The person who grants the power of attorney is known as the “principal” and the person given the power is known as the “agent” or “attorney-in-fact.” The power of attorney defines the limits of the power that the agent is giving to the agent. The power of attorney does not take away the principal’s power to act; it only gives the agents the power to also act for the principal.
The Maryland legislature passed a new Power of Attorney Act in 2010. The new act provides two new statutory forms that make it easier for people to grant powers to other to act for them in financial and other matters. The new law, titled the Maryland General and Limited Power of Attorney Act, is in MD Code Estates & Trusts, Title 17.
Statutory Powers of Attorney
Any writing or other record that grants authority to a person to act for someone will be read as a power of attorney, even if the document does not say “power of attorney” on it. The Maryland General and Limited Power of Attorney Act created a specific kind of power of attorney called a “statutory form power of attorney.” These are documents that are the same or similar to the powers of attorney forms included in the law.
Maryland law requires that the power of attorney be honored if it follows the form mentioned in the law. If a person refuses to honor a statutory power of attorney, that person may be held liable for the attorney’s fees incurred to get a court order.
General v. Limited Powers of Attorney
A power of attorney can be either general or limited. A general power of attorney gives a person the power and authority to act for the principal in all business and personal matters. This usually includes opening and closing bank accounts, buying and selling stock, accessing safe deposit boxes, taking out loans, purchasing real estate, suing, and entering into a contract in the name of the principal.
A limited power of attorney grants to the person only the powers defined in the document. Limited powers of attorney are often used to give agents the power to act in financial matters, to manage real estate, or to make healthcare decisions for the principal when the principal loses the ability to make decisions for himself. Medical powers of attorney are called advance directives.
The power of attorney may be limited either by the scope of powers that the agent gets, or by time. Powers should be as specifically defined as possible, both to protect the principal and to make it more likely that the people and businesses will honor the power of attorney.
Who May Create a Power of Attorney
To create a power of attorney, an individual must:
- Be at least 18 years old;
- Intend to give the power to the person designated in the document; and
- Be mentally competent, which means
- Able to understands the document;
- Understand which powers are being granted; and
- Understand which property is affected by the power granted.
Written Powers of Attorney Are Assumed to be Durable
In Maryland, a written power of attorney is assumed to be a durable power of attorney unless the document says it isn’t. Durable powers of attorney do not end when the principal becomes disabled. A conventional power of attorney ends when the principal becomes too disabled to make decisions for himself.
When Power of Attorney Goes into Effect
Normally the power of attorney goes into effect immediately when the principal signs the document. However, a springing power of attorney gives the agent the power to act for the principal only after a certain event, such as when the principal becomes disabled. The wording of the document must be very specific so that there is no question about what counts as an event that matches the requirements of the power of attorney. The person granting the power may authorize someone to say whether the event making the power effective has happened. If the power of attorney is supposed to go into effect when the person becomes sick or hurt and no one has been authorize to make the determination in the power of attorney, then a doctor or a judge may make the determination.
Powers and Duties of Person with Power of Attorney
The powers of the agent should be described in detail in the document. If there is a question about the limits of the powers granted by the power of attorney, the principal, agent, guardian of the principal, principal’s family member, or a government agency may petition the court. The court can also decide what power the agent has. An agent is required to act, within the powers granted, in the best interest of the person who gave the power. The agent must do what they think the person granting the power would want them to do, to the best of his/her ability.
Agents must keep a record of all receipts and transactions made for the other person. They must act loyally for the benefit of the principal’s best interest and cooperate with the person who is empowered to make health-care decisions for the principal if there is one.
The agent has a right to reimbursement for reasonable expenses paid while acting for the principal, but s/he has no right to payment beyond that unless it is included in the power of attorney.
Medical Powers of Attorney (Advanced Directives)
Any competent person may create a power of attorney to give someone the power to make healthcare decisions for him in case something happens. These documents are called advanced directives. The Maryland Health Care Decision Act governs advance directives.
Under the Maryland Health Care Decision Act (Md. Health-General §§ 5-601 et seq.) the person the principal appoints to make healthcare decisions is called a “healthcare agent.” An owner, operator or employee of the healthcare facility providing care to the principal cannot usually serve as the healthcare agent unless the person was selected as the healthcare agent before the facility began care of the principal.
An advance directive can be either a written or electronic document. It must be signed, dated and witnessed by two witnesses. It is the responsibility of the person who wants his advance directive honored to tell his doctor about it. Anyone except the healthcare agent may serve as a witness. The directive goes into effect when the person becomes too sick to make a decision about his care. If the patient is unconscious or not able to communicate then the attending doctor may make the determination that the advance directive is in effect. Otherwise two doctors must certify that the patient is not capable of making an informed decision about care.
Ending the Power of Attorney
A power of attorney may end in a number of ways. Obviously, all powers of attorney end when the principal dies. However, the power of attorney only ends when the person using the power learns of the principal’s death. Any actions that the agent takes in good faith until he learns of the principal’s condition are binding. Also, the power expires if the document sets a time limit on the power. Also, the principal may choose to cancel (revoke) the power. The principal may revoke the power by tearing up the document, signing a document revoking it, or signing a new document giving the power to someone else. Just as the principal needs to be competent to give the power to the agent, the principal needs to be competent when taking it away. If the principal becomes disabled, powers of attorney that are not durable end.