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Maryland Estate Planning Attorney: When Does a Durable Power of Attorney for Finances Become Effective? (aka, Financial Power of Attorney, Power of Attorney, Maryland Power of Attorney)

Power of AttorneyHaving a Durable Power of Attorney for Finances, also called a Financial Power of Attorney, Durable Power of Attorney, or simply a Power of Attorney—allows an individual to act on your behalf. Having a Durable Power of Attorney for Finances is an important document if you own property or have income, investments, or expenses in your name; the importance was discussed in an earlier post that can be found here.

But a wise question many clients ask me when considering a Durable Power of Attorney for Finances is, “when can someone begin to act on my behalf?”

Perhaps the most important decision to make is deciding when the Durable Power of Attorney for Finances becomes effective and exercisable by your agent. There are essentially two choices:

Effective upon Disability

A Durable Power of Attorney for Finances may become effective when you become disabled and are unable to act on your own behalf. This designation of power is referred to as “springing power.” This designation requires careful consideration and experienced drafting since (1) the criteria for disability would need to be well defined and (2) the person making the determination of disability would need to be identified. There are several implications to this designation including the potential for delay in commencement of the power in a time when quick action may be required.

Effective upon Execution

A Durable Power of Attorney for Finances may become effective upon its execution. This is the more common approach however careful consideration must be made when selecting your agent as this person will have the ability to act on your behalf in financial matters. That said, there are numerous ways of limiting the powers granted given the confidence you have in a particular agent. This decision requires careful consideration and specific language so that you are comfortable with the authority given to your agent.

Whether making your Durable Power of Attorney for Finances effective upon disability or execution, there are implications that need to be understood and properly addressed in the drafting of the document. No one should accept a one-size-fits-all or “form” Durable Power of Attorney for Finances. The Law Office of Stephen J. Reichert, LLC creates legally binding Durable Powers of Attorney for Finances that satisfy the specific needs of each client.

For a free, confidential conversation to discuss these and other estate planning matters, contact Maryland estate planning attorney Stephen J. Reichert at 410-299-4959, or by clicking here.

Day, evening and weekend appointments are available in office or at your residence. Mr. Reichert personally serves clients in Baltimore, Baltimore County, Anne Arundel County, Howard County, Carroll County, Harford County, Frederick County and Montgomery County.