Maryland Has a New Statutory Form Personal Financial Power of Attorney

What does this new form mean
for you and your estate plan?

By Todd J. Bornstein, Esq.

Effective October 1, 2023, the Maryland legislature adopted a new Maryland Statutory Form Personal Financial Power of Attorney. You need to know the following to be “ahead of the curve.”

What is a power of attorney document?  

A power of attorney is a document pursuant to which one person (the “Principal”) designates one or more other people (the “Agent(s)”) to act on behalf of the Principal with respect to the Principal’s finances. 

What is a Maryland Statutory Form Personal Financial Power of Attorney?

As explained above, a financial power of attorney document may be any document pursuant to which the Principal authorizes one or more persons to act as Agents to manage the financial affairs on behalf of the Principal. However, the Maryland Statutory Form Personal Financial Power of Attorney is one of the two specific statutory form documents that have been “blessed” by the Maryland legislature as containing the required provisions to qualify such power of attorney document to be legally enforceable and binding with respect to third parties (such as financial institutions) located in Maryland who are presented with the form.

Prior to 2012, there was no prescribed statutory form. Generally speaking, each law firm used their own unique financial power of attorney form for their clients. Third parties, such as financial institutions, were under no obligation to honor these power of attorney documents.  A financial institution could reject such a power of attorney document for any reason, or no reason at all.  However, in 2012, Maryland adopted the use of two statutory forms, which if executed properly, would be legally binding on and enforceable as to third parties located in Maryland.

What are the differences between the new 2023 Maryland Statutory Form Personal Financial Power of Attorney and the prior versions?  

Generally speaking, the new form is more comprehensive and allows a Principal to grant an Agent a broader scope of authority as compared to prior statutory form personal financial powers of attorney. For example, the new form gives the Principal the option to allow the Agent to make gifts or transfers of the Principal’s assets to minimize estate taxes, or to qualify the Principal for Medicaid.

If you executed one of the prior versions of the Maryland Statutory Form Personal Financial Power of Attorney, is that form legally enforceable?  Do you need to execute the new form? 

Generally, if you have executed one of the prior versions of the Maryland Statutory Form Personal Financial Power of Attorney, that form would continue to be legally enforceable; so long as the form you executed was in compliance with the statutory requirements at the time it was signed.  

What should you do if you are a Maryland resident or have assets located in Maryland and have never executed a Maryland Statutory Form Personal Financial Power of Attorney? 

We strongly recommend you contact an estate planning attorney to discuss your situation, and determine whether the new Maryland Statutory Form Personal Financial Power of Attorney would be beneficial for you.

If you would like to speak with one of our Trusts and Estates attorneys, please contact Todd J. Bornstein at tbornstein@sgrwlaw.com or (301) 634-3104.