Transcript Today’s Presentation - Gordon Feinblatt LLC

Maryland’s New
Power of Attorney Law
Presented September 1, 2010
by
Marjorie A. Corwin and Carla Stone Witzel
Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
233 East Redwood Street
Baltimore, Maryland 21202
[email protected]
[email protected]
410-576-4041
410-576-4192
Copyright, 2010
Today’s Presentation
Overview of the Maryland’s new power of
attorney law
How the new law affects financial
institutions
Forms: Powers of Attorney and Agent’s
Affidavit
What financial institution should do when
POA is presented
Background: Powers of Attorney
Why are financial institutions concerned with
powers of attorney?
In connection with deposits and similar
institution/customer relationships, POAs
cause “tension:”
On the one hand,
account owner expects
FI to protect and limit
access to assets
On the other hand,
account owner who
executes POA expects
FI to give agent access
to assets
Background: Powers of Attorney
Why are financial institutions concerned with
powers of attorney?
Powers of Attorney pose risks for institution:
Fraud
Invalidity due to revocation/termination
Limits on agent’s authority
Damages for refusing to accept valid POA
New Maryland Law
Called “Maryland General and Limited
Power of Attorney Act”
Chapters 689/690 of 2010 Laws of Maryland
(introduced as HB659 and SB309)
[get copy at http://mlis.state.md.us/2010RS/billfile/sb0309.htm]
Becomes effective October 1, 2010
New Maryland Law applies to:
Unless there is an exception, this law applies to
all powers of attorney governed by Maryland
law executed on or after October 1, 2010.
What is the effect of new law on powers of
attorney in existence before October 1, 2010?
Reasonable Conclusion: A power of attorney that
was valid and effective before October 1, 2010 will
continue to be valid and effective.
New Law not applicable to:
New law does not apply (among others) to:
 Power “coupled with an interest” in the subject
of the power
 Power given as security (for example, to creditor
in connection with a credit transaction)
 Power given for consideration
New Law not applicable to:
New law does not apply (among others) to:
 Power that states it is not subject to this new
Maryland law
 Power that is governed by another State’s law
Practice point: Determine if Maryland’s law applies
to the power of attorney being presented.
Maryland General and Limited Power
of Attorney Act
Provisions of New Maryland Law
Unless stated otherwise in the POA document:
POA is “durable” (it continues to be effective
even if principal is disabled or incapacitated,
including missing)
POA is effective when executed
Agent’s authority continues until terminated
(regardless of lapse of time)
Photocopy or electronic copy of original POA
likely is as valid and binding as the original
New Execution Requirements
New Execution Requirements
Power of attorney must be acknowledged
and signed by principal
 May be signed by other person on behalf of
principal if other person signs in the presence of
the principal and at express direction of the
principal
Principal must sign in the presence of a
notary
New Execution Requirements
Must be attested and signed by 2 or more
adult witnesses
 Notary may be one of the witnesses
Witnesses must sign in the presence of the
principal and in presence of each other
Practice point: Check each power of attorney to
ensure these execution requirements are met.
Termination of POA
The financial institution needs to consider
whether a power of attorney has terminated or
the agent’s authority has terminated.
A POA terminates:
When the principal dies
 However, death does not terminate the agency as
to a person who acts in good faith who is
without actual knowledge of principal’s death
Termination of POA
A POA terminates:
When principal revokes POA or revokes the
agent’s authority
When POA provides that it terminates
When the agent dies, become incapacitated,
or resigns and the POA does not provide for
another (successor) agent to act
Termination of POA
A POA terminates:
If not “durable” (because the document so
provides), when principal becomes
incapacitated or disabled
When the specific purpose of the POA (as
stated in the document) is accomplished
Termination of Agent’s Authority
An agent’s authority terminates:
►When principal revokes agent’s authority
►When agent dies, becomes incapacitated, or
resigns
►When POA terminates
Termination of Agent’s Authority
An agent’s authority terminates:
►If agent is married to principal, when
action for dissolution or annulment of the
marriage is filed or there is a legal
separation (unless POA provides otherwise)
Is Power of Attorney Effective?
The financial institution needs to consider
whether a power of attorney has terminated
or the agent’s authority has terminated.
Consider Getting Agent’s Affidavit
New law provides that, assuming no fraud, an
affidavit that states the agent has no knowledge
of revocation or termination of the POA by
principal’s death, disability, or incompetence is
conclusive proof of non-revocation or nontermination of the POA.
Statutory Forms
New law contains two new forms:
1. General (Full) Power of Attorney
2. Limited (Selective) Power of Attorney
Statutory Forms: Rule
Financial institution may not require an
additional or different form of power of
attorney for any authority granted in one of
the statutory forms
Statutory Forms: Rule
If a financial institution refuses to accept a
properly executed statutory form POA
(because the institution wants to require an
additional or different form for any
authority granted in the statutory form),
then liability may result
Statutory Forms: Rule
• While a financial institution may not refuse
a statutory form POA because it wants the
principal to use a different or additional
form, a statutory form may be refused for
other reasons (e.g., suspected fraud, actual
knowledge of principal’s death, etc.)
Alternative POA Form
While it cannot be required under the new
rule, a form POA offered by the financial
institution to customers may still be helpful.
 Any existing form POA used by FI must be
reviewed for compliance with the new execution
requirements.
 Are there other changes that should be
considered for existing form POA in light of
Maryland’s new law?
What to do when POA is presented?
The financial institution should have policies
and procedures its follows when a power of
attorney is presented.
 Existing policies and procedures need to be
reviewed and updated
 Training of personnel should be undertaken
Account Agreement
Review deposit account documents for
agreements between customer and financial
institution as to powers of attorney
Update deposit account agreement to reflect
desired terms
 For example, do you want the right to charge
for review of POA?
What to do when POA is presented?
Check for the governing law
 If another State’s law governs, need to look to
that other State’s law
 If it is a military POA, look to federal law
 If Maryland law governs, . . .
What to do when POA is presented?
If MD law governs, check date on POA
 If executed before 1/1/00, determine if it is a
“durable” POA
 Comment: If executed on or after 1/1/00, POA will be
durable unless it states otherwise
 If executed on or after 10/1/10, determine if
POA is one of the two statutory forms
 Comment: Might consider asking for an affidavit
from the person who prepared form
What to do when POA is presented?
If the POA is one of the two statutory forms
Check for proper execution
Check for fraud
Consider getting affidavit that POA is
“substantially in the statutory form” from
person who prepared it
Consider getting affidavit from agent affirming
POA has not been terminated or revoked
What to do when POA is presented?
If the POA is not a statutory form
Determine scope of agent’s authority
 Might ask if principal will execute the financial
institution’s standard POA form instead
Check for fraud
Check for proper execution
Consider getting affidavit from agent affirming
POA has not been terminated or revoked
Questions?
Sponsored by
Marjorie A. Corwin, Esquire
Carla Stone Witzel, Esquire
Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
233 East Redwood Street
Baltimore, Maryland 21202
410-576-4000
Copyright, 2010