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How do I set up Power of Attorney?

A power of attorney lets you authorize another person to handle specified matters on your behalf.

WHAT IS A POWER OF ATTORNEY?

A power of attorney (POA) is a legal document that allows one person to give another person authority to act on their behalf in specific matters.

The person granting the authority is called the principal. The person receiving that authority is called the agent or attorney-in-fact. Despite the name, an agent does not have to be a lawyer.

For example, someone might authorize a trusted person to pay bills, manage bank accounts, handle certain property transactions, or take care of other financial responsibilities. The agent must stay within the authority granted by the document and follow applicable law.

WHAT SHOULD I KNOW BEFORE STARTING?

Choosing an agent is one of the most important steps in creating a power of attorney. You should select someone you trust to act responsibly, respect your wishes, and manage your affairs honestly.

You must also decide what the agent can do. Depending on the document's wording, the authority might cover matters such as:

  • Banking and bills: Paying expenses or managing certain financial accounts.

  • Property: Handling specified transactions involving real estate or other property.

  • Financial and legal matters: Taking authorized steps to manage your financial affairs or complete certain transactions.

You do not have to give them unlimited authority. You can grant specific powers and limit what the agent is permitted to do. The actual language of the document determines the scope of that authority, so it is important to understand the terms before signing.

Maryland law establishes formal requirements for executing most financial powers of attorney. Speak with your legal team for more details. Generally, the document must be in writing, signed by the principal (or signed on the principal's behalf at the principal's express direction and in their physical presence), acknowledged before a notary public, and witnessed and signed by at least two adult witnesses.

A power of attorney generally begins immediately unless the document specifies a future date or event. It generally ends when the principal dies. It may also end earlier if the principal revokes it, a termination event specified in the document occurs, or another event takes place.

Some powers of attorney are designed to remain effective if the principal later becomes incapacitated. This is known as a durable power of attorney.

DOES A POWER OF ATTORNEY ALLOW SOMEONE TO MAKE MEDICAL DECISIONS FOR ME?

Not necessarily. A financial power of attorney and a health-care authorization serve different purposes.

A financial power of attorney generally concerns matters such as money, property, and financial transactions. It does not normally authorize someone to make healthcare decisions for them.

Healthcare decision-making is addressed through separate legal documents, and is usually referred to as medical power of attorney . This concerns who may make medical decisions on your behalf if you cannot make or communicate those decisions yourself. If you want someone to help with both financial matters and health-care decisions, you should understand which documents are needed for each purpose.

Planning ahead lets you choose someone carefully and explain all your wishes. Waiting until a crisis happens can make it impossible to create a valid power of attorney. A properly prepared document can also help reduce confusion about who is authorized to handle financial matters and what that person is allowed to do.

Legal guidance can help you understand which type of power of attorney fits your needs, choose appropriate language, comply with Maryland's signing requirements, and avoid granting more authority than you intend. An attorney can also explain how a financial power of attorney differs from a healthcare directive and whether you should consider other planning documents.

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