Legislature Tinkers With Power of Attorney Law

1:38 pm Consumer Articles, Estate Planning, Technical Articles

The Maryland legislature once again has tinkered with the law governing powers of attorney in Maryland. That law includes Power of Attorney Forms, which if used, or if one’s power of attorney is “in substantially the same form” as one of the form documents, then the law bestows certain rights on the holder of the power of attorney, namely, the right to obtain payment of one’s legal fees from the person or institution who refuses to honor the power of attorney where a legal action is taken to compel acceptance. This right to legal fees differs from the general “American rule” of jurisprudence which holds that each litigant in a legal action must pay his own legal fees.

Unfortunately, the forms in the statute are generally not sufficiently comprehensive and lack certain important provisions.

Hence, many lawyers recommend using a hybrid power of attorney which incorporates the statutory form provisions, and which hybrid is designed to be “in substantially the same form” as the form of the document in the statute. That way, clients can have a sufficiently comprehensive power of attorney and retain the right to legal fees under the law while not using the precise form in the statute, which many lawyers have determined to be defective.

Within the past year, Maryland’s legislature, only a short time following the enactment of the original power of attorney legislation, has enacted legislation changing the language of the forms in the power of attorney statute. After the first such revision, a number of lawyers still were using the form documents from the statute before revision. I know this, having reviewed several such documents brought in by clients seeking a review of their estate plans. Generally in those circumstances I contact the lawyer who drafted the power of attorney to advise that the law has changed.

The problem is that, if a lawyer uses the statutory form from a prior version of the statute after the effective date of the statutory revision, then the client may not have a power of attorney to which the right to recover legal fees would apply. While this will not cause the power of attorney itself to be invalid, if the lawyer’s intention is to provide his client with a power of attorney that includes the right to recover legal fees, the use of the out of date form language may defeat that intended purpose.

Now, for the second time within a relatively short time, the legislature has tinkered with the statutory language in the power of attorney form set forth in Maryland’s power of attorney law. Such change deals with a technical issue relating to qualified retirement plan assets and is more in the way of notification to the person executing the power of attorney. Nevertheless, even if the power of attorney form under the prior version of the statute grants the same powers as the new revised version, using the prior form after October 1, 2012, the effective date of the new statutory revision, may be at the cost of losing the right to recover legal fees.

The Gatesman Law Office endeavors to remain on the cutting edge of the law in crafting estate planning solutions for our clients.