Category Archives: Power of Attorney

COVID-19 Financial Power of Attorney

The most useful estate planning document during this COVID-19 pandemic is the financial power of attorney.

This document allows you to immediately access your elderly parent’s assets. If you’re unsure whether your parent is paying their bills in a timely fashion, then the power of attorney will allow you to access their financial information and pay their bills if necessary.

If your parent isn’t paying the bills, and if you don’t have the power of attorney, then your parent could risk experiencing the interruption of services (i.e. utilities, telephone, Internet), or the instigation of collection efforts, and the possible tax sale of their house.

Locate All Financial Power of Attorney Documents

As with all estate planning documents, your first task is to locate all financial powers of attorney for your parent or loved one. It is normal to have older versions, but it is critical that you review the documents to make sure that the newer version negates the older version. Otherwise, you would have two active financial powers of attorney that may have separate instructions. This will create confusion.

Beware of Weak Powers of Attorney

The other critical area of a financial power of attorney is that if the power of attorney is silent regarding a particular power, then the agent was not granted that power. For example, if the power of attorney is silent regarding the right to access a parent’s life insurance policy, then you, as the agent, have no right to access her policy.

The issue of having a financial power of attorney that is not robust enough is a common issue for older powers of attorney or Internet-driven powers of attorney. This creates problems if you discover too late that your power of attorney is too weak—after an elderly parent has already lost the competency to sign a new document.

How to Execute a Financial Power of Attorney During COVID-19

In Maryland, in order for a financial power of attorney to be properly executed, you must have a witness signature, and that signature must also be notarized. Of course, COVID-19 has made that more challenging.

Governor Hogan issued new emergency rules to implement remote notarization. There are new rules in place that allow for remote execution of the financial powers of attorney.

At the Law Offices of Adam J. Roa, it is our practice to review the estate planning documents with the potential signer via Zoom first and then separately arrange for a document execution. For many of our clients, this involves a drive-by document execution.

We’re Here to Help During COVID-19

We understand that these are uncertain times. Now, more than ever, is when your loved ones need you to be their advocate in planning for the future.

As an experienced elder law firm in Maryland, we’re happy to guide you through the process of preparing a financial power of attorney. Please call us at 410-296-8166 x292.

Financial Power of Attorney in Maryland

The key issue with financial powers of attorney is that if the power is not granted in the power of attorney, then it has not been granted. For example, if the power of attorney is silent regarding life insurance transactions, then you will have no right to use that power of attorney for life insurance transactions.

Over a decade ago, each attorney or law firm had their own unique financial power of attorney. However, the problem was that financial institutions could (and would) dishonor a financial power of attorney for no discernible reason.

That all changed when Maryland enacted sweeping financial powers of attorney rules that went into effect on October 1, 2010. From that point forward, Maryland adopted two financial power of attorney forms.

If the form you use is in “substantial compliance” with one of the two statutory forms, then the financial institution must honor it.

Maryland General Power of Attorney and Maryland Limited Power of Attorney

There are many differences between the two Maryland financial power of attorney forms: the Maryland General Power of Attorney (8 pages) and the Maryland Limited Power of Attorney (16 pages). The main difference is that the Maryland Limited Power of Attorney is much more robust than the Maryland General and affords the power of attorney holder a much wider and more useful set of powers than afforded in the Maryland General.

Problems with Internet-driven Powers of Attorney

One of the big issues that I see with Internet-driven powers of attorney (besides the execution issue), is often they do not conform with the Maryland standard power of attorney. Therefore, you are powerless if a financial institution refuses to honor it.

Another huge issue is that the Internet documents are often not nearly as robust as the Maryland statutory forms. It’s as problematic as taking out a rowboat that has half a dozen holes in it. The issue is even worse if a parent was competent at the time the first document was signed, then when you need to use it, you find out there are problems. But, by this point, it may be too late to have a parent sign a new power of attorney, especially if they are no longer competent to sign a new one.

Elder Law Attorney Ensures Proper Financial Power of Attorney

The first document I review when a family comes for a consultation regarding their parent or loved one is the financial power of attorney. I typically know in the first few minutes of the consultation if the document they have is going to help facilitate what we want to do or be a problem.

Don’t try to do this on your own. Have an experienced elder law attorney review your issue and draft a proper financial power of attorney that is robust to handle just about every situation. It is my practice to go through this document with you section by section and explain how each section is used, from a practical point of view.

POA Breach of Fiduciary Duty

A Power of Attorney Holder’s Breach of Fiduciary Duty

There is no question that a financial power of attorney holds what is called a “fiduciary duty” to act in the best interests of the grantor.   But what if that power of attorney holder breaches that duty and takes “mom’s” funds for herself?  What if her taking of mom’s funds caused mom to be disqualified from Medical Assistance (i.e. Medicaid)?  Can she be found liable?

An interested case in Indiana answered that quesion in the affirmative.

An Indiana appeals court rules that a woman breached her fiduciary duty to her mother when, among other things, she refused to cash out a life insurance policy in order to qualify her mother for Medicaid and later profited from the policy. Shaw v. Covenant Care Waldron Home (Ind. Ct. App., No. 73A04-1005-SC-317, March 2, 2011) (unpublished).

Joni Shaw admitted her mother to a nursing home. Ms. Shaw signed the admission agreement on behalf of her mother as her attorney-in-fact. Ms. Shaw applied for Medicaid on her mother’s behalf, but the application was denied due to a life insurance policy. Ms. Shaw refused to cash out the policy, and the Medicaid application was never approved. In addition, Ms. Shaw withdrew funds from her mother’s account and deposited them into her sole account. After her mother died, her brother, who was the beneficiary of the life insurance policy, gave her $8,000 from the proceeds of the policy.

The nursing home had an outstanding balance of $5,709.40, which Ms. Shaw refused to pay. The nursing home sued, alleging breach of contract and breach of fiduciary duty. It argued that an attorney-in-fact who breaches a duty to the principal is liable to third parties as though he or she were the principal. The small claims court found in favor of the nursing home, and Ms. Shaw appealed.

The Indiana Court of Appeals affirms, holding that Ms. Shaw breached her fiduciary duty to her mother. According to the court, because Ms. Shaw profited from refusing to cash in the life insurance policy and she transferred funds from her mother’s account to her own account, it was clear that Ms. Shaw was acting in her own self-interest to the detriment of her mother.

from www.elderlawanswers.com.

The interesting question from a Maryland point of view is what right does the nursing home have to sue the attorney-in-fact.  Can other interested family member’s sue on behalf of mom?  The answer to that question is “yes.”  However, court action will need to be started to give that family member standing to recover the stolen assets.

Maryland Power of Attorney – Part 2

Maryland Power of Attorney

Upon review of the new financial power of attorney statutory language for both the short and long form, there are many good aspects with the new provisions.  There are enforcement provisions in this new law.  Before, a bank could refuse to honor your power of attorney and there would be virtually no way to force the bank to honor your power of attorney other than jump through their unique requirements.  The agent must keep a record of all receipts, disbursements and transactions.  There are other requirements as well.  The execution requirements will change.  While there is bound to be much confusion when this is enacted on October 1, 2010, overall, this was a good move by the Maryland General Assembly and this a positive development for our seniors.  There are more safeguards into its use.  There more defined routes to attack misuse.  There is language that can be used to make this enforceable.

If you would like to know the background of why the new power of attorney laws are called “Loretta’s Law” please follow this link:

http://www.hometownannapolis.com/news/top/2008/02/21-38/Making-it-harder-to-steal-from-family.html?ne=1

Maryland Power of Attorney

Maryland Power of Attorney

The Maryland General Assembly just passed and the governor signed into law sweeping new changes regarding Maryland financial powers of attorney (Maryland Uniform Power of Attorney Act – Loretta’s Law).  There are a whole host of changes including new execution requirements, new statutory language, enforcement provisions, financial agent disclosure and non-disclosure requirements, and agent record keeping responsibilities.  The new law goes into effect October 1, 2010.