Florida durable powers of attorney: exploring the limits of an agent's authority.

• Author: Tiernan, Peter B.

Durable powers of attorney have become increasingly important instruments in estate and Medicaid planning in recent years, particularly since the substantial revision to the law made in 1995. Recently the law was amended to permit "springing" durable powers of attorney, which should further enhance the use of these instruments. Now that estate planners in Florida have had sufficient time to become acquainted with the law relating to durable powers of attorney, maybe it is time to examine some of the limitations that may apply with these documents.

Extent of Attorney-in-fact's Authority

Most attorneys, if asked to explain the extent of an attorney-in-fact's authority under Florida law, would probably respond that the attorney-in-fact has all powers to the extent "authorized and specifically enumerated" in the durable power of attorney. Such an answer is not entirely correct; the complete correct response is an attorney-in-fact has the authority to perform every act authorized and specifically enumerated in the durable power of attorney except when such acts are limited by either F.S. [section] 709.08(7), other applicable law, or by the durable power of attorney. (1)

F.S. [section] 709.08(7)(a) clearly states that there are limits to an agent's authority. No matter what authority the durable power of attorney might otherwise appear to grant, there are certain acts that cannot under any circumstances be performed by an attorney-in-fact. The purpose of this article is to explore these limitations under either F.S. [section] 709.08(7)(b) or "other applicable law." Although F.S. [section] 709.08(a) also states that actions can be limited by the durable power of attorney, such limiting language would appear to be unnecessary, considering that such actions could be limited by simply not authorizing and specifically enumerating them in the durable power of attorney.

F.S. [section] 709.08(7)(b)5 and the Doctrine of the Last Antecedent

F.S. [section] 709.08(7)(b)5 reads as follows:

Notwithstanding the provisions of this section, an attorney in fact may not:

5. Create, amend, modify, or revoke any documents or other disposition effective at the principal's death or transfer assets to an existing trust created by the principal unless expressly authorized by the power of attorney....

There appears to be some confusion about what the above provision actually permits. For example, some lawyers read this provision as permitting the amending, modifying, or revoking of a revocable trust as long as there is specific language included in the durable power of attorney expressly authorizing such action. However, such an interpretation ignores a basic rule of grammar and a rule that courts from other states have formulated known as the doctrine of the last antecedent. (2) Under this doctrine, courts presume that drafters place modifying phrases next to what they intended to modify. The doctrine states: "Where no contrary intention appears in a statute, relative and qualifying words and phrases, both grammatically and legally, refer to the last antecedent." (3) The only situation in which a contrary intention exists in a statute is when a comma is included between the qualifying phrase and the remainder of the sentence. Nothing else constitutes contrary intention.

In F.S. [section] 709.08(7)(b)5 the clause "unless expressly authorized by the power of attorney" immediately follows "transfer assets to an existing trust created by the principal." From a grammatical standpoint and under the doctrine of the last antecedent, that is the only action that can be "expressly authorized" by the durable power of attorney. If the Florida Legislature wanted the "unless" clause to modify all three actions, all it would have had to do was include a comma between the words "principal" and "unless."

Whether the legislature wanted to permit all three actions to be expressly authorized is debatable. On the one hand, the law governing guardianships only permits a guardian to deal with assets such as jointly owned bank accounts or ITF accounts if the guardian has a court order.4 Since durable powers of attorney are intended to be alternatives to guardianship proceedings, presumably the legislature would have wanted a similar requirement with durable powers of attorney.

It can be argued that the Florida Legislature intended the phrase "unless expressly authorized by the power of attorney" to apply not only to transfers to existing trusts but also to the other two actions mentioned in that subparagraph. In this respect, while every other numbered subparagraph of F.S. [section] 709.08(7)(b) only deals with one type of action, F.S. [section] 709.08(7)(b)5 mentions three separate and distinct actions. The fact that the legislature grouped these three actions together might be an indication that it wanted to permit all three types of actions to be "expressly authorized" by the principal if that is what the durable power of attorney specifically states.

In interpreting statutes, punctuation is considered to be the most fallible and least reliable indication of the legislature's intent. (5) However, the Florida Supreme Court has stated that a court has no authority to insert punctuation marks, specifically commas, which are not in statutes. (6) Therefore, considering the present punctuation (or lack of it) in F.S. [section] 709.08(7)5, the only grammatically correct interpretation of this provision is that an agent cannot under any circumstances create, amend, modify, or revoke any document or other disposition effective at the principal's death, notwithstanding anything to the contrary stated in the durable power of attorney. Such an interpretation has certain interesting consequences that are explored in more detail below.

Limitations of Power Because of F.S. [section] 709.08(7)(b)5

F.S. [section] 709.08(7)(b) sets forth certain actions that the attorney-in-fact may not do under any circumstances. As explained above, among these prohibited actions is any action that would create, amend, or modify any document or other disposition effective at the principal's death.

Although F.S. [section] 709.08(7)(b) does not provide definitions, a document effective at the principal's death would almost certainly be a revocable trust or a similar instrument. But just what is meant by the phrase "disposition effective at the principal's death"? The following discussion will examine some of the dispositions presumably encompassed by this phrase.

* Power over Jointly Owned Property and Similar Accounts

F.S. [section] 709.08(6) specifically provides that a durable power of attorney applies to all jointly owned property of a principal including tenancies by the entireties. However, since these type of accounts have survivorship features at the principal's death, such accounts appear to be dispositions...