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    Home / General / IMPORTANT Updates to Maryland’s Power of Attorney Laws

    IMPORTANT Updates to Maryland’s Power of Attorney Laws

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    The Maryland General Assembly was busy this past session passing several laws that impact estates and trusts. A major update was done to the Statutory Power of Attorney Act first created in 2010.

    We encourage all of our clients to schedule a complimentary client review appointment to discuss these changes to your financial Power of Attorney and other important estate planning documents.  

    A Power of Attorney is a document that provides someone legal authority to act for another person.  It allows you to appoint a person to manage your affairs if you are unable to do so. The person who grants the Power of Attorney is known as the principal and the person given the power is known as the agent or attorney-in-fact.  The Power of Attorney enumerates the scope of the power that the principal is giving to the agent.  This newsletter will review the statutory form first created under Maryland law in 2010 and the recent legislative updates effective October 1, 2023.

    The Maryland legislature passed the Power of Attorney Act in 2010 impacting all financial Power of Attorney documents. This was a substantial change in legislation as it codified a statutory form that is required to be accepted by financial institutions doing business in Maryland.  The statute states that a person or entity that refuses to accept the form in violation of this statute is subject to liability for reasonable attorney’s fees and costs incurred in an action or proceeding to confirm the validity of the Power of Attorney. As such, it has been our law firm’s recommendation that every client execute a Maryland Statutory Power of Attorney since 2010 (“MD Statutory POA 2010”).  However, the statute states that the form must be “substantially similar” or it is not required to be accepted.  As such, our office includes a Supplemental Durable General Property Power of Attorney (“Supplemental POA”) to be used simultaneously with the MD Statutory POA.

    During this past legislative session, the Maryland General Assembly passed a new bill which changes the statutory form effective October 1, 2023 (“MD Statutory POA 2023”). Below are a few of the most significant changes:

    1. Agent’s ability to appoint a successor agent.  The 2023 update now allows the principal to opt-in and grants the last serving agent the authority to appoint successor agent(s). Please note that there is no limitation in who the acting agent could appoint so it is our recommendation that clients generally do not opt into this or at least think very carefully about all possible scenarios before bestowing this power to your agent.
    2. Compensation for agent.  Under current law, an agent is entitled to reimbursement for reasonable expenses, but not entitled to compensation unless the Power of Attorney explicitly includes this provision. The MD Statutory POA 2023 now requires the principal to expressly state whether the agent is entitled to compensation.  The principal is then required to indicate if the agent is entitled to “reasonable” compensation or a specific amount if you decide to opt-in to compensation for your agent.
    3. Gifting. Gifting is an important power to grant to your agent as a way to give someone else the ability to spend down assets to qualify for Medicaid benefits in the future or reduce your estate and gift tax. Sinclair Prosser Gasior has generally always included gifting in the Supplemental POA, but now it will also be included in the MD Statutory POA 2023.
    4. Joint Accounts.  The MD Statutory POA 2023 now allows the principal to opt-in and allow the agent to create joint accounts with others or the agent. This joint account would include an ownership interest with the other co-owner or the agent so it is our general recommendation not to grant this power to your agent.

    These are just a few of the changes to the MD Statutory POA 2023 that will go into effect on October 1, 2023. The Power of Attorney you executed prior to October 1, 2023 does not automatically become invalid, but it may not be accepted by a financial institution since it is not the most current statutory version.

    We strongly recommend that you review your estate plan and update your financial Power of Attorney after October 1, 2023.  Please contact us today at (410) 573-4818 to schedule your complimentary client review consultation with one of our estate planning attorneys.

    Laura Curry, Estate Planning Attorney
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