1. Copyright, 2010 Maryland’s New Power of Attorney Law Presented September 1, 2010 by Marjorie A. Corwin and Carla Stone Witzel Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC 233 East Redwood Street Baltimore, Maryland 21202 mcorwin@gfrlaw.commcorwin@gfrlaw.comcwitzel@gfrlaw.com 410-576-4041410-576-4192

2. Today’s Presentation Overview of the Maryland’s new power of attorney law How the new law affects financial institutions Forms: Powers of Attorney and Agent’s Affidavit What financial institution should do when POA is presented

3. Background: Powers of Attorney Why are financial institutions concerned with powers of attorney? In connection with deposits and similar institution/customer relationships, POAs cause “tension:” On the one hand, account owner expects FI to protect and limit access to assets On the other hand, account owner who executes POA expects FI to give agent access to assets

4. Background: Powers of Attorney Why are financial institutions concerned with powers of attorney? Powers of Attorney pose risks for institution: Fraud Invalidity due to revocation/termination Limits on agent’s authority Damages for refusing to accept valid POA

5. New Maryland Law Called “Maryland General and Limited Power of Attorney Act” Chapters 689/690 of 2010 Laws of Maryland (introduced as HB659 and SB309) [get copy at http://mlis.state.md.us/2010RS/billfile/sb0309.htm]http://mlis.state.md.us/2010RS/billfile/sb0309.htm Becomes effective October 1, 2010

6. New Maryland Law applies to: Unless there is an exception, this law applies to all powers of attorney governed by Maryland law executed on or after October 1, 2010. What is the effect of new law on powers of attorney in existence before October 1, 2010? Reasonable Conclusion: A power of attorney that was valid and effective before October 1, 2010 will continue to be valid and effective.

7. New Law not applicable to: New law does not apply (among others) to:  Power “coupled with an interest” in the subject of the power  Power given as security (for example, to creditor in connection with a credit transaction)  Power given for consideration

8. New Law not applicable to: New law does not apply (among others) to:  Power that states it is not subject to this new Maryland law  Power that is governed by another State’s law Practice point: Determine if Maryland’s law applies to the power of attorney being presented.

9. Maryland General and Limited Power of Attorney Act

10. Provisions of New Maryland Law Unless stated otherwise in the POA document: POA is “durable” (it continues to be effective even if principal is disabled or incapacitated, including missing) POA is effective when executed Agent’s authority continues until terminated (regardless of lapse of time) Photocopy or electronic copy of original POA likely is as valid and binding as the original

11. New Execution Requirements

12. Power of attorney must be acknowledged and signed by principal  May be signed by other person on behalf of principal if other person signs in the presence of the principal and at express direction of the principal Principal must sign in the presence of a notary

13. New Execution Requirements Must be attested and signed by 2 or more adult witnesses  Notary may be one of the witnesses Witnesses must sign in the presence of the principal and in presence of each other Practice point: Check each power of attorney to ensure these execution requirements are met.

14. Termination of POA The financial institution needs to consider whether a power of attorney has terminated or the agent’s authority has terminated. A POA terminates: When the principal dies  However, death does not terminate the agency as to a person who acts in good faith who is without actual knowledge of principal’s death

15. Termination of POA A POA terminates: When principal revokes POA or revokes the agent’s authority When POA provides that it terminates When the agent dies, become incapacitated, or resigns and the POA does not provide for another (successor) agent to act

16. Termination of POA A POA terminates: If not “durable” (because the document so provides), when principal becomes incapacitated or disabled When the specific purpose of the POA (as stated in the document) is accomplished

17. Termination of Agent’s Authority An agent’s authority terminates: ► When principal revokes agent’s authority ► When agent dies, becomes incapacitated, or resigns ► When POA terminates

18. Termination of Agent’s Authority An agent’s authority terminates: ► If agent is married to principal, when action for dissolution or annulment of the marriage is filed or there is a legal separation (unless POA provides otherwise)

19. Is Power of Attorney Effective? The financial institution needs to consider whether a power of attorney has terminated or the agent’s authority has terminated. Consider Getting Agent’s Affidavit New law provides that, assuming no fraud, an affidavit that states the agent has no knowledge of revocation or termination of the POA by principal’s death, disability, or incompetence is conclusive proof of non-revocation or non- termination of the POA.

20. Statutory Forms New law contains two new forms: 1.General (Full) Power of Attorney 2.Limited (Selective) Power of Attorney

21. Statutory Forms: Rule Financial institution may not require an additional or different form of power of attorney for any authority granted in one of the statutory forms

22. Statutory Forms: Rule If a financial institution refuses to accept a properly executed statutory form POA (because the institution wants to require an additional or different form for any authority granted in the statutory form), then liability may result

23. Statutory Forms: Rule While a financial institution may not refuse a statutory form POA because it wants the principal to use a different or additional form, a statutory form may be refused for other reasons (e.g., suspected fraud, actual knowledge of principal’s death, etc.)

24. Alternative POA Form While it cannot be required under the new rule, a form POA offered by the financial institution to customers may still be helpful.  Any existing form POA used by FI must be reviewed for compliance with the new execution requirements.  Are there other changes that should be considered for existing form POA in light of Maryland’s new law?

25. What to do when POA is presented? The financial institution should have policies and procedures its follows when a power of attorney is presented. Existing policies and procedures need to be reviewed and updated Training of personnel should be undertaken

26. Account Agreement Review deposit account documents for agreements between customer and financial institution as to powers of attorney Update deposit account agreement to reflect desired terms  For example, do you want the right to charge for review of POA?

27. What to do when POA is presented? Check for the governing law  If another State’s law governs, need to look to that other State’s law  If it is a military POA, look to federal law  If Maryland law governs,...

28. What to do when POA is presented? If MD law governs, check date on POA  If executed before 1/1/00, determine if it is a “durable” POA  Comment: If executed on or after 1/1/00, POA will be durable unless it states otherwise  If executed on or after 10/1/10, determine if POA is one of the two statutory forms  Comment: Might consider asking for an affidavit from the person who prepared form

29. What to do when POA is presented? If the POA is one of the two statutory forms  Check for proper execution  Check for fraud  Consider getting affidavit that POA is “substantially in the statutory form” from person who prepared it  Consider getting affidavit from agent affirming POA has not been terminated or revoked

30. What to do when POA is presented? If the POA is not a statutory form  Determine scope of agent’s authority  Might ask if principal will execute the financial institution’s standard POA form instead  Check for fraud  Check for proper execution  Consider getting affidavit from agent affirming POA has not been terminated or revoked

31. Questions?

32. Copyright, 2010 Sponsored by Marjorie A. Corwin, Esquire Carla Stone Witzel, Esquire Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC 233 East Redwood Street Baltimore, Maryland 21202 410-576-4000