Words Matter – Why We Use Form Powers of Attorney

We have previously discussed powers of attorney and their role in estate planning. When we circulate draft estate planning documents to clients, we often get questions about the language within these documents. Here, we’ll shed a little bit more light on the language within these documents, how the documents were created, why we don’t recommend clients tinker with the language within their powers of attorney, and a method for clients if they want to give more detailed instructions.

Remind me again, what is a power of attorney?

A power of attorney is a legal document by which you grant another with the requisite legal authority to act for you when you can’t act for yourself.

We often call it “incapacity planning”.

There are two types of powers of attorney.

First, there is a “Health Care Power of Attorney” also known as an “Advance Medical Directive”. This document appoints an individual as your Health Care Surrogate (or Health Care Agent) to make health care decisions for you and communicate with doctors on your behalf if you are incapacitated.

Second, there is a “Financial Power of Attorney”. This document appoints an individual as your Agent to represent your interests with respect to financial and legal matters when you need assistance in those regards.

Are these forms of documents?

Yes. Maryland has a form Advance Medical Directive.

Both Maryland and the District of Columbia have form financial powers of attorney.

These forms are a creature of the D.C. Council and the Maryland General Assembly, respectively. These forms didn’t come into existence with no thought or study. Rather, the forms are the result of intense study and input from a variety of stakeholders, including attorneys.

These documents are updated from time-to-time. The District of Columbia form financial power of attorney was updated in 2022. The Maryland form financial power of attorney will be updated later in 2023. If you have an outdated form, that does not mean your document is invalid. Your document very much remains valid. However, when we work with clients on updates, we do often ask clients if they want us to bring them to-date on forms of power of attorney.

I don’t like some of the language in the document. Is it important to stick to the language in the forms?

Yes. It absolutely is.

When it comes to the form of an Advance Medical Directive, these are documents that will be used in a time of crisis. There won’t be time for a medical professional to scrutinize the form. We recommend that our clients use the statutory form so that it is instantly recognizable and won’t cause any unnecessary delay by a medical professional trying to interpret the document – or worse – involving lawyers to help interpret the document.

When it comes to a Financial Power of Attorney, both Maryland and District of Columbia law give a very important reason to stick closely to the forms. If your Agent presents a financial power of attorney that is “substantially similar” to the state form, and the financial institution dishonors or rejects the power of attorney, the financial institution can be on the hook for legal fees incurred by your Agent in compelling the financial institution to honor the document.

What can I do if I don’t like the language or want to give more detailed instructions?

To be clear, the language in these documents is far from perfect, much like the language in many laws and regulations that result from the legislative process.

Some clients ask us about adding limiting language to these documents. Other clients feel it important to add more substantive language to these documents.

However, as  stated, there are compelling reasons to stick to the language in the forms and ensure they are “substantially similar” to the state forms.

So what should clients do who feel it important to clarify their objectives or limitations on an Agent’s discretion? 

Start with the premise that you only should name an individual as your Health Care Surrogate who you are confident understand and will honor your goals and beliefs. You should only name an individual as your Agent who you have unfailing trust and confidence will be a sound steward of your money. Put another way, you should never nominate somebody as a Health  Care Surrogate or Agent who you have real reason might not act to further your objectives.

But expressing limitations, goals, and objectives is important to many clients. This is where a letter of instructions is useful. To be clear, a letter of instructions is non-binding and lacks the force of law. However, it is a means for clients to offer expressions of intent that are specific to them, which they might have otherwise desired their power of attorney to include, but are understandably (and appropriately) reluctant to modify the state form to include.

Additionally, when it comes to a Health Care Power of Attorney, the Living Will is a companion document which affords the client the space to articulate their goals and objectives about end-of-life medical care.

Concluding Thoughts

Powers of attorney are an essential part of every estate plan. State-specific forms serve an important purpose of uniformity while also offering clients an important remedy if the document is dishonored.

How can we answer your questions about powers of attorney or estate planning? Reach out to practice group chair Jeremy Rachlin at (301) 656-1177 x305 or jrachlin@bulmandunie.com.