New Law Sets Standards, Accountability for Use of Powers of Attorney

A law arising from this past session of the Maryland legislature provides clearer rules and strict accountability for persons acting on behalf of others though powers of attorney.

Known as “Loretta’s Law”, the new statute governing powers of attorney was passed partly in response to a news story of an elderly woman who appointed her niece as agent, also known as an attorney-in-fact, to control her assets under a power of attorney. The niece allegedly used these powers to steal from the elderly woman until two grandnieces, who served as guardians until the woman’s eventual death, caught on. The agent was brought to justice, but only after diverting about $500,000 to her personal use.

The thrust of the new law is to establish procedures for regular accountability of the agent to the grantor, also known as a principal, of the power of attorney. Specifically, the statute empowers certain people, including the principal, or guardian or other person acting for the principal, to request that the agent disclose within 30 days of the request a record of receipts, disbursements and transactions conducted by the agent on behalf of the principal. A broader group of “interested persons” may file a petition in circuit court to require the agent to comply with the request.

Similarly, any interested persons may petition the circuit court to interpret a power of attorney, review the agent’s conduct and grant appropriate relief. Included among the group of interested persons are the principal, the agent, a guardian or other fiduciary for the principal, a person authorized to make health care decisions for the principal, the principal’s spouse, parent or descendant, and a person whom the agent asked to accept the power of attorney.

The new law goes further to provide general standards for using the powers of attorney. As two examples: (i) with some exceptions, the statute states that a photocopy is as valid and binding as an originally signed power; and (ii) the statute enumerates the fiduciary duties of the agent to the principal, including broad and obvious ones such as acting loyally and for the principal’s benefit, and detailed ones such as keeping a record of all receipts, disbursements and transactions made on behalf of the principal.

Although powers of attorney have long been widely used, Maryland law previously did not require anyone to accept a power of attorney. The new law changes that by providing two standard forms: one granting general powers, the other granting powers for a limited, defined purpose. Anyone presented with either of these statutory forms properly completed is required to accept it or else face the prospect of a court order compelling acceptance and liability for reasonable attorneys’ fees and costs incurred in the action.

The new statute should be helpful in clarifying the use of powers of attorney and the obligations of those who act under them.

For more information on this topic, please contact Jay Merwin at 410-583-2400 or