One of the things that's becoming more and more frustrating for trusts and estates lawyers in Florida is the refusal of banks and other financial institutions to accept properly drafted powers of attorney.
A power of attorney is a document in which a person (the principal) grants another person (the agent or the "attorney") the authority to act upon the principal's behalf. A power of attorney can be limited in scope - such as it only grants the power to the agent to sell a specific piece of real estate. Or, the power of attorney could be extremely broad, in which the agent is granted the power to do almost anything and everything, including change the beneficiaries of life insurance policies and retirement accounts, create or modify trusts, and give away all of the principal's property. Of course, the agent is limited by their fiduciary duty to the principal in all of this.
Section 709 of the Florida Statutes sets forth the various rules regarding powers of attorney. Despite the clear language of the law though, it's often very difficult to explain to banks that they are required to accept them. I understand their fear, but things are getting ridiculous. In fact, Florida recently changed its law so that Florida Statute § 709.2120 provides that a third person who improperly refuses to accept a power of attorney is subject to a court order, plus liability for damages and attorneys' fees. In other words, if you violate the statute and refuse to accept the power of attorney, I can sue you and if I win, you will have to pay my attorneys fees.
Recently, I was about to sue a bank for their refusal to accept a power of attorney, when we came to a "compromise." The bank would not, under any circumstances, allow the appointed agent to manage the account at their institution, but they would allow the agent to close out the account and withdraw several hundred thousand dollars and bring it to another bank. So losing the account and taking the risk that all of the money will be stolen was ok, but writing $100 checks for groceries was not.
Not only are probate attorneys tired of it, but courts are getting frustrated also.
In the recent case of Albelo v. Southern Oak Insurance Company (3rd DCA Feb. 6, 2013) [enhanced version available to lexis.com subscribers], the home of plaintiff, Maximiliana Albelo -who is in her 80s- was burglarized. At some point before the burglary, she duly executed a durable power of attorney, appointing her son. A power of attorney is a durable power of attorney if it survives the incapacity of the principal. Under the authority granted to him under the durable power of attorney, Maximiliana's son filed a sworn proof of loss with the insurance company.
The insurance company refused to accept the proof of loss executed by her son as agent. Not only that, they said it was fraudulent. To make matters even worse, Southern Oak seems to be saying that Maximilana was required to have a guardian appointed for herself.
This of course, is ridiculous. The whole point of executing powers of attorney is to avoid guardianships. The Court in this case pointed out that the rejection of the power of attorney and the argument that a guardian was needed was frivolous. That means that both the insurance company and its attorney has to pay Albelo's attorney's fees.
Hopefully this case will help persuade financial institutions to start accepting powers of attorney, but I'm not holding my breath.
Visit South Florida Estate Planning Law for more commentary from Florida estate planning attorney David Shulman. David Shulman is an attorney located in South Florida who focuses his practice on Wills, Trusts and Estates, and Tax Planning. He attended George Washington University Law School and Brandeis University, both of which he graduated with honors. In addition David received his LLM in Estate Planning from the University of Miami Law School. Prior to starting his own practice, David worked for the Internal Revenue Service and a large South Florida law firm.
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