A power of attorney is accepted in all states including Washington, DC and Maryland. A power of attorney gives one or more persons the power to act on your behalf as your agent. The power may be limited to a particular activity, such as closing the sale of your home, or be general in its application. The power may give temporary or permanent authority to act on your behalf. The power may take effect immediately, or only upon the occurrence of a future event, usually a determination that you are unable to act for yourself due to mental or physical disability. The latter is called a "springing" power of attorney. A power of attorney may be revoked, but most states require written notice of revocation to the person named to act for you.
The person named in a power of attorney to act on your behalf is commonly referred to as your "agent" or "attorney-in-fact." With a valid power of attorney, your agent can take any action permitted in the document. Often your agent must present the actual document to invoke the power.
If you do not have a power of attorney and become unable to manage your personal or business affairs, it may become necessary for a court to appoint one or more people to act for you. People appointed in this manner are referred to as guardians in Maryland and conservators in Washington, DC. Few people want to be subject to a public proceeding, so it is important to be proactive to create the appropriate document to avoid this. A power of attorney allows you to choose who will act for you and defines his or her authority and its limits, if any.
Importance of a Financial Power of Attorney in an Estate Plan
- When you were under the age of 18, you couldn't do things without your parents or guardian giving approval. They had to sign or act on your behalf. This same thing happens as you age. When you get to a point, either physically or neurologically, that you're not able to do things, the court in your state will require a guardianship or conservatorship plan for someone to have the responsibility of making decisions for you.
- Someone who has a legal ability to act on your behalf, whether financially or medically, will do what is in your best interest, as approved by the court system. Your conservator might have to go back to court multiple times a year to give an account of every little thing that he or she is or is not doing. It is cumbersome. If you have a comprehensive estate plan, your family can avoid this process.
If you set up your financial power of attorney in advance, you will decide who's going to take care of you and who is going to act in your best interest. Your agent will not have to go to court or answer to anyone. Of course, that person is responsible to you to do what's in your best interest.
No matter what your age, you could get into an accident. Something could happen. You want to be sure that someone is there to act on your behalf.