In 2008, the American Association of Retired Persons (AARP) published a report that highlighted problems with Power of Attorney laws that, in some cases, led to exploitation of vulnerable adults (Power of Attorney Abuse: What States Can Do About It; AARP, November 2008). The report urged states to adopt a uniform power of attorney act to address these concerns. Illinois enacted new powers of attorney for both property and health care that went into effect on July 1, 2011. Florida’s new power of attorney for property is effective on October 1, 2011. This article explains how the new powers of attorney differ from the previous laws. This will help you, the client, decide whether you need new power of attorney documents prepared, and, if so, how to request them from my office.
Both Florida and Illinois provide that powers of attorney that were prepared before the effective dates of the new laws remain valid. Therefore, you do not need to have new powers prepared unless you want to have them prepared. We will now look at how the new power of attorney laws for both Florida and Illinois differ from the law in effect when your power of attorney was prepared. “Principal” refers to you, the client, and “Agent” refers to the person that you appoint as your Power of Attorney.
Florida’s new Power of Attorney law differs from the previous law in several ways. If Co-Agents are appointed, they can act independently of each other, unless the document provides otherwise. Previously, co-agents had to act in unison, or by majority, if you named more than two agents. Another change is that the filing of a petition for dissolution of marriage (divorce) terminates the authority of an agent who is married to the principal, unless the document provides otherwise. “Springing” powers that become effective upon an event, such as the principal’s incapacity, are not authorized in the new act. As mentioned above, however, if you have a “springing” power of attorney now, that power of attorney continues to be valid. One of the biggest changes in the new law allows you to grant authority to your agent to take significant actions that affect your estate plan. This authority is referred to as the “superpowers,” and includes the right to create, modify, amend or revoke a trust, make gifts, change the beneficiary designations on your accounts, and waive your right to receive benefits or property. Giving these “superpowers” to your agent could help your agent take advantage of tax benefits for your estate plan. You can grant your agent these “superpowers” only if each individual power is specifically described in the power of attorney, and you sign off on each individual power. Another benefit of the new law is that it will make banking and investment transactions, which are the two most common uses of a power of attorney, easier for your agent. The new law is more “user friendly” for these transactions because it contains specific wording granting your agent these powers, rather than the general language contained in the old statute. This specific language will enable banks and investment institutions to accept the new power of attorney more readily.
Illinois enacted new laws for powers of attorney for both property and for health care, effective on July 1, 2011. The intent was to provide more protection to the (often-vulnerable) principal from financial or physical abuse, and to make both documents more “user friendly” for both the principal and the financial institutions and healthcare providers who rely on the documents. As mentioned above, your current Illinois powers of attorney for property and health care remain valid, but you may wish to have new powers prepared to conform to the new Illinois laws. The new power of attorney for property provides written notice to your agent that describes his or her responsibilities, and also elevates the agent’s standard of care, requires more oversight of the agent’s actions, and expands the remedies against an agent who abuses his or her fiduciary responsibilities. Your agent may not know, for example, that he or she should keep an accounting of your funds, and that they should not comingle your funds with their funds. The standard of care for your agent has been changed as well. The new standard of care is that your agent should “act in good faith for the benefit of the principal using due care, competence and diligence” instead of merely exercising “due care.” Your agent will be made aware of these duties and responsibilities when they receive and sign the new “Agent’s Certification and Acceptance of Authority” form. If you designate a successor agent to act if your initial agent is unavailable, the new law provides a procedure for the successor to assume authority. Co-agents are prohibited for both the new power of attorney for property and for healthcare, unless a non-statutory form is used. The new Illinois health care power of attorney replaces outdated medical terms and incorporates the latest changes to health care privacy laws. The new forms both include a revocation of all previous powers of attorney, to avoid a principal from naming two different agents in separate powers with overlapping authority.
How to update your Power of Attorney documents. If you have decided to update your power of attorney documents to conform to the new laws of either Florida or Illinois, contact my office.