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T HE 15 M INUTE G UIDE TO THE NEW F LORIDA P OWER OF A TTORNEY A CT – E SSENTIAL I NFORMATION ON I MPORTANT C HANGES T UESDAY, A UGUST 30, 2011 5:30 P.

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Presentation on theme: "T HE 15 M INUTE G UIDE TO THE NEW F LORIDA P OWER OF A TTORNEY A CT – E SSENTIAL I NFORMATION ON I MPORTANT C HANGES T UESDAY, A UGUST 30, 2011 5:30 P."— Presentation transcript:

1 T HE 15 M INUTE G UIDE TO THE NEW F LORIDA P OWER OF A TTORNEY A CT – E SSENTIAL I NFORMATION ON I MPORTANT C HANGES T UESDAY, A UGUST 30, :30 P. M. Alan S. Gassman, Esq. Recordings of this webinar and additional materials can be found at: Copyright © 2011 Christopher J. Denicolo, Esq.

2 T ABLE OF C ONTENTS Page Citations Initial Summary………………… New Features of the Law…………………………………………………………………………………………………….……………………8 5 Catastrophes That Can Happen as a Result of the New Florida Durable Power of Attorney Act…………………….…………………9 Durable Power of Attorney Basics……………………………………………………………………………………………………………….10 New Law: Springing Powers of Attorney..………………………………………………………………………………………………………13 Florida Statute Section ………………..………………………………………………………………………………………………..14 Military Powers of Attorney Can Spring…………………………………………………………………………………….……………………15 Avoiding Financial Scams……………...…………………………………………………………………………………………...……..………19 New Law: Authority of Agents – Powers Requiring Separate Signed Enumeration……………………………………..…………………20 Federal Tax Implications of Agents authority……………………………………………………………………………………………..……21 New Law: Agents – Modifiable Duties……………………………………………………………………………………………………………22 New Law: Agents – Mandatory Duties……………………………………………………………………………………………..…………….23 A Power of Attorney Agent Log……………………………………………………………………………………………..……………….……25 Liability of Agents……………………………………………………………………………………………………..……………………………26 Author Biographies…………………………………………………………………………………………………………………………………32 Copyright ©

3 Riders on the Storm: How To Make Sure Your Insurances Do Not Have Any Catastrophic Exceptions Monday, September 12, 2011 at 5:30 p.m. Speakers: Alan Gassman and Chuck Wasson To register please visit: https://www2.gotomeeting.com/register/ Special Planning Needs for Doctors Who Are Married To Doctors Monday, September 19, 2011 at 5:30 p.m. Speakers: Alan Gassman and Lester Perling To register please visit: https://www2.gotomeeting.com/register/ Keeping Your Practice Independent in the Age of Big Medicine Tampa Bay MGMA Seminar Thursday, September 15, 2011 at 2:00 p.m. Speakers: Alan Gassman and Fred Simmons To register please 3 U PCOMING W EBINARS & S EMINARS Copyright © 2011

4 PREVIOUSLY RECORDED WEBINARS: To view these webinars and download the accompanying PowerPoint presentations please visit: Giving A Deposition? What Doctors Need to Know Helter Shelter – Understanding Credit Shelter Trusts Under the New Estate Tax Law Understanding ACOs in 30 Minutes – A Physicians Guide How to Advise Clients Under the New Estate Tax Law Unannounced Medicare Audits – What To Do If Investigators Come To Your Office A Medicare Practice Compliance Paperwork Checklist for Medical Practices What Has Just Changed With Regard To Undisclosed Foreign Accounts When & How To Terminate A Questionable Employee Protecting Medical Practices From Creditors – General Strategies and Common Mistakes Creditor Protection for the Single Floridian Creditor Protection for the Single Physician For Couples Only – All About Tenancy By The Entireties – When To Use It – When To Lose It How Medical Practices Can Respond to the New Healthcare Law and Eminent Changes Malpractice Litigation Defense Strategies for Florida Physicians Cornflakes and Estate Planning Mistakes New Healthcare Price Transparency Bill How the New Pain Care Clinic Regulations Affect Your Medical Practice Major Changes in the New Florida Power of Attorney Law – What You Need to Know – With a View From The Bench 4 Copyright © 2011

5 All proceeds go to the Clearwater Bar. 5 Copyright © 2011

6 C ITATIONS Florida law governing powers of attorney and similar instruments is in Chapter 709 of Florida Statutes. Florida legislature passed SB 670 to significantly revise Chapter 709. SB 670 was signed by Governor Rick Scott on June 21, Codified as Ch , Laws of Florida. Effective: October 1, 2011 The text of this bill is available at: Article by Tami Conetta can be found at Article by Matthew Ahearn can be found at ct.pdf. Article by Florida Bar Real Property, Probate, & Trust Law Section, with additions by Charlie Robinson can be found at although written pre- adoption of the statute. Article on avoiding financial scams can be found at Military powers of attorney are covered by 10 U.S.C. § 1044b, discussed on pages 19 and Copyright © 2011

7 I NITIAL S UMMARY Powers of Attorney grandfathered under the new law: A power of attorney executed before October 1, 2011, if its execution complied with Florida law. A power of attorney executed in another state, if its execution complied with the law of that state. The certain powers that require separate signed enumeration in the new law do not apply to a power of attorney executed before October 1, Changes to the formalities of execution do not apply to a power of attorney created before October 1, Rights acquired by a qualified agent under a power of attorney existing on October 1, 2011 are not affected by the new law, and any power of attorney that is in existence on October 1, 2011 is not invalidated. The new law does not affect conduct of an agent occurring before October 1, Copyright © 2011

8 N EW F EATURES OF THE L AW A power of attorney executed in Florida on or after October 1, 2011, is valid if its execution complies with § A power of attorney executed in Florida before October 1, 2011, is valid if its execution complied with the law of Florida at the time of execution. A power of attorney executed in another state (even if it does not comply with Floridas requirements) is valid if its execution complied with the law of the state of execution at the time of execution The statute is not clear whether a springing power of attorney validly executed and permitted under the law of another state will be effective in Florida after October 1 st, but probably not. See pages 1722 on springing powers of attorney. A military power of attorney is valid if it is executed in accordance with 10 U.S.C. § 1044(b). A deployment contingent power of attorney may be signed in advanced and is effective on the deployment of the principal (also discussed on pages 19 and 37). A photocopy or electronically transmitted copy of an original power of attorney has the same effect as the original, except as otherwise provided in the power of attorney. 8 Copyright © 2011

9 5 C ATASTROPHES THAT CAN HAPPEN AS A RESULT OF THE NEW F LORIDA DURABLE POWER OF ATTORNEY ACT 1. Signing a springing power of attorney: will have no force or effect after Sept. 30, Authorizing the agent to conduct certain actions, without separately signing or initialing each provision, will not be sufficient to allow the agent to do any of the following: a. Create an inter vivos trust (living trust): the terms of the trust agreement may prevent amendment or termination by an agent under a power of attorney. b. Amend, revoke, or terminate a trust created by or f/b/o the principal (if the trust instrument allows it) c. Make a gift subject to § (3), see page 30; d. Create or change rights of survivorship e. Create or change a beneficiary designation f. Waive the principals rights to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan g. Disclaim property or powers of appointment 3. Executing a power of attorney after Sept. 30, 2011 without having two witnesses and a notary to each signature. a. Before October 1, 2011, two witnesses would be sufficient if the power of attorney is not a durable power of attorney, or if the agent will not be transferring real estate or signing other documents that require notarization and equal dignity. b. Note: Healthcare powers of attorney require that the two witnesses not be related to the person giving the power. 4. An agent is not eligible for compensation, unless the agent is an individual who is a Florida resident that has never been an agent for more than three principals at the same time ; or the agent is: the spouse or an heir of the principal, a financial institution that has Florida trust powers, or a Florida licensed attorney or C.P.A. How many illegal contracts will be entered into as the result of this? 5. Granting someone a power of attorney that you do not trust 100%. a. Neer well to do agents may seek to have principals sign new powers of attorney because of recent articles and publicity, and will then take advantage of them. 9 Copyright © 2011

10 D URABLE P OWER OF A TTORNEY B ASICS Durable Power of Attorney – except as otherwise provided, a power of attorney is durable if: It contains the words This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in chapter 709, Florida Statutes; or It contains similar words that show the principals intent that the authority conferred is exercisable notwithstanding the principals subsequent incapacity. If the power of attorney is silent, then it is NOT a durable power of attorney (i.e., it terminates upon the principals incapacity). Incapacity means the inability of an individual to take those actions necessary to obtain, administer, and dispose of real and personal property, intangible property, business property, benefits and income. A principal may revoke a power of attorney by expressing the revocation in a subsequently executed power of attorney or other writing signed by the principal. The principal may give notice of the revocation to an agent who has accepted authority under the revoked power of attorney. The execution of a new power of attorney does not revoke a power of attorney previously executed by the principal. 10 Copyright © 2011

11 D URABLE P OWER OF A TTORNEY B ASICS The power of attorney terminates when: Principal dies; Principal becomes incapacitated (if the power of attorney is not durable); Upon the filing for a petition of involuntary guardianship; Principal is adjudicated totally or partially incapacitated by the court; Principal revokes the power of attorney; Power of attorney provides that it terminates; The purpose of power of attorney is accomplished; or The court must look to the language of the instrument, as with any other contract, in order to ascertain its object and purpose. The language of the agreement must be construed in such a manner so as to carry out the intent of the principal.. Johnson v. Fraccacreta, 348 So.2d 570, 572 (Fla. 4th DCA 1977). NEW! – An agents authority terminates (and the power of attorney does not provide for another agent to act) if there is a dissolution or annulment action filed with respect to the marriage between the principal and agent, unless the power of attorney otherwise provides. 11 Copyright © 2011

12 D URABLE P OWER OF A TTORNEY B ASICS An agents authority is suspended when any person initiates judicial proceedings to determine the principals incapacity or voluntary guardianship. The authority will be suspended until the petition is: Dismissed, Withdrawn, or The court enters an order authorizing the agent to exercise one or more powers granted under the power of attorney. Voluntary Guardianship : Desired court supervision without a finding of mental incompetency. See Bryan v. Century Nat. Bank, 498 So.2d 868, 872 (Fla. 1986). Emergency Powers : If an emergency arises after initiation of guardianship proceedings to determine incapacity and before adjudication regarding the principals capacity, the agent may petition the court in which the proceeding is pending for authorization to exercise a power granted under the power of attorney. The petition must set forth the nature of the emergency, the property or matter involved, and the power to be exercised by the agent. Any termination or suspension is not effective as to an agent who, without knowledge of the termination or suspension, acts in good faith, and such an action would bind both the principal and principals successors in interest. 12 Copyright © 2011

13 NEW LAW: S PRINGING P OWERS OF A TTORNEY Springing powers of attorney are not effective under the new law if signed on or after October 1, A springing power of attorney is a power of attorney conditioned on the principals incapacity (or on any other future event or contingency) and has no force or effect (does not become exercisable) unless or until that date. If the power of attorney is executed in a different state on or after Oct. 1, 2011, it might be valid if that separate state specifically recognizes spring powers of attorney. See pages If executed before October 1, 2011, the springing power of attorney: Remains valid (with springing feature) A power of attorney that becomes exercisable upon incapacity can only be used after the delivery of the affidavit of a medical or osteopathic physician licensed in the state of Florida who has primary responsibility for the treatment and care of the principal. See page 18 If signed after October 1, 2011, the springing power of attorney : Is ineffective as to the entire power of attorney Exception: Military powers A deployment-contingent power of attorney will be effective (see page 19 & 37). 13 Copyright © 2011

14 F LORIDA S TATUTE S ECTION When power of attorney is effective (1) Except as provided in this section, a power of attorney is exercisable when executed. (2) If a power of attorney executed before October 1, 2011, is conditioned on the principal's lack of capacity and the power of attorney has not become exercisable before that date, the power of attorney is exercisable upon the delivery of the affidavit of a physician who has primary responsibility for the treatment and care of the principal and who is licensed to practice medicine or osteopathic medicine pursuant to chapter 458 or chapter 459 as of the date of the affidavit. The affidavit executed by the physician must state that the physician is licensed to practice medicine or osteopathic medicine pursuant to chapter 458 or chapter 459, that the physician is the primary physician who has responsibility for the treatment and care of the principal, and that the physician believes that the principal lacks the capacity to manage property. (3) Except as provided in subsection (2) and s (4), a power of attorney is ineffective if the power of attorney provides that it is to become effective at a future date or upon the occurrence of a future event or contingency. 14 Copyright © 2011

15 M ILITARY P OWERS OF A TTORNEY C AN S PRING A military power of attorney is valid if it is executed in accordance with 10 U.S.C. § 1044b. A deployment-contingent power of attorney may be signed in advance, is effective upon the deployment of the principal and shall be afforded full force and effect by the courts of this state. 10 U.S.C. § 1044b reads as follows: (a) Instruments to be given legal effect without regard to State law.--A military power of attorney (1) is exempt from any requirement of form, substance, formality, or recording that is provided for powers of attorney under the laws of a State; and (2) shall be given the same legal effect as a power of attorney prepared and executed in accordance with the laws of the State concerned. (b) Military power of attorney.--For purposes of this section, a military power of attorney is any general or special power of attorney that is notarized in accordance with section 1044a of this title or other applicable State or Federal law. (c) Statement to be included. (1) Under regulations prescribed by the Secretary concerned, each military power of attorney shall contain a statement that sets forth the provisions of subsection (a). (2) Paragraph (1) shall not be construed to make inapplicable the provisions of subsection (a) to a military power of attorney that does not include a statement described in that paragraph. (d) State defined.--In this section, the term State includes the District of Columbia, the Commonwealth of Puerto Rico, and a possession of the United States. For the rule of sale of homestead property when someone serving in the military is missing, see page Copyright © 2011

16 S PRINGING P OWERS OF A TTORNEY D ISCUSSION C ONTINUED How about an escrowed power of attorney? Can a live power of attorney be signed on or after October 1, 2011, but be entrusted to a lawyer or other professional with instructions not to deliver it to the appointed agent unless or until the principal is incapacitated or otherwise unavailable? The new statute provides that a copy of a power of attorney is equal to an original, except as otherwise provided in the power of attorney. It therefore appears that the Legislature intended that an original live power of attorney could be held in escrow and only used when the agent has received the original document, if the power of attorney provides that the agent needs the original document to act. 16 Copyright © 2011

17 S PRINGING P OWERS OF A TTORNEY D ISCUSSION C ONTINUED As a result: Many law firms will be preparing multiple power of attorneys, and escrow agreements so that the client will sign four or five identical powers of attorney, and one or more of these can be delivered to the agent when the principal becomes incapacitated or is otherwise unavailable. Alternately, clients may designate three or four people as agents and require consent among them before an action is taken to better safeguard the clients personal assets. Revocable trust arrangements will become more popular because revocable trusts can still have springing trusteeship. Assets under a revocable trust can be handled by a trustee, and the trusteeship would not change from the grantor to alternate trustee except upon an event that would otherwise apply (i.e., the incapacity or resignation of the grantor). Nevertheless, be careful with revocable trust planning. See the next slide for examples of assets that cannot or should not normally be placed under a revocable trust. 17 Copyright © 2011

18 S PRINGING P OWERS OF A TTORNEY D ISCUSSION C ONTINUED : R EVOCABLE T RUSTS Not all assets can be placed into a Revocable Trust. Life insurance needs to be owned by the insured person. § to be creditor protected. Annuity contracts need to be owned by an individual. § to be creditor protected. IRAs and pension accounts cannot be placed in trust, but may be payable to a properly drafted trust. Section 1244 Stock To qualify for ordinary loss on sale: must be issued to an individual, not a trust. 26 U.S.C. § 1244 Homestead is probably safe from creditors in a Revocable Trust. One bankruptcy court in 2001 has ruled otherwise: In re Bosonetto, M.D. Florida, stated that because a trust is not a natural person, Florida property owned by the trust is not covered by the homestead exemption. However, several cases have chosen not to follow Bosonetto: In re Edwards, 356 B.R. 807, 810 (Bankr. M.D. Fla. 2006): the great weight of the relevant case law holds to the contrary. In re Alexander, 346 B.R. 546, 551 (Bankr. M.D. Fla. 2006): Bosonetto does not cite to any Florida cases in support of its ruling nor does it account for the contrary holdings of several courts in the cases cited above. Further, it appears that subsequent cases have not followed the reasoning in Bosonetto. Engelke v. Estate of Engelke, 921 So. 2d 693 (Fla. 4 th DCA 2004): The grantor of the trust retained an ownership interest in the property since the trust was revocable. The trust, due to its revocable nature, was owned by a natural person within the meaning of the Florida homestead exemption. Tenancy by the entirety (TBE) is better creditor protection than having assets held in a revocable trust. Most joint revocable trusts will not qualify as TBE for creditor protection services. 18 Copyright © 2011

19 A VOIDING F INANCIAL S CAMS "Mr. Madoff has not only stolen my money, wrote Richard Shapiro of Hidden Hills, Calif. "He has stolen my lifestyle and my family's Lifestyle. We as a result, are sentenced to a life devoid of our life savings and the security and comfort that provided to us." Madoff Victims Vent Their Anger in Print, by Armen Keteyian, CBS News, Mar. 18, nvestigates/main shtml You never want to hear the words that come with such a phone call. "We are all wiped out." But they came, and we went numb. "I wouldn't invest a nickel in the stock market, Stephanie Halio says. "It's too dangerous, and the government is not there to protect us. […] You live your life according to what you've saved," she says. "I don't want anyone else's money. I want my money returned to me." Little Relief for Madoff Victims Many former investors won't benefit even as a trustee found surprising success recovering funds lost in Bernard Madoff's $65 billion fraud, by Ben Steverman, Bloomberg Businessweek, Jan. 11, Consider a Clause like: My agent shall invest only in Federal Deposit Insurance Corporation insured bank accounts, CDs, and other accounts, brokerage accounts with major brokerage firms that are fully insured by Security Investor Protection Corporation, and with licensed trust companies duly bonded and operating in the United States, but may retain any asset owned by me at the time that the agent begins to serve. Any such account that is invested in anything other than CDs, cash, money market, or conservative, low cost bond funds must be opened and managed whereby the brokerage firm or other institution takes on the fiduciary obligation to make or approve investment decisions by or for the appointed agent. No investments will be made in options, puts, margined accounts, or bonds or funds that invest in bonds below a AA rating with Standard & Poors, Moutons or their successors. 19 Copyright © 2011

20 N EW L AW : A UTHORITY OF A GENTS – P OWERS R EQUIRING S EPARATE S IGNED E NUMERATION For powers of attorney executed on or after October 1, 2011, certain powers must be separately acknowledged (by signature or initialing) by the principal, which are the authority to: Create an inter vivos trust (living trust): The terms of the trust agreement may prevent amendment or termination by an agent under a power of attorney. Amend, revoke, or terminate a trust created by or f/b/o the principal (if the trust instrument allows it) Make a gift subject to § (3); However, an agent who is not an ancestor, spouse, or descendant of the principal may not give themselves or someone that they are legally obligated to support any interest in the principals property, whether by gift, right of survivorship, beneficiary designation, disclaimer, or otherwise, unless the power of appointment provides to the contrary. Unless the power of attorney provides otherwise, § (3) only authorizes the agent to make of up to $13,000 per year plus an equal amount if the principal is married, plus the right to split a gift return under 26 U.S.C. 2513, unless explicitly provided otherwise. Language can be added to the power of attorney to authorize gifts in excess of the gift tax annual exclusion. Create or change rights of survivorship Create or change a beneficiary designation Waive the principals rights to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan Disclaim property or powers of appointment 20 Copyright © 2011

21 F EDERAL T AX I MPLICATIONS OF A GENTS A UTHORITY T O M AKE G IFTS Granting an agent the power to make taxable gifts under a power of attorney is not a taxable gift by the principal, so long as the power of attorney is revocable. However, the principal is considered to have made a taxable gift when the agent exercises the gifting power. The gift must be effectively delivered to the donee for it be considered as a completed gift. In most cases, this means that the property subject to the gift must actually be delivered to the donee, or to an agent of the donee. It is not clear as to whether an agent has a general power of appointment with respect to property over which the power of attorney authorizes the agent to make taxable gifts to himself or herself, or to satisfy the agents obligations. There does not appear to be a case directly on point. On one hand, a general power of appointment for federal tax purposes includes all powers that are in substance and effect powers of appointment, regardless of the nomenclature used in creating the powers. Therefore, if power of attorney gives the agent the power to make gifts to himself, or to satisfy his debts, then the agent may have a general power of appointment, and such property would be included in his estate for federal estate tax purposes. On the other hand, if the power of attorney creating the gifting power is revocable by the principal, then the agents power to make gifts to himself may be seen as a power exercisable only with the consent or joinder of the principal. Powers that are exercisable only with the consent or joinder of the principal do not create a general power of appointment. In light of this uncertainty, it might be advisable to draft the power of attorney to limit the agent's power to make gifts if estate and gift taxes are a concern. Do not have clients own life insurance on their children. If a power of attorney allows an agent to deal with any life insurance policies owned by the principal, and the principal owns a life insurance policy on the agents life, then the agent could be considered to have incidents of ownership over the policy, and the policy death benefit could be included in the agents gross estate. This can be avoided by drafting the power of attorney to limit the agent's authority over the principals life insurance policies. 21

22 N EW L AW : A GENTS – M ODIFIABLE D UTIES The following duties apply unless modified or eliminated by the power of attorney: Competency: act with care, competence, and diligence ordinarily exercised by agents in similar circumstances; An agent who has accepted authority to make investment and/or financial decisions for the principal must comply with the Prudent Investment Rule. Loyalty: act loyally for the sole benefit of the principal; May allow actions that create a conflict of interest if for the benefit of other family members. Impartiality: act so as to not create a conflict of interest that impairs the agents ability to act impartially in the principals best interest; Cooperate with health-care providers authorized to make health care decisions for the principal. 22 Copyright © 2011

23 N EW LAW : A GENTS – M ANDATORY D UTIES The new law creates the following duties that cannot be waived or eliminated under a present and future power of attorney: Act within the scope of the authority granted in the power. Act in good faith, not contrary to : The principals reasonable expectations actually known by the agent; and The principals best interest (except as provided with respect to the agents authority to cooperate with a person who has authority to make health care decisions for the principal and estate planning matters). Attempt to preserve the principals estate plan (if in principals best interest), including: The value and nature of the principals property; The principals foreseeable obligations and need for maintenance; Minimization of taxes, including income, estate, inheritance, generation-skipping transfer, and gift taxes; SEE A CPA OR TAX LAWYER Eligibility for a benefit, a program, or assistance under a statute or rule; and The principals personal history of making or joining in making gifts. Liability: An agent who acts in good faith is not liable to any beneficiary of the principals estate plan for failure to preserve the plan. Act personally may not delegate authority to a third person Except an agent may delegate in regards to investment functions, see § Delegation of investment functions. 23 Copyright © 2011

24 Keep adequate records of all receipts, disbursements, and transactions made on behalf of the principal Create and maintain an accurate and current inventory of the principals safe deposit box (if authorized to access) No obligation to disclose receipts, disbursements, or transactions or safe deposit box inventories unless ordered by court or requested by the principal, a court-appointed guardian, or another fiduciary acting for the principal, a court agency, or (after death) a personal representative or successor in interest to principals estate. Must comply within 60 days of an authorized request or provide written or other records substantiating why additional time is needed. N EW LAW : A GENTS – M ANDATORY D UTIES 24 Copyright © 2011

25 A POWER OF ATTORNEY AGENT LOG DATEACTIONCOSTTHIRD PARTIES INVOLVED REASON/ RESULT FOLLOW- UP NEEDED 10/4/2011Paid the veterinarian $57.42 checking VetBird had a cough & is better Give bird its medication 10/8/2011Paid the veterinarian $57.42 checking VetBird has lisp Needs voice lessons 10/10/2011See Mrs. Jones, lawyer* $ checking Mrs. JonesReview prior actions See again in 3 months 10/12/2011Garage SaleDeposited $ Paid CashSold Furnishings Not applicable *Hard to understand – will ask the vet to explain. Please note exoneration on page 42: The power of attorney may provide that the Agent is not liable for any acts or decisions made in good faith, except to the extent resulting from dishonesty, improper motive, or reckless indifference to the purposes of the power of attorney, or the best interests of the principal. 25 Copyright © 2011

26 L IABILITY OF A GENTS Actions of agents occurring before Oct. 1, 2011 are not affected by the new law. An agent who violates his or her duties is liable to the principal or the principals successors in interest for the amount required to: Restore the value of the principals property to what it would have been had the violation not occurred; and Reimburse the principal or the principals successors in interest for the attorneys fees and costs paid from the principals funds on the agents behalf in defense of the agents actions. Actions of Co-Agents: An agent is not liable for actions or omissions of another agent if the agent does not participate in or conceal a fiduciary duty committed by the other agent. An agent who has actual knowledge of a breach or imminent breach of fiduciary duty by another agent, including a predecessor agent, must take any action reasonably appropriate in the circumstances to safeguard the principals best interests. If the agent in good faith believes that the principal is not incapacitated, giving notice to the principal is sufficient. An agent who fails to take action as required is liable to the principal for the principals reasonably foreseeable damages that could have been avoided if the agent had taken such action. A successor agent does not have the duty to review the conduct or decisions or the predecessor agent. The remedies under this Act are not exclusive and do not abrogate any right or remedy under any other law other than the Act. 26 Copyright © 2011

27 L IABILITY OF A GENTS Successor Agents do not have a duty to: Review the conduct or decisions of a predecessor agent. Institute any proceeding against a predecessor agent, or to file any claim against a predecessor agents estate, for any of the predecessor agents actions or omissions as agent (except as discussed in the preceding section). Others An agent may delegate investment functions under Floridas Prudent Investment Rule. As long as the agent exercises reasonable care, judgment, and caution in selecting the individual, the delegating agent is not liable for an act, error or judgment, or default of the delegated individual. The agent must also take reasonable care in regards to the scope of the delegated authority and must periodically review the actions of the delegated individual. Exoneration A power of attorney may provide that an agent is not liable for any acts or decisions made by the agent in good faith and under the power of attorney, except to the extent the power of attorney: Relieves the agent of liability for breach of a duty committed: Dishonestly; With improper motive; or With reckless indifference to the purposes of the power of attorney or the best interest of the principal; or Was inserted as a result of an abuse of a confidential or fiduciary relationship with the principal. 27 Copyright © 2011

28 NAME ADDRESS Dear ___________: The Florida legislature passed a new durable power of attorney act that will take effect October 1, Most Floridians probably do not need to do anything in response to this new law, but there will doubtlessly be a significant amount of press given to this issue in a few weeks, and a few clients will want to take one of the actions described below. This act will not affect the legal authority or primary rules associated with your presently effective Powers of Attorney, but beginning October 1, 2011, banks and other financial institutions are probably going to be much more cautious about acting on Powers of Attorney. It may be a good idea to refresh your power of attorney in the not too distant future, because the age of a document can influence whether it will be readily acceptable by third parties in times of need. You may also want to review who you gave your power of attorney to, and who the alternates are. A small number of our clients have executed springing powers of attorney, that by their terms would not take effect unless or until the incapacity of the client. Springing powers of attorney will not be permitted in Florida if signed after September 30, If you would like for your financial power of attorney to not apply unless or until you are incapacitated, then it may be best for you to sign a springing power of attorney before October 1 st of this year. 28 Copyright © 2011

29 If you presently have a springing power of attorney, then it would not be a bad idea to sign an updated version of it before October 1 st, so that it is as recent as possible and would therefore not be replaceable. Also, healthcare powers of attorney that spring will require affidavits from a medical physician or osteopath before they are effective after the incapacity of the person who has given the power. After September 30 th, some clients will have us use escrowed powers of attorney, whereby our firm or another trusted professional or personally chosen entity would hold a live power of attorney in escrow, with instructions and consent to deliver it for use if and when you would ever be unable to act for yourself, whether this will be upon incapacity or for other good reason. Once the new law takes effect, it will not be safe to use any sort of standard form durable power of attorney that you might find in an office supply store, on the internet, or even in reputable form books. The new Florida statute requires that certain important powers be enumerated next to where you would initial or separately sign your name for each power. The new law will also require post-September 30, 2011 powers of attorney to have two witnesses, and to be notarized. The Florida healthcare power of attorney law was not changed by this new act. Nevertheless, this may be a good time to review who you have appointed, and who your alternates are for the exercise of healthcare power authority, keeping in mind that the agent under your financial power of attorney, or an alternate Trustee under any trust you may have established for yourself, will need to be available to provide financial payment and other fiscal-related duties if you or a loved one were to become incapacitated. Many clients have adult children who give them financial and healthcare powers of attorney in order to be able to sign a childs name, or to make decisions for a child as a matter of convenience or in the event of incapacity. We very much appreciate the opportunity to be of service with respect to your planning. Please let me know if you have any questions on the above, and feel free to fill out the following form if any of the below indicated boxes apply to you. 29 Copyright © 2011

30 From:Joe Client Address:XYZ To:Gassman Law Associates, P.A. (FAX: ) ( (WRITE: 1245 COURT STREET, STE. 102, CLEARWATER, FL 33756) (PHONE: and tell the receptionist) With reference to your power of attorney letter, please: ___ Send me copies of our present powers of attorney so that we can see if they should be updated. ___ Please also send me copies of the decision pages from our will and trust documents on the appointment of Personal Representatives and Trustees so that we can review those. ___ I know it has been a long timeplease send me an updated power of attorney with the same first choice and alternatives as I had before, so that I can review these to see if we should change them while having them updated. ___ Please call me to discuss this. ___ Please provide me with a springing power of attorney, appointing ___________ to serve as my agent in the event of my incapacity, and with _________________ as alternate agent(s). ___ Please send information on the new $5,000,000 estate tax exemption, and what my planning opportunities may be for this. ___ Please send this by only in order to save paper. ___ Please recommend a veterinarian for my birds lisp. 30 Copyright © 2011

31 Q UESTIONS ? Alan S. Gassman, Esq. (727) Copyright © 2011

32 A BOUT THE S PEAKERS A LAN S. G ASSMAN, E SQ. Alan S. Gassman is an attorney practicing in Clearwater, Florida with the firm of Gassman Law Associates, P.A. Mr. Gassmans primary practice focus over the past 26 years has been the representation of high net worth individuals, physicians and business owners in estate planning, taxation, and business and personal asset structuring. Mr. Gassman speaks often for national and state sponsored continuing education programs and publishes several articles each year in publications such as such as BNA, Estates and Trusts Magazine, Estate Planning Magazine, The Florida Bar Journal, Leimberg Estate Planning Network (LISI), and Medical Economics, and has presented dozens of Webinars for professionals on a variety of topics. Mr. Gassman has a law degree and a Masters of Law degree (LL.M.) in Taxation from the University of Florida, and a business degree from Rollins College. He is board certified by the Florida Bar Association in Estate Planning and Trust Law, has the Accredited Estate Planner designation for the National Association of Estate Planners & Councils, has been and is a commentator for the Leimberg LISI Estate Planning Network, past President of the Pinellas County Estate Planning Council, and co-chair and lecturer for two annual Florida Bar Tax Section conferences (Wealth Conservation and Physician Representation). Mr. Gassman holds a prestigious AV rating from his peers on the Martindale-Hubbell attorney listing. Mr. Gassman can be contacted at or by phone at The Gassman Law Associates, P.A. website is 32 Copyright © 2011

33 A BOUT THE S PEAKERS C HRISTOPHER J. D ENICOLO, E SQ. Christopher J. Denicolo, J.D., LL.M. is a partner at the Clearwater, Florida law firm of Gassman Law Associates, P.A., where he practices in the areas of estate tax and trust planning, taxation, physician representation, and corporate and business law. He is the author of several noted articles in The Florida Bar Journal, BNA Tax & Accounting, Estate Planning Magazine and Leimberg Information Services, Inc. He, Alan Gassman and Kenneth Crotty are the co-authors of the BNA book Estate Tax Planning in 2011 & His address is g/gassman/seminars/webinar – power of attorney/FL New POA Act.1p.pptx 33 Copyright © 2011


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