of Attorney can sue the third party to force the third party to comply with the Power of Attorney. The third party can be liable for damages—including court costs and attorney’s fees—if the Power of Attorney prevails in the lawsuit.
However, lawsuits cost a lot of money and take a lot of time. If a Power of Attorney needs to act immediately (e.g. sell property or do Medicaid planning), then a lawsuit is likely not practical. The best option is usually to have the creator of the Power of Attorney sign and execute a new Florida Durable Power of Attorney so that the agent can act immediately. This option will only work if the creator of the Power of Attorney has the legal capacity to sign and execute a new Florida Durable Power of Attorney.
If the creator of the Power of Attorney does not have capacity, then a licensed Florida estate planning or elder law attorney may have some success with the third party’s legal department or management team to try and get them to accept the out of state Power of Attorney. This option can be effective if the out of state Power of Attorney complies with Florida law.