Everything You Need to Know About the Durable Financial Power of Attorney in Maryland
July 28, 2015
Today we’ll talk about one of the key documents that is typically involved in estate planning—a power of attorney. The word “attorney” in this case doesn’t mean “lawyer,” but rather “one appointed to represent another’s interests,” which is essentially what a lawyer does. Therefore, a power of attorney is a legal document that grants someone else power to represent your interests and make certain decisions on your behalf. In the legal field, we refer to the person granting a power of attorney the “principal,” and to the person authorized to act on your behalf we refer as the “agent.”
Why have a Durable Financial Power of Attorney?
To better phrase this question: under which circumstances would you require someone else to act on your behalf? A power of attorney is a very important document that can be used in many situations, regardless of your age, health or finances. Here are a few common scenarios when a power of attorney is helpful:
- If you live and/or travel abroad and need someone to manage your affairs in your absence.
- If you rarely leave home due to injury or illness and need someone to visit financial or government institutions on your behalf.
- If you’ve been diagnosed with a mentally incapacitating disease, such as Alzheimer’s, and want to make sure your property will be in good hands if you lose your mental clarity.
- If you are busy and simply want your trusted representative to be able to make decisions and sign documents on your behalf without your presence.
Not every power of attorney can grant all of the above privileges to your agent, so you need to make sure to choose the right type of document and word it carefully.
Who Can Grant/Receive a Power of Attorney?
In order to create a power of attorney in Maryland, you need to be at least 18 years old and be mentally competent, i.e. understand the document and the type of power you are granting. The same requirements apply to the person on the receiving end of the power of attorney. To make a financial power of attorney that will be deemed legal, you will need to have your signature notarized and witnessed by two persons not named in the power of attorney.
You can give power of attorney to anyone—it doesn’t have to be your blood relative. However, there are certain restrictions that concern people who have declared bankruptcy, have been convicted of a crime or act as your personal caregiver. They may be ineligible to act as your agent in certain circumstances.
Restrictions Imposed on a Power of Attorney
A properly drafted power of attorney can be a very flexible document. You can control what powers you are granting, and when and for how long you want to grant that power to your agent. Your Maryland estate planning attorney can help you understand your responsibilities and decide what sort of restrictions you should or shouldn’t impose on your power of attorney. Most attorneys will recommend that you sign the Maryland Statutory Form of Power of Attorney. If this form is properly executed, banks and institutions in Maryland must accept it, or they may be liable for any attorney fees needed to get them to accept it. Using the non-statutory form does not ensure that a bank will recognize your power of attorney, and many banks will only recognize the statutory form.
General or Limited Power of Attorney
A general power of attorney grants your agent the power to act as your representative in all business and personal matters. This means your agent can open and close your bank accounts, take out loans in your name and enter into almost any kind of contract. A limited power of attorney grants agent only the powers specifically listed in the document. So if you only want someone to be able to act for a limited period of time, or for only limited purposes, you would choose a limited power of attorney.
Non-Durable or Durable Power of Attorney
A non-durable power of attorney ends when the principal (you) becomes disabled and can no longer make decisions for himself or herself, or any time before that if you provide for an expiration date. A non-durable power of attorney is often used for one-time transactions when you need someone to represent you only on this one instance. For example, if you just want someone to be able to sell a specific piece of property on your behalf, you would choose the limited power of attorney.
A durable power of attorney remains in force until the agent learns about principal’s death. There can be additional conditions that affect when a power of attorney ends. For example, a specific date can be set or you can simply revoke the document at any moment.
Springing Power of Attorney
A springing power of attorney doesn’t go into effect immediately, but is instead triggered by a specific event in the future. For example, you can choose to empower your agent only when you are out of the country or when you have lost your mental capacity to handle your own affairs. Because of the problems in getting banks to accept springing powers of attorney, some lawyers will not recommend them, except in special circumstance.
Medical Power of Attorney
A medical or healthcare power of attorney is something every adult needs. In Maryland it is known as the “advance directive.” It identifies a person responsible for making healthcare decisions (your healthcare agent) on your behalf if you can’t do it yourself. You can also use the advance directive to list instructions in regard to certain medical procedures and treatments you either do or don’t want to receive.
For example, if you are ever in a situation where your body is on life support with no reasonable prospect for recovery, your agent will follow the advance directive to fulfill your wish, whether it is to remain on life support or to have it disconnected.
Have any other questions about a power of attorney or ready to get yours drafted? Contact DK Rus today for a free consultation.
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