The situation facing one family is all too common. An aunt is now incapacitated with severe Alzheimer’s disease. Her brother has been her agent with a durable power of attorney in place for many years. In the course of preparing his own estate plan, he decided it’s time for one of his own children to take on the responsibility for his sister, in addition to naming his son as executor of his estate. The aunt has no spouse or children of her own.

The answers, as explained in a recent article “Changing the agent under a durable power of attorney” from My San Antonio Life, all hinge on the language used in the aunt’s current durable power of attorney. If she used a form from the internet, the document is probably not going to make the transfer of agency easy. If she worked with an experienced estate planning attorney, chances are better the document includes language that addresses this common situation.

If the durable power of attorney included naming successor agents, then an attorney can prepare a resignation document that is attached to the durable power of attorney. The power of attorney document might read like this: “I appoint my brother Charles as agent. If Charles dies or is incapacitated or resigns, I hereby appoint my nephew, Phillip, to serve as a successor agent.”

If the aunt would make her wishes clear in the actual signed durable power of attorney, the nephew could relatively easily assume authority, when the father resigns the responsibility because the aunt pre-selected him for the role.

If there is a clause that appointed a successor agent, but the successor agent was not the nephew, the nephew does not become the agent and the aunt’s brother can’t transfer the POA. If there is no clause at all, the nephew and the father can’t make any changes.

In September 2017, there was a change to the law that required durable power of attorney documents to specifically grant such power to delegate the role to someone else. The law varies from state to state, so a local estate planning attorney needs to be asked about this issue.

In Florida, approximately 10 years ago, it was common for powers of attorney to include general language that authorized the agent to take “any action not otherwise mentioned in this document” or “any action that I could take myself.”  Courts recognized these provisions as granting broad powers to the agent.

Under current Florida law, general language of this nature has no legal effect.  An agent may only exercise authority specifically granted to him in the power of attorney, as well as any authority reasonably necessary to give effect to express grants of authority.

Florida law requires the principal to sign or initial certain powers given to the agent.  This requirement is designed to protect the principal by ensuring that the principal knows what powers he or she is giving.  The requirement applies to the following powers:

• Creating an inter vivos trust
• Amending, modifying, revoking, or terminating an existing trust (additionally, the trust instrument must explicitly authorize the settlor’s agent to exercise such authority)
• Making gifts, subject to statutory limits
• Creating or changing rights of survivorship
• Creating or changing a beneficiary designation
• Waiving the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan
• Disclaiming property and powers of appointment

Current Florida law restricts the principals right to delegate certain powers.  Even if the power of attorney expressly allows it, the agent may not take any of the following actions:

• Perform a contract under which the principal was obligated to provide “personal services”
• Make an affidavit as to the personal knowledge of the plaintiff (in other words, take an oath affirming facts which the principal did or did not know)
• Vote in a public election on behalf of the principal
• Execute or revoke a will for the principal
• Exercise authority granted to the principal in her capacity as trustee or as a court-appointed fiduciary

If there is no provision allowing an agent to name a successor agent, the nephew and father cannot make the change.

Another avenue to consider: did the aunt’s estate planning attorney include a provision that allows the durable power of attorney to establish a living trust to benefit the aunt and to transfer assets into the trust? Part of creating a trust is determining who will serve as a trustee, or manager, of the trust. If such a clause exists in the durable power of attorney and the father uses it to establish and fund a trust, he can then name his son, the nephew, as the trustee.

Taking this step would place all of the aunt’s assets under the nephew’s control. He would still not be the aunt’s agent under her power of attorney. Responsibility for certain tasks, like filing the aunt’s income taxes, will still be the responsibility of the durable power of attorney.

If her durable power of attorney does not include establishing a living trust, the most likely course is the father will need to resign as agent and the nephew will need to file in court to become the aunt’s guardian. This is a time-consuming and slow-paced process, where the court will become heavily involved with supervision and regular reporting. It is the worst possible option, but it may also be the only option.

If your family is facing this type of situation, begin by speaking with an experienced estate planning attorney to find out what options exist in your state, and it might be resolved.

If you would like to discuss  your options with an estate planning attorney in Jupiter, Palm Beach Gardens, or Naples, Florida, schedule a complimentary call with Edward J. Welch at Welch Law, PLLC.

Reference: My San Antonio Life (Jan. 25, 2021) “Changing the agent under a durable power of attorney”