Powers of Attorney in Maryland: Financial vs. Healthcare and Why You Need Both
Estate Planning Maryland
Powers of Attorney in Maryland: Financial vs. Healthcare and Why You Need Both
How financial powers of attorney and advance directives can help protect your choices if you cannot act for yourself.
Life is unpredictable. While many people focus on what happens after death, estate planning should also address what happens while you are alive but unable to manage important decisions yourself.
Who would pay your bills or manage your accounts? Who would speak with your doctors and make healthcare decisions if you could not communicate?
In Maryland, two important planning tools can help answer those questions: a financial power of attorney and an advance directive for healthcare.
They serve different purposes. Understanding how each one works, and when it takes effect, can help you build a more complete estate plan.
What Is a Financial Power of Attorney?
A financial power of attorney allows you (called the principal) to appoint another person (called an agent) to act for you regarding financial and property matters.
DEPENDING ON THE AUTHORITY YOU GIVE YOUR AGENT, THAT MAY INCLUDE:
- Paying bills
- Managing bank accounts
- Handling certain investments
- Managing real estate
- Handling tax matters
- Managing other financial responsibilities
Maryland's statutory financial power of attorney allows a principal to grant broad authority or select particular powers. This means the document should reflect what you actually want your agent to be able to do.
When Does a Financial Power of Attorney Take Effect?
This is an important detail that is easy to misunderstand.
Under Maryland law, a power of attorney generally becomes effective when it is executed unless the document states that it will take effect at a later date or after a particular event.
For example, a POA may provide that it becomes effective only after incapacity. If its effectiveness depends on incapacity, Maryland law provides rules for determining when that condition has occurred.
A written Maryland POA is also generally durable unless its terms provide otherwise. This means it can remain effective even if the principal later becomes incapacitated.
What Is a Maryland Advance Directive?
For healthcare decisions, Maryland law uses the term advance directive.
An advance directive can allow you to appoint a healthcare agent to make healthcare decisions under the circumstances stated in the document. It can also communicate your wishes about medical care if you cannot make or communicate those decisions yourself.
AN ADVANCE DIRECTIVE CAN ADDRESS ISSUES SUCH AS:
- Who should serve as your healthcare agent
- Your preferences about medical treatment
- Life-sustaining procedures
- Other healthcare wishes
When Does an Advance Directive Take Effect?
A healthcare advance directive works differently from a financial POA.
Unless the document provides otherwise, Maryland law generally requires the attending physician and a second physician to certify in writing that the patient is incapable of making an informed decision before the advance directive becomes effective.
If the patient is unconscious or unable to communicate by any means, Maryland law provides an exception to the second-physician certification requirement.
This distinction matters because your financial agent and healthcare agent may not begin acting at the same time.
Financial POA vs. Advance Directive: What Is the Difference?
| Financial Power of Attorney | Advance Directive | |
|---|---|---|
| Main Purpose | Financial and property matters | Healthcare decisions and wishes |
| Person Appointed | Agent | Healthcare agent |
| May Cover | Bills, accounts, property, taxes, and other authorized financial matters | Medical treatment and healthcare decisions |
| When It Takes Effect | Generally when executed unless the document says otherwise | Generally after the required incapacity determination unless the document says otherwise |
| Main Planning Goal | Keep financial matters managed if you cannot act | Give someone authority and guidance for healthcare decisions |
These documents work together, but they are not interchangeable.
Why Might You Need Both?
A financial POA does not, by itself, authorize your financial agent to make healthcare decisions.
Likewise, appointing a healthcare agent does not automatically give that person authority to manage your bank accounts or other financial affairs.
Having both documents can address two very different sides of incapacity.
For example, if you were hospitalized and unable to make decisions, your financial agent might need to manage bills or other financial responsibilities while your healthcare agent communicates with doctors and makes authorized medical decisions.
You can potentially name the same person for both roles, or choose different people based on their abilities and your level of trust.
How Should You Choose an Agent?
Choosing an agent is about more than picking the person who lives closest to you.
CONSIDER SOMEONE WHO IS:
- Trustworthy
- Responsible
- Comfortable making important decisions
- Willing to follow your wishes
- Able to communicate when necessary
For a financial POA, your agent may have significant authority over your money and property.
For an advance directive, your healthcare agent may need to make difficult decisions during stressful circumstances.
Before naming someone, consider talking with them about the role. Make sure they understand what you are asking and are comfortable accepting the responsibility.
Common Power of Attorney and Advance Directive Mistakes
Even good planning can create problems when important details are overlooked.
COMMON MISTAKES INCLUDE:
- Creating only a financial POA or only an advance directive
- Choosing an agent without discussing the responsibility with them
- Assuming a financial POA starts only after incapacity
- Giving broader financial authority than you intended
- Failing to tell your healthcare agent that you appointed them
- Keeping documents somewhere no one can access them
- Failing to review documents after major life changes
- Waiting until capacity has already become an issue
These documents work best when they are created thoughtfully and coordinated with the rest of your estate plan.
What Happens If You Do Not Have These Documents?
What happens next depends on the situation.
If someone becomes unable to manage financial affairs and there is no adequate alternative in place, a court guardianship proceeding may become necessary.
Healthcare decisions work somewhat differently.
The absence of an advance directive does not automatically mean that a court proceeding will be required. Maryland law provides a hierarchy of surrogate decision-makers who may make certain healthcare decisions for a person who has been certified incapable and does not have an available healthcare agent.
Still, relying on default legal procedures means you have less control over who may eventually make those decisions.
Why Does This Matter for Families and Aging Parents?
Powers of attorney and advance directives are often associated with older adults, but incapacity can happen at any age. For families with aging parents, these conversations can be especially important.
RATHER THAN WAITING FOR A MEDICAL EMERGENCY, FAMILIES CAN DISCUSS:
- Who should manage financial matters if help is needed
- Who should communicate with healthcare providers
- What medical wishes should be documented
- Where important documents will be stored
- Whether existing documents still reflect current wishes
Planning while someone has capacity can provide clearer direction later.
When Should You Review Your Documents?
A power of attorney or advance directive should not necessarily be treated as something you sign once and forget.
CONSIDER REVIEWING YOUR DOCUMENTS AFTER MAJOR CHANGES SUCH AS:
- Marriage or divorce
- Death or incapacity of an agent
- A significant change in health
- Moving to another state
- Major financial changes
- Changes in family relationships
- A change in who you trust to make decisions
Even without a major event, periodically reviewing your documents can help you confirm that the people you named and the instructions you provided still reflect your wishes.
Final Thoughts: Plan While You Still Have the Choice
Powers of attorney and advance directives are not only about preparing for a crisis. They are about deciding in advance who you trust to act for you and what authority you want that person to have.
A financial POA can address your money and property. An advance directive can address your healthcare decisions and wishes.
Together, they can make an estate plan more complete and give your family clearer guidance if you cannot make certain decisions yourself.
Planning ahead means those choices can come from you rather than being left entirely to circumstances later.
KEY TAKEAWAYS
- A financial POA addresses financial and property matters.
- An advance directive addresses healthcare decisions and wishes.
- A Maryland financial POA is generally effective when executed unless it provides otherwise.
- A written Maryland POA is generally durable unless its terms say otherwise.
- An advance directive generally becomes effective after the required determination that you cannot make an informed decision, unless the directive provides otherwise.
- Financial and healthcare agents serve different roles.
- The same person can potentially serve in both roles, but you may choose different people.
- Without adequate planning, guardianship may sometimes become necessary.
- Maryland has surrogate decision-making rules for certain healthcare situations when no healthcare agent is available.
- Review your documents as your health, family, finances, and relationships change.
Put Your Wishes in Writing
Planning for incapacity is an important part of protecting yourself and your family.
DK Law Group can help you understand financial powers of attorney, advance directives, and how these documents fit into a broader Maryland estate plan.
Help Linda Protect Her Parents
Plan while you still have the choice.
Before an emergency happens
Linda's parents are healthy today, but they want to make sure their affairs are handled if one of them becomes unable to make decisions.
Linda has agreed to help them get their plan in place.
Your job: Help Linda make the right decisions before an emergency happens.
Choose carefully. A wrong answer opens an explanation screen. Read why it doesn't work, then select Try Again to return to the same question. Choose the correct answer to continue.
Not quite. Here's why.
You chose:
Return to the question and try another answer to help Linda move forward.
You helped Linda plan ahead.
Her parents prepared for different needs and gave their family clearer direction.
- ✓ Financial decisions addressed
- ✓ Healthcare wishes addressed
- ✓ Trusted people chosen
- ✓ Planning completed before an emergency
Remember
Financial and healthcare planning serve different purposes. A financial power of attorney can help with financial matters, while a healthcare directive can guide medical decisions. Choose someone you trust and put these documents in place while you still have the legal capacity to make your wishes known. Plan while you still have the choice.
