I've Got the Power of Attorney.. or Do I?
Do you ever question whether your current Power of Attorney makes the cut? Take a look at it and see if it has the following language:
Banks and other financial institutions – With respect to this subject, I authorize my agent to: continue, modify, and terminate an account or other banking arrangement made by or on behalf of the principal; establish, modify, and terminate an account or other banking arrangement with a bank, trust company, savings and loan association, credit union, thrift company, brokerage firm, or other financial institution selected by the agent; contract for services available from a financial institution, including renting a safe deposit box or space in a vault; withdraw, by check, money order, electronic funds transfer, or otherwise, money or property of the principal deposited with or left in the custody of a financial institution; receive statements of account, vouchers, notices, and similar documents from a financial institution and act with respect to them; enter a safe deposit box or vault and withdraw or add to the contents; borrow money and pledge as security personal property of the principal necessary to borrow money or pay, renew, or extend the time of payment of a debt of the principal or a debt guaranteed by the principal; make, assign, draw, endorse, discount, guarantee, and negotiate promissory notes, checks, drafts, and other negotiable or nonnegotiable paper of the principal or payable to the principal or the principal’s order, transfer money, receive the cash or other proceeds of those transactions; and apply for, receive, and use credit cards and debit cards, electronic transaction authorizations, and traveler’s checks from a financial institution.
If you don’t see this, you may not be able to effectively use the power. In the past there has been a serious issue regarding powers of attorney presented to banks and other institutions. Often, the Power of Attorney was not acceptable. An attorney-in-fact is the person you have named to act for you under your general power of attorney. When the attorney-in-fact would attempt to withdraw funds from a bank on behalf of the individual he/she was representing by presenting the power of attorney, the bank would not deem the attorney-in-fact authorized to do so under the document. Another example is that a settlement on a house could not be finalized because the buyer’s attorney was not allowed to sign for the buyer.
Maryland has passed a new statute that became effective October 1, 2010, that attempts to solve many of the problems that have faced the Power of Attorney in this state. The new statute also includes statutory forms for both General Powers of Attorney and Limited Powers of Attorney. We recommend you discussing these forms with our experienced attorney as to fully understand the effects of signing such a document and what rights you will be giving or receiving.
The signing requirements prior to this new statute were not very strict. Now, the requirements could be compared to those involved with signing a last will and testament. Under the new statute, once properly drafted, two witnesses must also sign the power of attorney. The witnesses and the person signing the Power of Attorney must all be present at the same time and the document must now be notarized as well.
There are also detailed requirements for what the person acting as the attorney-in-fact has to do or not do. A very important requirement that will go a long way to prevent fraud and theft is that the attorney-in-fact must keep a record of receipts, disbursements, and transactions for all financial activities he or she performed under authority of the power of attorney.
The new Maryland law also provides new protections for the elderly and others who sign such forms. “A person may not require an additional or different form of a power of attorney for any authority granted in a statutory form power of attorney.” So, if the new Maryland form or another power of attorney “in substantially the same form” is presented and all the validation and signature requirements are met, institutions such as hospitals, doctors, banks, etc. in Maryland cannot reject the power given in that document. If they do, they face the threat of being subject to a court order and attorney fees and costs created by their actions.
Additionally, in the new forms, certain people can be given the ability to petition the court to review the attorney-in-fact’s conduct. Examples of such people would be the principal’s (your) guardian, spouse, or other potential beneficiaries. The new statute sets forth some mandatory duties and some duties which may be waived. The statute allows the attorney-in-fact to delegate authority, and the attorney-in-fact is not liable for the delegee’s action if the delegee is chosen with reasonable care and diligence.
This new law has fixed many of those issues that once arose when attorneys-in-fact attempted to present or use their power at banks. It has also addressed other situations where an institution may try to challenge the document.
At the beginning of this blog, we set forth the statute’s proposed language for banks and other financial institutions. The new statute has proposed and recommended language for the following needed topic areas as well: insurance and annuities, claims and litigation, government and military benefits, retirement plans, and taxes. Contact us and our Columbia Attorney can prepare a power of attorney for you or discuss your current power of attorney with you to make sure your document correctly delegates your powers. Call our Estate Planning Attorney in Howard County, Maryland at 410-730-4404.