In estate planning, we believe in planning for reasonable future uncertainties so you have the peace of mind that you and your loved ones will be protected. A Financial Power of Attorney is just one of many estate planning tools that can allow you to focus on and enjoy the present because you know you have everything in order should different life events occur. We cannot predict the future, but we can put measures in place to ensure your wishes are met.
A Financial Power of Attorney is a legal document in which you give a person (your Attorney-In-Fact) the authority to handle financial matters on your behalf. Your financial matters can include—but are not limited to—access and authority over your bank accounts, investments, real estate, retirement accounts, life insurance policies, and other assets. A Financial Power of Attorney can also allow a person to pay your bills and handle your taxes.
What are the benefits of a Financial Power of Attorney?
A Financial Power of Attorney allows you to put someone you trust in control of your financial affairs, especially if you should become incapacitated or disabled and are no longer able to make decisions for yourself.
When you designate your Attorney-In-Fact in a Financial Power of Attorney, you are likely to avoid the lengthy and expensive process of a guardianship proceeding, if you should become incapacitated. Guardianship is the court process of appointing someone to manage the personal or financial affairs of a minor or an incapacitated adult.
What are the different forms of Financial Powers of Attorney?
The state of Maryland recognizes a few different forms of Power of Attorney that are used for different situations. Please note that even just a brief overview of these different forms can be confusing, so it is imperative that you discuss your options with your estate planning attorney. Your attorney will explain your options and can recommend which one to use for your specific needs.
Limited v. General Power of Attorney
A Limited Power of Attorney gives the designated person the authority to handle only specific financial matters, such as banking or real estate transactions. It can be used for a single transaction or for all transactions in a specific category.
In contrast, a General Power of Attorney gives the designated person the authority to handle all of your financial matters. It is designed to be as broad as Maryland law allows. This includes everything from signing contracts for you, to opening and closing bank accounts, purchasing real estate, and buying and selling stocks.
Durable v. Springing Power of Attorney
A Durable Power of Attorney is in effect when the legal document is properly executed and stays in effect indefinitely. The state of Maryland assumes that all Power of Attorney documents are durable unless otherwise specified.
On the other hand, a Springing Power of Attorney is in effect after any specific events that are noted in the document and stay in effect for the duration of the event. For example, you may choose a Springing Power of Attorney in the case that you become incapacitated. The designated person will have authority only for the time that you are incapacitated.
It is extremely important that these events are specific and detailed, so there is no question whether the Power of Attorney comes into effect. Even with these precautions, using Springing Powers of Attorney can be more cumbersome than using Durable Powers of Attorney because when the power comes into effect or terminates can be open to interpretation.
We understand that Powers of Attorney can be confusing. We are here to help guide you. If you have questions about Powers of Attorney, please contact us at (443) 589-5600. Per Governor Hogan’s Executive Order on April 10, 2020, estate planning documents can be signed, witnessed, and notarized remotely.