How to Set up a Financial Power of Attorney in Maryland

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If you're navigating the financial planning journey, you already know it's all about preparing for today and tomorrow. An essential tool in your toolkit should be a financial power of attorney (POA). Especially here in Maryland, setting up a POA can be critical to ensure your finances are in good hands, even when you might not be able to handle them yourself.

This guide will walk you through a financial power of attorney, its importance, and the steps to set one up in Maryland.

When you’re ready to get started on your own financial POA, call our Maryland estate planning office at (301) 456-0982 for a FREE consultation so we can help you create an estate plan that’s truly tailored to you and your family’s unique needs.

What is a Financial Power of Attorney?

A financial power of attorney is a legal document that grants someone you trust the authority to handle your financial affairs. This can include paying bills, managing investments, and making other financial decisions on your behalf. The person you designate is known as your "agent" or "attorney-in-fact," while you are referred to as the "principal."

Do I Need a Financial Power of Attorney in Maryland?

Most estate planning professionals advise clients to include a financial power of attorney as part of their overall estate planning because incapacitation can happen to anyone at any time. A financial POA means that in that situation, you won’t recover to find that your mortgage is in default or your assets have been seized because you were physically or mentally incapable of staying on top of your finances.

In short, the best time to create a financial power of attorney is when you don’t need one. If you become incapacitated without one, it can be much more challenging for your loved ones to take the steps necessary to ensure your affairs remain in order for as long as you are unable to handle them yourself.

What are the Benefits of a Financial Power of Attorney in Maryland?

Benefits of a financial power of attorney include:

• Manages Your Finances if You Can’t: Whether due to health issues, travel, or other life events, if you can't manage your finances, your chosen agent can keep everything running smoothly.

• Gives You the Choice of a Representative: You decide who manages your finances, avoiding a situation where the court steps in to make these decisions for you.

• Flexibility: You can tailor the POA to your needs, deciding what your agent can and can't do with your finances.

• Avoids Court Intervention: A POA can keep you out of court by avoiding the need for a formal guardianship if you become incapacitated.

How to Establish a Financial POA in Maryland

1.      Choose Your Agent

Pick someone you trust completely to look after your financial well-being. This person should be dependable, have a good head for finances, and ideally live close by in Maryland.

2.      Understand Maryland’s Legal Requirements

Maryland law has specific requirements for creating a valid financial power of attorney. The Maryland General Assembly provides a statutory form you can use to assign a financial power of attorney, but the law also allows you to create a custom document to fit your individual needs.

3.      Decide on Scope and Duration

Determine whether your POA will be durable (continues if you become incapacitated) or springing (comes into effect only if you become incapacitated). Maryland law allows for both, but specifics must be clearly outlined in the document.

4.      Draft the Document

While there are DIY options, working with an attorney to draft your POA is the most advisable option as it will ensure that it meets all the legal requirements and will effectively cover all your needs.

5.      Sign and Notarize

Sign your POA before a notary, and depending on what powers you're passing on, you might need a witness or two.

6.      Inform Relevant Parties

Let your banks and anyone who will be affected by your POA about the documents. Giving them a copy is also advisable so they can access the documents if/when needed.

7.      Update Regularly

Life changes, and so might your POA needs. Periodically review it to make sure it reflects your current situation.

Do I Need Other Documents Besides My Financial POA?

A financial POA is only one part of a comprehensive plan for the hopefully unlikely event you become incapacitated. In addition to a financial POA, you may want to include the following documents in your estate plan:

·        Health power of attorney

·        Will

·        Trust

·        Guardianship (if you have minor children)

An experienced estate planning attorney can walk you through these documents and help you choose which ones are right for you and your unique circumstances.

Do I Need an Attorney for a POA in Maryland?

Given the complexities and legal requirements of creating a financial POA, consulting with an attorney experienced in Maryland’s estate planning laws is highly recommended. An attorney can provide guidance tailored to your specific situation, helping draft a document that meets legal standards and addresses your needs.

An experienced Maryland estate planning attorney can also recommend additional documents to help you create a well-rounded estate plan beyond just a financial POA. This may include wills, trusts, guardianships, and other important legal documents to safeguard you and your family’s future against the inevitable and the unknown.

Our experienced Maryland estate planning attorney has over 20 years of experience guiding clients through these complex legal documents to create a clear picture of their financial future. Call us at (301) 456-0982 or contact us here for a FREE consultation that will get you started on the peace of mind that a comprehensive estate plan can bring.  

Conclusion

A financial power of attorney is a cornerstone of sound financial planning, reassuring that your affairs will be handled according to your wishes, even if you cannot manage them yourself. By choosing a trusted agent and creating a POA that reflects your preferences and complies with Maryland law, you can protect your financial legacy. Setting up a financial POA is a proactive step toward securing your and your loved ones' peace of mind.