In 2010, Maryland passed the Maryland General and Limited Power of Attorney Act (the “Act”). We had two back-to-back winter snowstorms in February that year which was key to a compromise to finally pass this important bill. A power of attorney does not provide a legal professional, such as an attorney, power over your assets. Instead, you name a person whom you trust to step into your shoes and handle your financial affairs for you when you request. The person creating the document is called the “principal” and the person you are giving power to is called an “agent”. The agent must act in the best interest of the principal. The new Act creates an enforceable, legal obligation for both the principal and the agent.
The power of attorney statute may be found in the Maryland Annotated Code, Estates and Trusts Article, Title 17 – Maryland General and Limited Power of Attorney Act. One impetus for drafting this bill was to require financial institutions to accept the statutory power of attorney document when presented by an agent. Prior to the Act’s enactment, financial institutions would refuse to honor power of attorney documents that were older than three years or not prepared using the specific financial institution’s form which resulted in the filing of onerous guardianship petitions. A guardianship is a court proceeding to appoint a person to have legal authority over your property.
The Act states that a power of attorney, in order to be validly executed in Maryland, must be:
signed by the principal or be signed on behalf of the principal at the principal’s discretion,
acknowledged by the principal before a notary, and
signed by at least two adult witnesses who are both in the presence of each other and in the presence of the principal.
In Maryland, the notary can be one of the adult witnesses. Durable means an agent’s authority is exercisable notwithstanding the principal’s subsequent disability or incapacity. All powers of attorney are now presumed durable. This is key as the document is often used during a period of incapacity.
While the Act has provided more ease of use of powers of attorney with financial institutions, attorneys often suggest you have a supplemental durable power of attorney. If you move to another state that does not have a statute that presumes durability, the supplemental form defines durability. Upon diagnosis of a debilitating illness, clients or agents who are named under a power of attorney, want to restructure estate plans to protect assets. This restructuring sometimes involves gifting of assets and the establishment of irrevocable trusts. This power must be specifically stated by the principal in the power of attorney document in order to carry out this type of planning by an agent. Another provision in the supplemental form allows your agent to pay expenses of pet care. If not specifically allowed, your agent may not have the legal authority to use your assets to pay for kenneling, maintenance, care and upkeep of your pets.
Although it might be tempting to fill in the blank and complete the statutory form on your own, the rules can be complicated and naming the right person as your agent to handle these complex financial transactions may be the most important decision you need to make. Working with an experienced estate planning attorney who has drafted and administered these documents can provide guidance to protect your family in the future when these documents are most needed. At Council Baradel, we have the experience to assist you during this very important time. The guardianship process is expensive and time consuming. The best advice is to prepare these documents when you are not in a crisis. Contact us to ensure you and your family are safe and protected in the future.