Power of Attorney (POA)
Authorizes another individual to act as your financial agent, if you become disabled. It is imperative that you trust that individual.
A (financial) Power of Attorney (POA) is a legal document where an individual, known as the Grantor, authorizes another person to act on their behalf in financial matters.
The scope and duration of a POA can be specifically tailored, offering flexibility. Importantly, if the Grantor becomes incapacitated, a properly drafted and followed POA normally eliminates the need for court intervention in a Guardianship.
Selecting a trustworthy agent is essential as this person is granted extensive powers over your financial affairs with management authority.
Disability is age non-discriminatory. It results from accident, age, disease and/or illness.
There are two estate planning documents, (which cannot be combined), that provide protection in the event of future disability. These are an Advance Health Care Directive and a financial Power of Attorney.
How can I prevent the appointment of a guardian of my property?
Most adults need a Power of Attorney (“POA”). If properly drafted and followed this document should provide you with financial protection. The named Attorney in Fact (“AIF”) makes making the same decisions a guardian of property would be responsible for.
Do I need a financial Power of Attorney (POA)?
The person(s) named as your financial agent is called an Attorney-In-Fact, (“AIF”). In the event of your future disability, the AIF collects your income, pays bills, and protects/manages all of your property and affairs. They are able to act for you within the powers granted in the document.
Can my AIF undertake any financial action for me?
No. The AIF’s authority is limited to:
- Your financial matters and the authority or powers expressly stated in the document.
- If you sign a POA from a specific financial institution or government agency (such as the IRS), that document is only valid with the issuing entity.
Among other powers, the POA should be broad enough to allow your AIF to undertake your banking, to hire other agents such as an accountant, to sign your tax returns, to engage in tax or Medicaid planning and because your AIF may need to access health care bills, should also contain a HIPPA declaration/release.
How is a Power of Attorney created?
A document containing certain information needs to be signed in front of two witnesses and a notary public. A valid power of attorney states yourself as the principal, identifies the agent you name as well as an alternate, and lists the particular authorities with which you are entrusting them.
Who should draft an Advance Healthcare Directive (AHCD) and Power of Attorney (POA)?
Because of the complexities involved, these documents should be prepared by an attorney experienced in estate planning and elder law. It is not recommended that other professionals draft these documents or that you use a form purchased from an office supply store or online as they will likely not be able to meet your specific needs and may not be effective.
Do I need to appoint a lawyer as an agent?
While the agent is usually called the attorney-in-fact, you can appoint any mentally competent person above the age of 18. It is important to consider what exactly you will be relying on your agent to do and if the person named is both willing and capable of filling the role.
Is it possible to make a Power of Attorney if I become mentally incapacitated?
No, to create a valid power of attorney a person must be over the age of 18 and mentally competent at the time of signing. This is why it is so important to start planning sooner rather than later.
Can I revoke my Power of Attorney?
So long as a person is still mentally competent they can revoke any power of attorney document they have signed. It is your right to revoke any authority you provide a person through a power of attorney anytime before it takes effect. You should have an attorney draft a revocation form and distribute copies to all institutions and agencies that would have dealt with the original such as a bank or hospital. It is also important to ensure your agent is formally given a copy.
Disclaimer – This overview is provided for general information relevant for planning undertaken in Maryland only. None of the information within should be relied upon. Statutes, regulations, and the cases interpreting them are constantly changing. Consult an attorney before taking any action. Your reliance on or use of this information does not create an attorney/client relationship or privilege between you and the law firm and its employees, or their heirs, personal representatives, successors, or assigns.
LEARN MORE
- Reasons to Create an Estate Plan Now vs. LaterHave you ever said or overheard someone else say I do not need a Will, Power of Attorney or Advance Care Directive? By not engaging in estate planning you are allowing laws enacted by the legislature to make your decisions.
- Having the Talk: Share Your Estate Plan With Your FamilyBecause “the talk” involves not one but two things we’re often uncomfortable discussing – money and death – many of us put it off or never have it at all, and that’s a mistake. Making your expectations clear can help your heirs to avert a good deal of discord, or even litigation, after you’re gone.
- Frequently Asked Questions about Power of AttorneyIf you are considering getting a power of attorney, you should fully understand the process, what it entails, and what it means.