How a Power of Attorney Works in Maryland: A Complete Guide
A Power of Attorney (POA) is one of the most important estate planning tools available under Maryland law. It allows you to appoint someone, called your agent or attorney-in-fact, to handle your financial or legal affairs if you can’t act for yourself. While wills and trusts often get more attention, a properly drafted Power of Attorney can be just as essential to protecting your interests during your lifetime.
What a Power of Attorney Does
A Power of Attorney gives another person the legal authority to make decisions and take actions on your behalf. Depending on how it’s written, your agent may be able to:
Pay your bills and manage your bank accounts
Handle real estate transactions, including buying or selling property
Access retirement accounts and investment portfolios
File taxes and manage business interests
Apply for government benefits, such as Social Security or Medicaid
Without a valid Power of Attorney, your loved ones may need to go to court to have a guardian appointed which is an expensive and time-consuming process that can be avoided with proper planning.
The Maryland Statutory Power of Attorney
In 2010, Maryland adopted a Statutory Power of Attorney form that is recognized statewide. Financial institutions are required by law to accept this form (or face potential penalties for unreasonable refusal). The statutory form provides broad powers, but it also has limitations particularly when it comes to Medicaid planning, gifting authority, and creating or managing trusts.
That’s why many estate planning attorneys, including our office, prepare customized Powers of Attorney that expand upon the statutory language to fit your specific needs.
Durable vs. Springing Powers of Attorney
A Durable Power of Attorney remains in effect even if you become incapacitated, which is why it’s the most commonly used type in estate planning.
A Springing Power of Attorney, on the other hand, only becomes effective when a specific event occurs and usually kicks in when you are deemed incapacitated by a physician. While this may sound appealing, in practice it can create delays or disputes about when incapacity actually began. Most Maryland attorneys prefer durable powers for their reliability.
Choosing Your Agent Wisely
Your agent will have significant authority, so it’s important to choose someone who is trustworthy, organized, and able to act in your best interests. Many people name a spouse or adult child, but you can also choose a friend or professional fiduciary.
You may also name one or more successor agents to step in if your primary agent is unable or unwilling to serve. In some cases, it’s wise to appoint co-agents who can act together for added checks and balances.
Common Mistakes to Avoid
Using generic online forms. Many free or cheap templates do not comply with Maryland law or omit crucial powers.
Failing to update old documents. Banks and financial institutions may reject Powers of Attorney that are too old.
Not providing copies to the right people. Your agent, attorney, and financial institutions should have access to your current POA.
Overlooking special powers. Without specific language, your agent cannot make gifts, change beneficiary designations, or establish trusts on your behalf.
When to Review or Update Your Power of Attorney
You should review your Power of Attorney every few years or whenever you experience a major life change, such as:
Marriage, divorce, or separation
The birth or death of a family member
Moving to another state
Changes in financial institutions or accounts
A shift in who you trust to manage your affairs
Keeping your Power of Attorney current ensures that it will be honored when you need it most.
Why It’s Important to Work With an Attorney
In Maryland, even a small drafting error can make a Power of Attorney unenforceable. An experienced estate planning attorney can tailor the document to your exact needs ensuring that it complies with state law, anticipates financial complexities, and protects you from potential abuse.
At Holt Legacy Law, we prepare customized Durable Powers of Attorney that include additional authority for Medicaid planning, trust management, and real estate transactions, so your family never has to face court intervention.
Final Thoughts
A Power of Attorney is more than just a form- it’s peace of mind. It ensures that someone you trust can handle your affairs, protect your assets, and make decisions when you no longer can. Creating one today can save your loved ones stress and confusion later.
If you’d like to create or review your Power of Attorney, feel free to book a free consultation.
Prefer to speak with someone directly? Call us at (410) 864-6395. We’re happy to help.
