“IT’S ALL ABOUT TRUST.
YOU CAN’T BE 90 PERCENT SURE SOMEONE WILL DO THE RIGHT THING. YOU MUST BE 100 PERCENT CERTAIN YOUR AGENT WILL DO WHAT’S IN YOUR BEST INTEREST.”
The advantage of Maryland’s Personal Financial Power of Attorney form is that “as the new law makes clear, banks must accept it,” says Galinis. “If banks fail to recognize the power of attorney and you have to go to court to get them to do so, they may have to pay court fees.” “If the new statutory form is used, third parties are required to accept it,” says Ruprecht. “If it is substantially changed, then third parties may not recognize the agent’s authority.” What constitutes substantially changed is open to interpretation. “Because the legislation is still new, there haven’t been any court cases [offering clarification].” Another question is whether financial institutions in other states will accept the Maryland form. “TD Ameritrade, for example, indicates that ‘the laws of the State of NewYork will govern this Agreement,’” says Ruprecht. So it makes sense to check with out-of-state banks or brokerage firms to determine if additional powers of attorney are required. The Maryland forms may not meet everyone’s needs, according to Galinis. An example of a power that appears to be missing is the ability of the agent— the individual named to act on another’s behalf—to make gifts to others. “Many seniors have worked all their lives and accumulated assets that they want to give to their kids,” says Galinis. “But, if an agent doesn’t have the power to give money away, those assets may go to Medicaid instead.” To ensure that you are giving appropriate powers to your agent, Galinis recommends consulting with an attorney. “There’s no requirement. But part of the reason to hire an attorney is to talk about the ramifications of what you are doing.” “You’re effectively giving someone carte blanche to act on your behalf,” said Ruprecht, who suggested that much thought go into the selection of an agent. “A lot of harm can be done by picking the wrong person.”
“It’s all about trust,” says Galinis.“You can’t be 90 percent sure someone will do the right thing.You must be 100 percent certain your agent will do what’s in your best interest.” It was a breach of fiduciary duty that led to enactment of the current statute, known as Loretta’s Law. In 2001, Loretta Soustek of Pasadena gave her niece—who eventually was convicted of stealing $449,000 from Soustek—financial power of attorney.The criminal activity came to light after a court appointed two of Soustek’s great nieces as guardians. “Under the 2010 law, agents are required to keep records of transactions undertaken on an individual’s behalf and must, if asked, produce them in court to show that the money spent or action taken was not designed to benefit the agent,” says Ruprecht. Acting as an agent requires good judgment and “the ability to ask whether you’re doing this for your sake or their sake,” says Ruprecht. “You need to watch out for the appearance of self-dealing.You might think it makes sense for your mom to buy your car. But if you’re her agent, why not sell to a third party instead?” A financial power of attorney may be revoked at any time, says Ruprecht, “as long as you are not incapacitated.” In most cases, ripping up the document will suffice, said Phyllis Dobin, of counsel to Berman, Sobin, Gross, Feldman & Darby, LLP, “as long as the power of attorney hasn’t been given to financial institutions.” If it has, she recommends to clients that they “write a letter to the agent saying it is revoked. And, if filed in land records record something revoking it.” Despite the few uncertainties, “it’s a good idea for everyone to have a power of attorney,” says Ruprecht.“It can be a real tragedy if you don’t name anyone. You might feel fine today, but what will tomorrow bring? The wrong thing is not to do anything.”
1817249
-Attorney David Galinis
May 2012 | Gazette SENIORS 29