The state of Michigan recognizes durable powers of attorney (POA) for financial and health care purposes. A durable POA allows a trustworthy person or entity known as an agent to make decisions for an individual in the event they become incapacitated or incompetent.
A medical power of attorney becomes effective when an individual can no longer make their own health care decisions, and a financial POA continues after the principal becomes incapacitated, unless the POA states otherwise. The POA document will state when the agent's authority on behalf of the individual goes into effect; in many instances, it becomes effective immediately.
Powers of Attorney in Michigan
A power of attorney (POA) is a document that allows an individual (known as a principal) to give another person or entity (known as an agent or attorney-in-fact) the authority to manage their affairs. POAs can be nondurable or durable.
Nondurable Powers of Attorney
A nondurable POA allows the agent to act on behalf of a principal until they become incapacitated, die or a set expiration date arrives. Once an agent completes a transaction, the nondurable power of attorney may cease.
Durable Powers of Attorney
A durable POA typically goes into effect when the principal cannot make their own decisions due to incapacitation or incompetency. The document will often state when a POA should go into effect and becomes effective immediately upon the principal's disability or incapacity.
There is no set end to a durable POA, but it does expire upon the principal's death. In Michigan, estate planning usually includes two types of POAs:
- Financial POA that allows an agent to handle the principal's financial or business matters.
- Health care POA that allows an agent to make medical decisions on the principal's behalf. In Michigan this is called a "patient advocate designation."
Agent's Responsibilities Under POA
A principal can name any adult or institution, such as a bank, as their agent. That party should be trustworthy, follow the principal's instructions, and act in their best interest. The principal can give the agent wide authority to control all aspects of their financial affairs, or they can limit the agent to certain tasks. Generally, an agent can:
- Sign the principal's checks.
- Make deposits for the principal.
- Pay the principal's bills.
- Contract healthcare or other professional services for the principal.
- Sell the principal's property.
- Get insurance for the principal.
- Manage the principal's day to day affairs.
A principal can name more than one agent at a time. Those agents can, in turn, act separately or as one. The principal should also name a successor agent in case the first agent becomes unavailable or unwilling to act on behalf of the principal.
An agent must keep records and receipts regarding their actions and the principal's assets, and must keep the principal informed of what they're doing if asked.
Validity of a Durable Power of Attorney Document
For a durable POA to be valid, the principal must sign it in front of two witnesses or a notary public. The agent must sign an acknowledgment of their responsibilities and duties before taking authority, in which they promise to do what the POA requires, including keeping track of transactions.
In signing, the agent acknowledges the possibility of civil and criminal penalties if they violate their duties. This is a somewhat recent addition to Michigan law and applies to durable POAs drafted after October 1, 2012.
If granting the agent power to deal with real estate, the principal should also file a copy of the POA with their county registrar, which allows it to recognize the agent's authority if they need to sell, mortgage or transfer the property. The principal should also give a copy of their durable POA to banks or other institutions that the agent might deal with.
Durable Power of Attorney and Joint Ownership
If the principal and their spouse have a joint bank account, the spouse can withdraw money and sign checks from that joint account even if the principal is unable to do so. However, jointly owned stocks and property are different – in Michigan, a spouse needs the principal's consent and signature to make changes to jointly-owned stocks or a home's title.
The spouse does not have the legal authority to make changes on the principal's life insurance policy or benefits. To provide the principal's consent after their disability or incapacity, a spouse must be named as the principal's agent in their durable POA.
Canceling or Revoking a POA
A durable POA can be canceled for various reasons. If an agent abuses their authority and another party shows concern about the principal's welfare, that party can ask the probate court to cancel the durable POA and appoint a conservator to handle the principal's affairs or take some other protective action on the principal's behalf. Other factors for canceling a durable POA include:
- Not having an available agent, which is why it is important to name a successor agent in the document.
- The court invalidates the durable POA if it concludes that the principal was not mentally competent when they signed the document or it believes the principal was the victim of fraud or undue influence.
A principal can also revoke a durable POA at any time, as long as they are mentally competent to do so. They must sign a written document stating that they are revoking the durable POA. They can sign it in front of a notary public and two witnesses, but Michigan does not require this in the case of revocation. Once they sign the document, the principal must send it to the agent and anyone that the agent deals with, such as financial institutions.
- NOLO: Michigan Power of Attorney Laws
- Center for a Secure Retirement: When to Consider a Nondurable Power of Attorney
- Michigan Bar: Probate Information Durable Power of Attorney
- Michigan.gov: ESTATES AND PROTECTED INDIVIDUALS CODE (EXCERPT) Act 386 of 1998 700.5501 Durable power of attorney; definition; attorney-in-fact.
Michelle Nati is an associate editor and writer who has reported on legal, criminal and government news for PasadenaNow.com and Complex Media. She holds a B.A. in Communications and English from Niagara University.