A Power of Attorney (POA) is a written document where a Grantor authorizes another individual to act as their financial agent.
POA’s can be limited in scope and duration, but should the Grantor become disabled in the future, a power of attorney-when properly drafted and adhered to-will normally prevent court intervention.
When appointing a Power of Attorney, it is imperative that you trust that individual because the document will allow your agent carte blanche to manage all of your financial affairs.
Disability is age non-discriminatory. It results from accident, age, disease and/or illness.
There are two estate planning documents, (which cannot be combined), that provide protection in the event of future disability. These are an Advance Health Care Directive and a financial Power of Attorney.
Do I need a financial Power of Attorney, (“POA”)?
The person(s) named as your financial agent is called an Attorney-In-Fact, (“AIF”). In the event of your future disability, the AIF collects your income, pay bills, and protects/manages all of your property and affairs. They are able to act for you within the powers granted in the document.
How can I prevent the appointment of a guardian of my property?
Most adults need a POA. If properly drafted and followed this document should provide you with financial protection. The AIF is making the same decisions a guardian of property would be responsible for.
Can my AIF undertake any financial action for me?
No. The AIF’s authority is limited to:
- Your financial matters and the authority or powers expressly stated in the document.
- If you sign a POA from a specific financial institution or government agency (such as the IRS), that document is only valid with the issuing entity.
Among other powers the POA should be broad enough to allow your AIF to undertake your banking, to hire other agents, to sign your tax returns, to engage in tax or Medicaid planning and because your AIF may need to access health care bills, should also contain a HIPPA declaration/release.
Who should draft an AHCD and POA?
Because of the complexities involved, these documents should be prepared by an attorney experienced in estate planning and elder law. It is not recommended that other professionals draft these documents or that you use a form purchased from an office supply store or online.
Disclaimer – This overview is provided for general information relevant for planning undertaken in Maryland only. None of the information within should be relied upon. Statutes, regulations, and the cases interpreting them are constantly changing. Consult an attorney before taking any action. Your reliance on or use of this information does not create an attorney/client relationship or privilege between you and the law firm and its employees, or their heirs, personal representatives, successors, or assigns.
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