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Planning may be easier with durable power of attorney

By GREGORY GAY
Published September 27, 2005

People need to plan how their business affairs will be managed should they develop dementia and become unable to make informed business decisions.

In some cases a durable power of attorney may be best. A durable power of attorney is a written document in which an individual designates another to transact her business.

The person who creates the document is referred to as the principal. The person granted the authority to transact business for the principal is referred to as the attorney-in-fact or the agent. The attorney-in-fact has the full authority to perform, without prior court approval, every action authorized in the durable power of attorney. This authorization may even include the authority to sell or mortgage the principal's real property, including his homestead. A durable power of attorney can avoid the need to appoint a property guardian.

Use of the durable power of attorney is becoming more prevalent at real estate closings because sometimes a spouse or a parent is no longer be competent to sign the deed that conveys the homestead. Problems can arise at the closing if the original durable power cannot be located.

Florida laws state that no conveyance, lease or mortgage created by any power of attorney is valid unless it is recorded before the deed, lease or mortgage in the clerk of court's real estate records. The law does not authorize recording a copy of the power of attorney or a notarized copy of it.

Many title insurance agents will not be able to close a sale if the original durable power of attorney cannot be presented during the closing. This may lead to establishing a guardianship simply to obtain legal authority to sign the deed that conveys the incapacitated person's interest in the property. However, a guardianship proceeding is expensive and will normally delay the closing.

Where a person stores the original durable power of attorney is extremely important. Lawyers normally recommend that the original document be stored in a safe deposit box at a bank and that the person named as the agent be named as a co-lessee of the safe deposit box. Naming the agent as the co-lessee allows the person to quickly gain access to the safe deposit box if the principal is unable to retrieve the original durable power of attorney.

A durable power of attorney must be in writing; it must be signed by the person creating it in the presence of two adult witnesses and a notary public. The agent may continue to transact business for the principal until the principal dies, revokes the power, or is determined by a court to be incapacitated.

The Florida statutes require the durable power of attorney to contain the words: "This durable power of attorney is not affected by the subsequent incapacity of the principal," or similar words that show the authority conferred on the agent, may be exercised despite the principal's subsequent incapacity.

Sometimes an agent is required to attach a notarized copy of the durable power of attorney to a stock transfer form or an annuity form. The Florida statutes do permit a notary to supervise making a photocopy of an original document and to attest to the copy's validity, provided the document is neither a vital record in this state, another state, a territory of the United States, or another country, nor a public record.

-- Gregory G. Gay is a lawyer who specializes in elder law in Pasco, Hernando and Citrus counties. Write him in care of Seniority, St. Petersburg Times, P.O. Box 1121, St. Petersburg, FL 33731.

[Last modified September 26, 2005, 20:31:06]