A “power of attorney” is a document that gives someone legal authority to act for another person. It allows you to assign a person to manage your affairs if you are unable to do so.
The person who grants the power of attorney is known as the “principal” and the person given the power is known as the “agent” or “attorney-in-fact.” The power of attorney defines the limits of the power that the principal is giving to the agent. The power of attorney does not take away the principal’s power to act; it only gives the agent the power to act for the principal.
The Maryland legislature passed a Power of Attorney Act in 2010. The act provides two statutory forms that make it easier for people to grant powers to others to act for them on financial and other matters. The act is called the Maryland General and Limited Power of Attorney Act; it is in MD Code Estates & Trusts, Title 17.
Statutory Powers of Attorney
Any writing or other record that grants authority to a person to act for another person will be read as a power of attorney. A power of attorney need not say “power of attorney” on it.
Read the Law: MD Estates & Trusts §§17-101
The Maryland General and Limited Power of Attorney Act created a specific kind of power of attorney called a “statutory form power of attorney.” There are several templates provided in the following links: MD Estates & Trusts §§17-101, 17-202, 17-203, 17-204
If a person refuses to honor a statutory power of attorney, that person may be held liable for the attorney's fees incurred to get a court order that requires them to abide by the power of attorney.
Read the Law: MD Estates & Trusts §17-104
General v. Limited Powers of Attorney
A power of attorney can be either general or limited.
A general power of attorney gives a person the power and authority to act for the principal in all business and personal matters.
- This usually includes opening and closing bank accounts, buying and selling stock, accessing safe deposit boxes, taking out loans, purchasing real estate, suing, and entering into a contract in the name of the principal.
A limited power of attorney grants to the person only the powers defined in the document.
- Often used to give agents the power to act in financial matters, to manage real estate, or to make healthcare decisions for the principal when the principal loses the ability to make decisions for himself.
- Medical powers of attorney are called advance directives.
- May be limited either by the scope of powers that the agent receives or by time.
Note: Powers should be as specifically defined as possible. This helps to protect the principal and make it more likely that the people and businesses will honor the power of attorney.
Who May Create a Power of Attorney
To create a power of attorney, an individual must:
- Be at least 18 years old;
- Intend to give the power to the person designated in the document; and
Be mentally competent, which means able to understand
- the document;
- which powers are being granted; AND
- which property is affected by the power granted.
Written Powers of Attorney Are Assumed to be Durable
In Maryland, a written power of attorney is assumed to be a ”durable” power of attorney unless the document says that it is not.
- A conventional power of attorney ends when the principal becomes too disabled to make decisions for himself.
- But a durable power of attorney does not end when the principal becomes disabled.
Read the Law: MD Estates & Trusts § 17-105
When Power of Attorney Goes into Effect?
Normally, the power of attorney goes into effect as soon as the principal signs the document.
However, a ”springing” power of attorney gives the agent the power to act for the principal only after a certain event, such as when the principal becomes disabled.
- The wording of the document must be very specific so that there is no question about what counts as an event that matches the requirements of the power of attorney.
- The principal may authorize someone to say whether the event making the power effective has happened.
- If the power of attorney is supposed to go into effect when the person becomes sick or hurt and no one has been authorized to make the determination, then a doctor or a judge may make the determination.
Read the Law: MD Estates & Trusts § 17-111
Powers and Duties of Person with Power of Attorney
The power of attorney should describe the powers of the agent. If there is a question about the limits of the agent’s powers, then the principal, agent, guardian of the principal, principal's family member, or a government agency may petition a court to decide what power the agent has.
An agent is required to act in the best interest of the principal. The agent must do what they think the principal would want them to do, to the best of the agent’s ability.
Read the law: MD Estates & Trusts §17-103
Agents must keep a record of all receipts and transactions made for the principal. Agents must act loyally for the benefit of the principal's best interest and cooperate with the person who is empowered to make health-care decisions for the principal if there is one.
Read the law: MD Estates & Trusts §17-113
The agent has a right to reimbursement for reasonable expenses paid while acting for the principal, but the agent has no right to payment beyond that unless it is included in the power of attorney.
Read the law: MD Estates & Trusts §17-114
Medical Powers of Attorney (Advanced Directives)
Any competent person may create a power of attorney to give someone the power to make healthcare decisions for him in case something happens. These documents are called advanced directives. The Maryland Health Care Decision Act governs advance directives.
Under the Maryland Health Care Decision Act, the person the principal appoints to make healthcare decisions is called a “health care agent.” An owner, operator or employee of the healthcare facility providing care to the principal cannot usually serve as the healthcare agent unless the person was selected as the healthcare agent before the facility began care of the principal.
An advance directive can be either a written or electronic document. It must be signed, dated, and witnessed by two witnesses. It is the responsibility of the person who wants his/her advance directive honored to tell his/her doctor about it. Anyone except the healthcare agent may serve as a witness.
Unless otherwise stated in the advance directive, the directive goes into effect when the person becomes too sick to make a decision about his care. If the patient is unconscious or not able to communicate, then the attending doctor may make the determination that the advance directive is in effect. Otherwise two doctors must certify that the patient is not capable of making an informed decision about care.
Read the Law: MD Health- General § 5-602
Maryland Health-General § 5-603 provides a sample form for an advanced directive. The form includes provisions for selecting a health care agent, selecting powers of the agent, making a living will and preferences for treatment, and organ donation.
Ending the Power of Attorney
A power of attorney may end in a number of ways. A power of attorney may ends when:
- the principal dies (ends when the agent learns of the principal's death);
- the principal becomes incapacitated (unless the power of attorney is durable);
- the principal revokes the power of attorney;
- the power of attorney provides that it terminates;
- the purpose of the power of attorney is accomplished; OR
- the agent dies, becomes incapacitated, or resigns, and the power of attorney does not provide for another agent to act under the power of attorney.
Note: If the principal dies, any action that the agent takes in good faith – until the agent learns of the principal’s death – is binding.
Read the Law: MD Estates & Trusts § 17-112