1.5.2 Durable Power of Attorney
Another devise for disability planning is the durable power of attorney. Sec. 13-601, et seq. Estates and Trusts Article, Annotated Code of Maryland. Durable powers of attorney, however, have certain shortcomings. Indeed, a survey of lawyers with practices focused on planning for older clients found that most had experienced difficulty in getting powers of attorney accepted: “The national survey conducted by the Joint Editorial Board for Uniform Trust and Estate Acts found that a majority of respondents had difficulty obtaining acceptance of powers of attorney. Sixty-three percent reported occasional difficulty and seventeen percent reported frequent difficulty.” See Comment at Section 119 of the 2006 Uniform Power of Attorney Act; Whitton, “National Power of Attorney Survey Results and Analysis,” National Conference of Commissioners on Uniform State Laws 12-13 (2002), available at www.law.upenn.edu. For a discussion of the differences between trusts and durable powers of attorney, see McGovern, “Trusts, Custodianships, and Durable Powers of Attorney,” 27 Real Property, Probate and Trust Journal, 1, 23-45 (1992). Some of the more notable differences are as follows:
No clear delineation of the extent of the power of the agent: “The most serious problem with durable powers is the uncertainty as to the agent’s powers … [M]ost statutes authorizing durable powers confer no power on the agent. Instead, the statues simply state that powers possessed by the agent are not lost when the principal becomes incapacitated. Therefore, to determine the scope of the agent’s authority, one must look to the terms of the power and to the law of agency.” (Id. At 32.) This, of course, is the approach taken by the Maryland statute.
In Maryland, one of the few reported cases on powers of attorney stands for the proposition that instruments granting a power of attorney are to be strictly construed. King v. Bankerd, 303 Md. 98, 105 (1985): “[O]ne ‘well settled’ rule is that powers of attorney are ‘strictly construed’ as a general rule and (are) held to grant only those powers which are clearly delineated … (Although) the rule of strict construction ‘cannot override the general and cardinal rule’ that the court determines the intention of the parties.” In any event, there is a dearth of Maryland authority that deals with powers of attorney which adds ambiguity on the extent of an agent’s authority.
The Second Restatement of Agency uses the following example to illustrate the narrow construction to be given an agent’s powers: “P, a farmer, before going to Europe, gives to A, a general power of attorney, stating that A has authority to manage all of P’s business affairs ‘as fully as P himself if personally present.’ During P’s absence, A sells several of P’s fields. A is not authorized to sell the fields.”
Although we may pride ourselves on being able to draft documents that include sufficient specific power to the agent, very practical problems may arise when the agent attempts to exercise a specific power. “Indeed, it has become so difficult to get financial institutions to accept powersâ€‘ofâ€‘attorney even for routine transactions that legislation has had to be introduced to compel financial institutions to accept even statutory forms of powersâ€‘of- attorney.” Blattmachr, “The Master Living Trust,” 23 Heckerling Institute on Estate Planning, 18-16 (1989).
By contrast, the powers of a trustee are more certain with guidance by statute (Titles 14 & 15, Estates and Trusts Article, Annotated Code of Maryland) and abundant case law.
Another related uncertainty with a power of attorney involves control. “Agents must carry out the orders of the principal even when the orders are contrary to the terms of the power. Trustees, in contrast, normally are not subject to the control of the settlor or the beneficiaries … Because a traditional agency terminated when the principal became incompetent, the problem of principal incompetence never arose under the common law. When a principal becomes incompetent, the purpose of the durable power of attorney would be defeated if the attorney had to follow the principal’s instructions. Presumably, courts will create an exception to the general rules of agency to cover such situations. On the other hand, agents under a durable power should obey the principal as long as the principal is competent. Situations will arise when an agent is uncertain whether to follow the directions of a possibly incompetent principal, and the agent will seek a court determination of incompetency. Such resort to the courts will defeat one of the primary reasons for using a durable power. “McGovern, supra. at 23-24.
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