Power of attorney documents are commonly used in Maryland, but they are also commonly misunderstood. Knowing the different types and how they operate can give you a better grasp of the ways these valuable tools can be used to protect and further your interests.
What a Power of Attorney Does
A power of attorney document gives an agent the ability to exercise some of the same power as the principal person who executed the document. That principal shares their power with another person. They don’t lose any ability to act or make decisions on their own, they just enable another person to act on their behalf.
Someone might grant power of attorney to another person for convenience, to allow the agent to sign a contract for them when they are out of town. Or power of attorney can be granted to handle necessities in emergencies such as when an individual becomes incapacitated and cannot make or communicate decisions for themselves.
General and Limited Powers of Attorney
The two main types of powers of attorney in Maryland are general and limited. When an agent has a general power of attorney, they gain authority to make decisions and take action for the principal in all business and personal matters. This includes:
- Managing funds in bank accounts
- Buying and selling assets
- Signing contracts
Sometimes this is referred to as a financial power of attorney. A principal may also grant limited power of attorney to enable an agent to take only the specific actions allowed in the power of attorney document or to act only for a limited amount of time. The power of attorney might cover one specific real estate transaction, for instance. Or it might allow the agent to make health care decisions if the principal is incapacitated. A medical power of attorney is known as an advanced directive.
Durable Power of Attorney
A power of attorney is referred to as “durable” when it is created to remain in force even if the principal becomes incapacitated. Traditionally, a power of attorney would come to an end at the point of incapacity, which is essentially when the power is the most useful to the principal. Therefore, Maryland law now presumes that any power of attorney granted in writing is a durable power of attorney unless the document specifies otherwise.
Springing Power of Attorney
Generally, a power of attorney takes effect the moment it is signed. It is possible in Maryland, however, to create a “springing” power of attorney that only goes into effect when and if a certain event arises.
Many people ask their estate planning attorney to create a springing power of attorney that only grants power to their agent if they should become incapacitated. It is important to clearly define the event that triggers the power to spring into action.
An Estate Planning Attorney Can Craft the Right Power of Attorney for Your Needs
Although powers of attorney are used frequently, they must be drafted with care. Giving someone too much authority can allow them to take actions that are against your interests. At the other end of the spectrum, granting too little authority can make the power of attorney essentially useless.
An experienced estate planning attorney at the Law Office of Ralph W. Powers, Jr., P.C. can work with you to develop the right power of attorney documents for your specific needs and goals. Contact us today to find out how we can assist.