Financial Power of Attorney
In broad terms, a Financial Power of Attorney is a document in which a competent person (the grantor) gives another person (the agent) the right to act legally on the grantor's behalf to handle his or her financial affairs. The rights that can be granted to the agent could be anything from paying bills to selling property. Historically, Financial Powers of Attorney were time-limited or limited in authority, and they became ineffective when the grantor became incapacitated. Today's Power of Attorney for Finances (a Durable Power of Attorney) is a more effective tool for handling financial matters for the long term.
Durable Power of Attorney for Finances
A Durable Power of Attorney is different from a standard Power of Attorney in that the Durable Power of Attorney remains effective even after the grantor becomes unable to make decisions for him or herself. Sometimes a Durable Power of Attorney (DPOA) only becomes effective after the grantor becomes disabled. Be certain that “disability” is carefully defined in a DPOA. Typically, a person is defined as disabled when two physicians examine the individual and agree that he or she is no longer capable of making medical or financial decisions. An agent under a Power of Attorney for Finances is a fiduciary. A fiduciary is someone who can be trusted to act in the best interest of the disabled person and to use the assets for the benefit and welfare of the person.
As of January 1, 2000, all Powers of Attorney in Maryland are presumed to be durable, unless the document specifically states otherwise.
Many attorneys suggest that the document should include more than one agent to act as the Durable Power of Attorney; should one agent be unable to function in this role, the other one can step in. There are standard forms an individual can use, but an attorney can draft the document to be specific to one's needs.
Termination of a Power of Attorney
A Durable Power of Attorney is automatically terminated when the grantor dies. A competent grantor may revoke, suspend or terminate a power of attorney completely or in part at any time. If a guardian of the property is appointed, his or her powers supersede those of a power of attorney.
There is no Court supervision of the Financial Power of Attorney. One should only appoint a person who is trustworthy. If an individual wants his or her agent to have the authority to establish a trust or make gifts, this authority must be specifically granted in the power of attorney document.