Being appointed an agent under a financial power of attorney, or as a Court-appointed guardian, comes with a significant delegation of authority. However, it is important to know that such delegation of power is not without limits. For example, an agent can only exercise powers specifically granted under the power of attorney document. And, in the case of a guardianship, the guardian is obligated to periodically account for the Court of their efforts on behalf of the ward. And, of course, a fiduciary under either scenario cannot abuse their power or use their power unlawfully.
Recently, the Court of Appeals issued an opinion that provides yet more useful guidance for fiduciaries. In United Bank v. Richard Buckingham, et al., the Court answered the following two certified questions from the United States District Court for the District of Maryland: (1) whether changing beneficiaries on a life insurance policy constitutes a conveyance under the Maryland Uniform Fraudulent Conveyance Act; and (2) whether a guardian of property has the authority to change beneficiaries for a life insurance policy of the ward.
The Court answered the first question in the affirmative, explaining that a change in life insurance beneficiary made with intent to hinder, delay, or defraud creditors is subject to the Maryland Uniform Fraudulent Conveyance Act. The court then answered the second question in the negative, noting that a guardian of property clearly does not have the authority to change the beneficiary of a life insurance policy on the life of a ward, citing the provisions of Section 15-102(t) of Maryland’s Estates and Trusts Article. Instead, the Court found that a fiduciary may only change the beneficiary of a life insurance policy following application to and approval of a court of equity.