Power of Attorney
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A Power of Attorney is Important for Your Estate Plan
A Power of Attorney is a legal document that creates a Principal-Agent relationship. In a Power of Attorney, a person (Principal) gives another person or persons (Agent or Attorney-in-Fact) legal authority to act on behalf of the Principal in his/her financial affairs.
Depending on the powers granted, the Power of Attorney may be general or limited. The Agent may be authorized to handle banking transactions, stock and bond management, real estate transactions, gift-giving programs, and other financial affairs on behalf of the Principal.
To become effective in Maryland, a Power of Attorney must be in writing, signed by the Principal in the presence of two witnesses, and notarized.
A Power of Attorney operates while the Principal is alive, can be revoked at any time, and terminates upon the Principal's death.
A Power of Attorney does not grant the Agent the power to make healthcare or medical decisions for the Principal. If you want to designate an Agent to handle your medical and health affairs, you will need to execute an Advance Medical Directive and/or a Living Will.
It's important to know that an Agent or Attorney-in-Fact is a fiduciary who has a responsibility to act in the best interests of the Principal. The Agent must maintain his/her own finances separate from the Principal's finances.
What Will a Durable Power of Attorney Do for You?
A Durable Power of Attorney authorizes an Agent to make financial decisions and continue to manage accounts even if the Principal becomes incapacitated or disabled.
If a Power of Attorney is not durable, it may become ineffective upon the Principal's incapacity. In this event, a Guardianship Proceeding may be necessary to appoint a Guardian for an incapacitated Principal.
How Soon Does a Power of Attorney Go into Effect?
A Power of Attorney becomes effective as soon as the Principal signs the form unless the Power of Attorney directs otherwise. In Maryland, a Power of Attorney may be "springing," i.e., it becomes effective upon a future event or upon the Principal's incapacity.
What are the Benefits of Establishing a Power of Attorney?
A Power of Attorney may ensure that the Principal's financial interests are managed by an entrusted individual. However, if there is no Power of Attorney in place and an individual's physical or mental issues prevent him/her from managing his/her financial affairs, the courts may need to step in to appoint a guardian. This process is time-consuming and expensive. By comparison, setting up a Power of Attorney is quick, easy, and much less expensive.
Please contact the Avrine Law Firm at 240.395.1366 for more information on a Power of Attorney as a standalone document, as well as part of your Estate Planning Package.
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