A power of attorney is a legal document that grants one person, termed the attorney-in-fact or agent, the authority to act on behalf of another, known as the principal. This authority allows the agent to make decisions of legal and financial importance, particularly when the principal is absent or incapable. The process of obtaining a financial power of attorney can vary by state. Here is what you need to know about getting one in the state of Maryland. If you need help with your full estate plan, consider working with a financial advisor.
How to Obtain a Power of Attorney in Maryland
In Maryland, the law provides for various types of powers of attorney (POA), including limited, general and advanced medical directives, each with distinct implications. For instance, a general power of attorney confers broad powers to the agent, allowing them to handle a wide range of affairs on behalf of the principal.
In contrast, a limited power of attorney gives the agent specific powers, limiting their authority to certain areas as specified by the principal. It’s important to note that each type of POA carries its own potential risks and benefits. For example, a general POA could potentially lead to misuse of power due to the broad authority it grants. On the other hand, it can be beneficial if the principal needs comprehensive assistance with their affairs.
The first step in obtaining a power of attorney in Maryland is to decide which type of POA you need. This decision will determine the extent of the authority that the agent will have. Once this is decided, the principal then selects a trusted individual as the agent. This person should be someone trustworthy and capable of handling the responsibilities entrusted to them.
In Maryland, the principal is then required to complete the necessary forms, which include the “Maryland Statutory Form Personal Financial Power of Attorney” and the “Maryland Statutory Form Limited Power of Attorney.” These forms must be completed following Maryland law and signed in the presence of a notary. In some cases, the signing of these forms must also be witnessed by two individuals.
Given the legal complexities involved in obtaining a power of attorney, you might want to seek professional legal assistance. Legal professionals, such as attorneys, can help ensure that legal requirements are met and the process is executed correctly. They can also provide valuable advice and guidance to avoid common legal pitfalls, such as improper execution of the document or failure to specify the powers adequately.
Maryland Restrictions on a Power of Attorney
The restrictions of a power of attorney may confine the legal document’s authority to specific areas such as health care, financial matters or property management. This means that if you were to delegate someone the power to manage your health care, that individual wouldn’t automatically have the authority to manage your finances or property unless you expressly grant them those powers. These limitations can act as both a safeguard and a potential obstacle, depending on the circumstances.
To better understand these restrictions, we must delve into the legal framework that governs the power of attorney in Maryland. As outlined by the Maryland General and Limited Power of Attorney Act (Title 17), the person creating the power of attorney can delineate the powers granted and impose restrictions. This essentially means that you have significant control over what your agent can and cannot do.
The restrictions in Maryland can shield the principal but may also curtail the agent’s ability to act in the principal’s best interest. For example, if a power of attorney does not explicitly permit estate planning changes, the agent might be unable to make beneficial alterations in response to changing circumstances. This could be especially problematic in situations where the principal’s circumstances have changed dramatically and the existing estate plan no longer serves their best interests.
Therefore, it’s of utmost importance to carefully consider the scope and limitations when creating a power of attorney document. Understanding the potential implications of these restrictions, including the potential difficulties they could create, is also crucial. For instance, if the power of attorney is too restrictive, it could prevent the agent from taking necessary action in a timely manner. On the other hand, if the power of attorney is too broad, it could open the door to potential misuse or abuse.
When You Might Need a Power of Attorney
Several scenarios could necessitate the use of a power of attorney. For instance, when an individual is severely ill or hospitalized, they may find it impossible to handle their financial affairs or make crucial decisions. In such cases, a duly appointed agent can manage these matters, ensuring that decisions align with the principal’s best interests.
International business travelers might also require a power of attorney to manage their financial affairs back home while they’re away. Furthermore, in complex business transactions, a power of attorney can delegate crucial financial decisions to a trusted individual, ensuring the smooth operation of business affairs, even in the principal’s absence.
Having a power of attorney in place can greatly simplify estate planning, ensuring the principal’s financial matters are managed efficiently and according to their wishes even after their demise. This provides peace of mind for the principal and their loved ones, knowing that their legacy will be preserved and their estate will be managed as they intend.
How a Power of Attorney Can Help Your Entire Estate Planning
Powers of attorney, unlike other estate planning documents, focus on preserving your wishes during your lifetime. So, upon your death, the POA will end in Maryland. This legal document, should therefore be seen as a tool that could help ensure that your estate gets managed according to your wishes during your lifetime.
Designating someone as an attorney-in-fact through a POA will allow you to continue managing your financial and legal matters even when you can’t. Moreover, a POA can contribute to your estate plan by providing clarity and continuity in decision-making. This becomes particularly important when dealing with healthcare decisions.
By combining a financial POA with a healthcare POA, you can establish a comprehensive framework to manage both financial and medical aspects. And this can help direct your assets according to your wishes, while minimizing financial and legal risks that could arise in your absence. In this sense, a POA can help you preserve your estate during your lifetime for heirs and beneficiaries generations to come.
Bottom Line
A POA is a legal document that can help you manage both financial and personal affairs when you are absent or incapacitated. Maryland, like other states, has specific laws for creating a POA. You may want to engage the professional help of an attorney and an estate planning advisor to see how a POA could best benefit your situation, and your long-term goals for managing and preserving your estate.
Tips for Estate Planning
- A financial advisor can help you become prepared for retirement and guide you in creating a plan to protect your estate. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you’re trying to complete your estate plan on your own, you may want to create a checklist, but should also be aware of the potential dangers of DIY estate planning.
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