We tend to think that estate planning is only for the wealthy, but that’s not true. There are aspects of estate planning that can be useful at any stage of your life and a power of attorney is one of them. But there are different types and understanding your options will help you decide if one of them is right for you.
What is a power of attorney?
Every power of attorney is a legal form you create, which grants someone else the authority to act on your behalf. It’s your way of saying to the world, “I’m giving this individual permission to make decisions for me.” What varies is the amount of authority you give the person and when they can act.
General vs. limited authority
A general power of attorney is useful for someone who wants to grant broad authority to their agent. An example might be a disabled individual who needs the help of a family member to get things done. The general power of attorney lets the agent do things like open and close bank accounts, take out loans, enter into contracts, purchase real estate and carry out many other necessary functions.
Limited powers of attorney are just what they sound like—a grant of authority to an agent, but that authority is limited to certain things. A good example would be appointing a healthcare agent, someone who is allowed to make medical decisions for you if you become incapacitated. This agent’s authority does not extend beyond medical decisions.
A durable power of attorney
All powers of attorney in Maryland are assumed to be durable unless they say otherwise. This means that the agent’s authority continues even if the principal becomes disabled. You can make the authority nondurable if you choose, just as you can initially limit the scope of your agent’s authority.
Most powers of attorney take effect as soon as you execute them, but they don’t have to. You can create a power of attorney that only takes effect when a certain condition occurs. For instance, you may fear that you’ll suffer an accident or condition that makes you disabled—you can execute a power of attorney that only activates if the disability occurs in fact.