Power of Attorney in Maryland
A Power of Attorney (POA) is a legally binding document that permits an individual, known as the “principal,” to appoint another person, referred to as the “attorney-in-fact” or “agent,” to manage their affairs. This arrangement can cover a range of matters including financial transactions, medical decisions, or property management.
In a POA, the principal entrusts the agent with the legal authority to act on their behalf. The agent’s role is to act in the principal’s best interests, and their authority is as broad or as limited as defined in the POA document. Depending on the specifications set by the principal, the agent may be granted authority over certain tasks such as paying bills, managing investments, selling property, or making healthcare decisions.
The principal and agent relationship in a POA is built on trust. The principal is entrusting their agent with significant power, and the agent carries the responsibility to act honestly, prudently, and in the best interest of the principal. This relationship remains active as long as the principal is alive or until they revoke it.
A properly drafted POA equips your chosen agent to seamlessly continue managing your important affairs during periods you are unavailable or lack the mental capacity to do so yourself. This prevents disruptions and provides oversight aligned with your needs and preferences.
Types of Power of Attorney
A Power of Attorney can take various forms, each designed to serve different purposes based on the principal’s requirements. The two primary types are Financial POA and Healthcare or Medical POA. These can further be classified as either “Durable” or “Non-Durable.”
- Financial Power of Attorney: This type of POA allows the agent to handle the financial affairs of the principal. The agent may have authority over tasks such as paying bills, managing investments, buying or selling property, and handling other financial transactions.
- Healthcare or Medical Power of Attorney: Also known as a healthcare proxy, this POA assigns the agent the authority to make healthcare decisions on behalf of the principal when they are unable to do so. This can include decisions about medical treatments, surgeries, or end-of-life care.
Within these categories, there is the option to make the POA “Durable.” A Durable Power of Attorney remains in effect even if the principal becomes mentally incapacitated. This differs from a Non-Durable Power of Attorney, which ceases to be effective if the principal becomes mentally incapacitated.
The principal has the power to dictate the extent of authority granted to the agent. They may specify the level of power the agent possesses and the specific issues over which the agent is given authority. For instance, a principal might allow their agent to manage their financial affairs but not make decisions about their healthcare.
A Durable Power of Attorney, in particular, is crucial to protect and preserve assets and prevent the necessity of a guardianship proceeding, which can be time-consuming and costly. While a Power of Attorney is commonly used to enable an agent to care for an individual’s affairs when he/she has become mentally incapacitated, this tool may prove useful in various other situations as well, such as:
- A sudden illness that renders someone unable to handle finances or personal matters.
- A serious accident leaving someone mentally impaired.
- Military deployment overseas.
- Extended travel that makes someone unavailable to pay bills or manage affairs.
Benefits of Having a Power of Attorney
A Power of Attorney (POA) is a legal tool with numerous benefits, particularly for those wanting to protect their assets and ensure their affairs are managed according to their wishes if for any reason they are no longer able to do it themselves. Here are some of the most important ways a POA can prove to be valuable:
- Protects and preserves your assets by ensuring continuous management of finances, transactions, and property when you cannot handle them yourself. Without a POA, accounts could stagnate and assets be left unattended.
- As discussed earlier, it avoids the need for court-appointed guardianship if incapacity arises. The court process to name a guardian can take months, require medical evaluations, and involve public records. Courts may also end up choosing a guardian you would not.
- Prevents management gaps if health issues arise. Your agent can immediately access accounts and step in to handle finances and care.
- Provides oversight of your care aligned with your values and preferences. Your agent understands your wishes.
- Saves significant time, expenses, and family stress compared to establishing guardianship.
Living Wills and Powers of Attorney in Maryland
A living will is a legal document that articulates your wishes regarding medical treatment if you are terminally ill or in a persistent vegetative state. It provides guidance about end-of-life care options. For example, a living will could express whether you want life support in certain situations. This is different from a healthcare power of attorney, which names the person you authorize to make medical decisions if you cannot.
A living will provides instructions for your designated agent (under your healthcare POA) if you cannot voice these decisions yourself. It alleviates the burden on your agent having to guess what medical measures or life support interventions you would want. Your agent is legally required to follow the stipulations in your living will.
Having a living will and healthcare POA in place provides control over your medical care that is aligned with your personal values and preferences. A living will complements the authority given to the designated agent under a POA, which helps to facilitate seamless decision-making during emotionally challenging times.
Establishing a Power of Attorney in Maryland
Creating a Power of Attorney is a serious step that requires careful thought and consideration, especially given the amount of authority you are granting to another person. Here is a simplified step-by-step process on how to establish a POA in Maryland:
- Decide on the type of POA – each type serves different purposes, so it is important to understand which one aligns with your specific needs.
- Name an agent and successors you trust fully to act in your best interest.
- Outline specific powers you want to be granted to the agent regarding finances, healthcare, etc.
- Execute the POA following required formalities like notarization and witnesses.
- Review the POA regularly and update it as necessary if laws or your circumstances change.
Each circumstance is unique, and the language within the POA should fully reflect the specific needs of the individual who is setting it up. This is why it is best to work with an experienced estate planning attorney to ensure that the POA is set up properly in alignment with both Maryland law and your best interests.
If you are considering setting up a power of attorney in Maryland, call Baddour Law Firm at (301) 494-2108 or send us an online message to schedule a consultation in our Dunkirk or Lexington Park office. We are here to provide the guidance and support you need with these critical matters.
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