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A Power of Attorney: A Simple Legal Document Every Farmer Should Understand

Updated: Jul 23, 2020

By Sarah Everhart

People posing in front of a field (Photo by Edwin Remsberg).

What is a power of attorney? A power of attorney is a legal document in which the person executing the document (the grantor or principal) grants to another person (the attorney-in-fact or agent) the legal authority to take certain actions on his or her behalf.

In Maryland there are two types of powers of attorney: a Financial Power of Attorney and a Limited Power of Attorney. Effective October 1, 2010, the State of Maryland put easy-to-use forms for the Financial Power of Attorney (Section 17-202, Estates and Trusts Article, Maryland Code) and the Limited Power of Attorney (Section 17-203, Estates and Trusts Article, Maryland Code) into Maryland law. Prior to that time, attorneys personally drafted forms of the documents. Now that the preferred forms are found in State law, many institutions such as banks will only take a power of attorney that follows this statutory format. Therefore, if you have a power of attorney executed before October 1, 2010, you may want to have an attorney review your power of attorney and update it if needed.

What is the difference between the Financial Power of Attorney and Limited Power of Attorney? The Financial Power of Attorney is a very powerful document where the principal grants to the attorney-in-fact full authority to act on his or her behalf on all types of financial matters such as banking transactions, loan documents, deeds, investments, insurance, etc. The principal can choose when the Financial Power of Attorney would become effective. Typically, a principal chooses either to have an attorney-in-fact designation become effective immediately upon execution or upon the disability of the principal.

It is important to understand that a principal who chooses to sign a Financial Power of Attorney that is effective immediately has bestowed upon the attorney-in-fact the right to “stand in his shoes” and make a very wide range of financial decisions without the principal’s consent. A Financial Power of Attorney does not grant the attorney-in-fact the right to make medical decisions for or on behalf of the principal; that designation is made in a separate document called an Advanced Medical Directive.

What happens if a person doesn’t execute a Financial Power of Attorney? If a person becomes disabled without executing a power of attorney, the person’s family must file for a legal guardianship of the property in the Circuit Court where the person resides before any financial steps may be taken. A guardianship proceeding is not a simple matter as it requires a doctor’s certification of the disability, a consensus from all persons who could potentially serve as the guardian, and judicial action. If, for example, siblings can’t agree who should serve as guardian, a family can become stuck in a messy and costly legal squabble that could have been prevented had the person in question executed a power of attorney.

A Limited Power of Attorney is document in which the principal grants an attorney-in-fact the power to have only the delineated financial powers outlined in the document. For example, if a person is going to be out of the country and a deed needs to be executed, he or she could execute a Limited Power of Attorney giving a trusted friend the authority to sign the deed only for that specific transaction on his or her behalf.

All powers of attorney in Maryland must be in writing, signed by the principal, acknowledged by the principal before a notary, and signed by two adult witnesses who signed the document in the presence of the principal and each other. In some instances, a power of attorney is referred to as “durable power of attorney” which means that the power of attorney will be effective regardless of the disability or incapacity of the principal unless the document provides otherwise. The Maryland statutory powers of attorney are durable powers of attorney.

The U.S. Department of Agriculture (USDA) has its own power of attorney form for participants in Farm Service Agency, Commodity Credit Corporation or Federal Crop Insurance Corporation programs. The USDA power of attorney allows an applicant to name up to five persons as qualified attorneys-in-fact to act on his or her behalf with the USDA.

A principal should inform all persons nominated as attorneys-in-fact and provide them with a copy of the power of attorney documents. A principal should store the original power of attorney designations in a secure location with other important documents.

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