Creating a will and trust is just the beginning of estate planning. You will also want to grant power of attorney (POA) to a person that you trust to handle your financial affairs if you are incapacitated. You will also want to appoint someone to make medical decisions for you if you become incapacitated.
When you create power of attorney documents, you can appoint one individual for both financial and medical issues, or you can separate the two, and appoint a different agent for each.
Let’s discuss both financial and medical power of attorney in Maryland. Medical power of attorney should be part of an advance directive.
Financial Power of Attorney in Maryland
Important Characteristics
Durable or Nondurable
- Durable: A durable POA remains in effect even if the principal becomes incapacitated for whatever reason such as illness, injury or dementia. This is often used for long-term planning when future incapacity is a concern, perhaps due to age. If the POA does not indicate otherwise, it is presumed to be durable.
- Nondurable: A nondurable POA automatically terminates if the principal becomes incapacitated or other specified trigger is met. Nondurable POAs are usually used for limited transactions such as having an agent handle a real estate transaction when you cannot. This could be for reasons other than incapacity. For example, you may be traveling abroad.
Immediate or Springing
- Immediate: The POA goes into effect immediately.
- Springing: The POA goes into effect when an event such as incapacity triggers it.
Acceptance by Financial Institutions
The Maryland Statutory Form Personal Financial Power of Attorney and the Maryland Statutory Form Limited Power of Attorney are set out in Md. Code, Estates and Trusts § 17-203 and § 17-204. They must be accepted by financial institutions in Maryland unless they have a legitimate reason not to do so (an example would be forgery). While the Maryland Statutory Form Personal Financial Power of Attorney is a standard component of a solid estate plan, it may not be powerful enough for your family to implement an asset protection plan upon your disability. It is important to consult with an experienced Maryland estate planning and elder law attorney to ensure your documents are sufficient.
Medical Power of Attorney (Part of Maryland Advance Directive)
In Maryland, power of attorney for healthcare decisions is part of an advance directive. An advance directive includes both the appointment of an agent to make healthcare decisions (in other words, medical power of attorney) and also a living will that dictates instructions for end-of-life treatment.
Maryland’s Advance Directive is governed by the Health Care Decisions Act, codified in Md. Code, Health-General § 5-601 et seq.
Important Characteristics
- Trigger: A Maryland Advance Directive only becomes active if your physician determines you are incapacitated.
- Decision-making when you are incapacitated: Your agent makes medical decisions for you if you are unable to communicate or make decisions yourself. This includes decisions about surgery, medication, life-sustaining treatment, long-term care, and more.
- Accepted forms: You can use the Maryland Attorney General’s standard form or create a custom version as long as it complies with state requirements.
Why Do I Need a Power of Attorney in Maryland?
You may be thinking, “Can’t my spouse or adult child make my decisions if I’m incapacitated? Isn’t designating power of attorney overkill?”
Your spouse may not always have legal authority to manage your individual bank accounts, pensions, and financial instruments, or to make medical decisions unless you’ve granted that authority in a POA document. If you have granted a power of attorney, there is no doubt about your intentions, and this legal authority enables your agent to act quickly. If you have not designated power of attorney, your family member may need to go to court to be appointed as your legal guardian before they can make decisions on your behalf.
The obvious problem here is the time it takes before your agent is permitted to make important financial and health decisions during a crisis. On top of risking your health and finances, wrangling guardianship from a court during a time of emergency is likely to be both expensive and extremely stressful.
We highly recommend that you execute both a financial and medical power of attorney while you are competent. This way you know for sure who will be in charge when you can’t, and you enable them to act quickly.
Share your powers of attorney documents with your agent(s) and your attorney. Also share your advance directive (including your medical power of attorney) with your healthcare providers, and share your financial power of attorney with your financial institutions.
Following are the benefits of creating a power of attorney instead of just winging it.
Bypass Court Guardianship Proceedings
If you become incapacitated without a POA, your family must file for guardianship of the person (for healthcare) under Md. Code, Estates and Trusts § 13-705 and guardianship of property (for finances) under Md. Code, Estates and Trusts § 13-201.
This is far from a quick in-and-out process. If you have not appointed power of attorney and you become incapacitated, your family’s hands are tied while they
- File a petition and serve notice to interested persons
- Produce medical certification of incapacity
- Go to a hearing
- Undergo scrutiny because the entire matter becomes a matter of public record.
Maintain Control
Beyond enabling your agent to act quickly without going to court, a POA also enables you to have as much control as possible. Do you really want a court deciding who your agent is and the extent of their authority if you are incapacited? With a power of attorney, you can
- Choose your agent
- Define the scope of their authority
- Decide when the POA becomes effective
- Make changes to the document (as long as you are still competent)
When you plan ahead by creating a power of attorney, you maintain some control over your affairs and your health instead of leaving it up to a court.
Ensure Financial Continuity
When people think of creating a power of attorney document, they sometimes believe it is only for the event of long-term incapacity. But even if you undergo minor surgery or suffer a temporary but debilitating injury, or you fly out of the country for a well-earned sabbatical, you may need an agent to handle certain aspects of your finances.
Under these kinds of circumstances, you may want to appoint an agent through a POA to do mundane tasks such as file your taxes, manage the day-to-day of your investments and access your accounts to make payments. You may think your spouse can do all that for you, only to find that your financial institution won’t let your spouse access all of your accounts without a POA.
Get the Healthcare You Would Choose
If you fall ill or injured to the point of incapacity, it’s important that a person you trust makes the medical decisions you would choose for yourself. If you create a medical power of attorney, you can choose who that person is, the person who has your life in their hands. Under Maryland law, you can be as specific as you like in giving instructions to your agent in your advance directive.
A medical power of attorney enables your chosen agent to
- Consent to or refuse treatment
- Make hospital or long-term care decisions
- Access medical records under HIPAA
- Honor your religious, ethical, or personal preferences regarding health care
Requirements for a Valid Power of Attorney in Maryland
Requirements for a Financial Power of Attorney
- Must be in writing
- Must be signed by the principal
- Must be notarized
- Must be signed by two adult witnesses, in your presence as the principal according to Md. Code, Estates and Trusts § 17-110.
You don’t have to use the statutory forms to create a financial power of attorney, but financial institutions may be more reluctant to accept non-statutory forms.
Requirements for a Medical Power of Attorney (Advance Directive)
- Must be in writing
- Must be signed by the principal
- Must be signed by two adult witnesses, who are not the appointed health care agent
You do not need a notary for your advance directive in Maryland.
Is a DIY Power of Attorney in Maryland a Good Idea?
You may be thinking that because the state of Maryland provides forms for power of attorney, you can just fill them out yourself rather than consulting with an estate planning attorney. Why isn’t that a good idea?
It’s not a good idea because your life, your finances, your health and your family are all different from anyone else’s. Power of attorney is only one of the aspects of a good estate plan. It needs to work in conjunction with your other estate planning documents such as your will and trust rather than in opposition to them. The more complex your estate, the more you need an experienced estate planning professional to draw up your financial power of attorney.
Could Someone Contest My Power of Attorney Documents?
It’s always possible for an interested party to challenge legal documents including POAs. They could petition a court in order to show evidence of a problem such as
- The principal lacked capacity when they signed the document.
- The principal was defrauded, coerced or subject to undue influence to sign the power of attorney.
- The appointed agent is abusing their authority.
- The POA was executed improperly. For example, perhaps it did not have the number of witnesses required.
Maryland law provides remedies in Md. Code, Estates and Trusts § 17-103 and Md. Code, Estates and Trusts § 17-108, including court oversight, revocation, and requiring an accounting from the agent.
To vastly reduce the risks of a successful challenge to power of attorney in Maryland, you will want an experienced attorney to draft it. They can build in protections against possible challenges to both your financial and medical powers of attorney.
Now Is the Time to Appoint Power of Attorney in Maryland
Life is unpredictable. You may plan to live in perfect health until you are 90, but people can suffer accidents, strokes, and other illnesses and injuries at any time. Now is the time to get both your financial power of attorney and your advance directive with a medical power of attorney in place.
Chesapeake Wills and Trusts is ready to help you prepare powers of attorney as part of your overall estate plan. Contact us today to set up a consultation.