A Durable Power of Attorney is an important Estate Planning document that is often overlooked. It allows you (the principal) to designate an individual whom you trust (your agent) to handle your financial affairs in the event that you are unable to.
Given today’s advances in medical science, people are able to live longer lives. However, as people age, it is often common that their mental capacities deteriorate. Moreover, losing ones’ functional mental capacity can occur over a period of time. It can manifest itself in many different ways. An individual may be able to freely communicate to their friends and family, but not be mentally competent enough to handle their financial affairs. Once that person is not mentally competent enough to handle their financial affairs, who does so on their behalf? Who has access to their bank accounts? Their safe deposit box?
One may intuitively think that their spouse should be able to automatically take over this role. However, this is not the case. Without a Durable Power of Attorney which appoints someone to act as their agent, one must petition a court to be appointed as their guardian. Family dynamics often can complicate this process as family members may disagree as to who should serve as the guardian or even if a guardian is necessary. Moreover, even after a Maryland Court appoints a guardian, they will be under the judicial supervision of the applicable circuit court. The guardian will be required to file an annual account detailing how they have used the disabled individual’s assets. A court can hold hearings and set other restrictions on how the guardian uses the disabled individual’s assets. Given that one of the most common forms of guardianships is where one spouse is serving as the guardian for the other, this process can be highly intrusive into a marriage.
A Durable Power of Attorney helps avoid this judicial oversight. It allows you to select who you trust to serve as your financial representative should you need one. It reduces the need for a judicial hearing or court oversight. Moreover, Maryland Law allows you to grant as much or as little authority as you wish to your agent. Therefore, depending on your own personal circumstances, one can tailor their Durable Power of Attorney to cover only certain aspects of their finances or to empower their agent to take complete control of their finances.
A Durable Power of Attorney is another way for you to continue to have your wishes be respected long after you may no longer have the mental capacity to personally enforce them.