This document names an agent to make financial decisions on your behalf. It can be written to provide your Agent with any level of power you want to authorize. This document is extremely important and very power, it enables the Agent to avoid guardianship, gift assets for asset protection under the advisement of an attorney, pay your bills, manage expenses, make tax related decisions with your accountant, and many other powers.
Well formed and statutorily compliant Powers of Attorney are the most powerful document in an Estate Plan. It is similar to the Queen piece in a chess game. The important defensive consideration is that this document stays up-to-date and compliant with Maryland's ever changing laws and statutory requirements.
What is a Power of Attorney?
This document allows another to represent you and act on your behalf to deal with typical financial matters. These matters include a broad range of activities including, but not limited to banking transactions, managing stocks, bonds and other similar transactions, real estate transactions and gift giving authority.
It is important to have a Power of Attorney form in place as a part of your estate planning because it will allow your Power of Attorney to continue to care for your financial needs after you are unable to act for yourself. This is beneficial as it prevents the time consuming, costly and often embarrassing need for court intervention of having a guardian appointed in order to act on your behalf in financial situations.
In the state of Maryland, the person who is appointed by you to represent you and act on your behalf is often called an “Agent” and is also known as your “Attorney in Fact”. That is why you will see the person you named to act on your behalf be referred to as an Attorney in Fact.
Please note that although generally the Power of Attorney executed by you covers a broad range of financial matters, in Maryland it does not deal with allowing your Attorney in Fact to make any health care or medical decisions on your behalf. Because of this restriction, you should also consider signing Health Care Proxy and Living Will forms to appoint someone to make health care decisions on your behalf.
A Durable Power of Attorney means that the Power of Attorney will continue after you (the principle) becomes incapacitated and that you can no longer act for yourself. Note however, if a Power of Attorney form is not designated as a “Durable Power of Attorney” it may revoke automatically in the event of your incapacity which could require a guardianship proceeding in the future.
Your Durable Power of Attorney became effective immediately upon its execution (i.e. signing). Generally, you should put the Power of Attorney into a safe location and inform your Attorney in Fact of where it is so that they can get it when it is needed. You should note that because it is effective it could be used immediately after you signed it. However, the Attorney in Fact will normally need to have a copy of the Durable Power of Attorney in order to take any actions on your behalf with the bank or other similar financial institutions.
The Attorney in Fact which you have appointed in your Power of Attorney is a Fiduciary and owes a fiduciary duty to you. This means that as a Fiduciary he or she has a responsibility to act in your best interest. He or she must act reasonably and prudently in their actions and they must handle your affairs separately without commingling your funds with their own.
Your Power of Attorney is effective as long as you continue to live unless you revoke it. Upon your death, the Power of Attorney will automatically be revoked and upon your death your Attorney in fact will no longer have authority. Your Power of Attorney is not intended to be a will substitute which is why it ceases to be effective after death. After your death, the Executor named in your will or the Trustee if you have a Trust generally will handle any financial matters needed.
Unless you have revoked your older Power of Attorney Form it is probably still effective. Executing a new Power of Attorney does not typically revoke an older Power of Attorney. If you do have an older Power of Attorney form, we recommend that you contact us and revoke any prior forms so that you do not have problems in the future from conflicting forms or appointed Attorneys in Fact.
You may revoke your Power of Attorney at any time during your lifetime as long as you are competent. In order to do this, you must provide written notice to the Attorney in Fact and to any others that may be relying on the Power of Attorney. For example, if your Power of Attorney has been dealing with your bank and has provided the bank with a copy of the Power of Attorney Form, in addition to notifying your Attorney in Fact, you must also notify the bank, that the Attorney in fact named no longer has authority to act on your behalf. Generally, attorneys have form letters which they use that can help you properly revoke your Power of Attorney. It is important of you to keep a list of who you give a Power of Attorney as well as who you suspect has Powers of Attorney in case you desire to revoke it so you know who you need to notify.
To learn more or get started on your estate plan, just schedule a time to visit us for a no obligation complimentary consultation.