POA Agent Duties and Gifting Authority in Maryland

Accepting appointment as someone's power of attorney agent in Maryland isn't just a family favor — it's a fiduciary role with specific legal duties, strict limits on what you can do with the principal's money, and real consequences for overstepping.

The Fiduciary Standard

Under Estates and Trusts § 17-103, a Maryland POA agent owes the principal a duty of loyalty. This means:

• Act in the principal's best interest, not your own
• Avoid conflicts of interest between your personal finances and the principal's
• Keep the principal's property separate from your own assets
• Maintain detailed records of every transaction you execute on the principal's behalf
• Follow the principal's instructions as expressed in the POA document

This isn't advisory guidance — it's a statutory mandate. An agent who breaches these duties faces civil liability, including disgorgement of any profits and reimbursement of losses caused to the principal's estate.

What Self-Dealing Means (and When It's Allowed)

Self-dealing is any transaction where the agent benefits personally from the principal's assets. Under the standard Maryland statutory form, self-dealing is prohibited unless the principal explicitly authorizes it in the Special Instructions section.

Common self-dealing scenarios that require explicit authorization:

• The agent paying themselves a management fee from the principal's accounts
• The agent buying the principal's car or property at a discounted price
• The agent using the principal's funds to pay the agent's own debts
• The agent transferring the principal's assets into a joint account with the agent

Without specific written authorization, any of these transactions constitutes a breach of fiduciary duty under ET § 17-113, and the transaction can be voided by a court.

The 2023 Gifting Expansion

Before 2023, Maryland's statutory POA form stripped agents of most "estate-shifting" powers. Agents couldn't make gifts of the principal's property, create or amend trusts, change beneficiary designations, or alter survivorship rights — unless the principal added custom language in the Special Instructions.

Senate Bill 851/House Bill 18 (effective 2023) changed this significantly. The updated statutory defaults now allow agents to engage in self-dealing transactions and property transfers specifically for Medicaid planning and asset protection purposes.

This matters for families navigating long-term care costs. Maryland Medicaid eligibility for nursing home care requires a single applicant to hold no more than $2,500 in countable assets. The 2023 expansion means agents can now:

• Transfer the principal's home to a qualifying family member (such as a caregiver child who lived in the home for at least two years before institutionalization)
• Fund an irrevocable Medicaid Asset Protection Trust
• Restructure asset titling to move property outside the probate estate and beyond the reach of Maryland's Medicaid Estate Recovery Program (MERP)

These transfers must still comply with Medicaid's 60-month look-back period. Any transfer for less than fair market value within five years of a Medicaid application triggers a penalty period during which Medicaid refuses to pay for nursing facility care.

Gifting Beyond Medicaid Planning

Even with the 2023 expansion, gifting authority outside of Medicaid planning still requires explicit authorization in the Special Instructions. If a principal wants their agent to:

• Make annual exclusion gifts to family members ($19,000 per recipient in 2026)
• Contribute to grandchildren's 529 education savings plans
• Make charitable donations from the principal's accounts
• Distribute assets to heirs before death to reduce the estate's exposure to Maryland's $5 million estate tax threshold or the 10% inheritance tax on non-lineal heirs

Each of these must be spelled out. A general grant of financial authority doesn't include gifting power by default.

Record-Keeping Requirements

Maryland doesn't prescribe a specific format for agent records, but the fiduciary duty of loyalty under § 17-103 effectively requires:

• A log of every financial transaction with dates, amounts, and purpose
• Copies of all receipts, bank statements, and investment records
• Documentation of any communication with the principal regarding financial decisions
• Separate accounting for the principal's funds — never commingled with the agent's personal accounts

If a family member, co-agent, or the court challenges the agent's management, these records are the agent's primary defense. Without them, the burden shifts to the agent to prove they didn't misuse the principal's assets.

What Happens When an Agent Oversteps

If an agent exceeds their authority or breaches fiduciary duties, interested parties — the principal (if competent), family members, or a court-appointed guardian — can petition the Orphans' Court to:

• Compel the agent to provide a full accounting
• Void unauthorized transactions
• Remove the agent and appoint a successor
• Order the agent to reimburse the principal's estate for any losses

In cases of willful financial exploitation, the agent may also face criminal charges under Maryland's vulnerable adult protection statutes.

The Maryland Power of Attorney Kit includes a section on structuring agent powers, drafting Special Instructions for gifting and Medicaid planning authority, and an agent record-keeping template.

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