Michigan Durable Power of Attorney: Why You Need a DPOA

Navigating Incapacity: How a DPOA Provides Clarity and Control

Estate planning in Michigan is much more than deciding how your property will be distributed when you pass away. It also involves preparing for a time when you may become incapacitated from a serious accident or illness or need assistance with managing your affairs. A durable power of attorney is one of the most important documents for Michigan estate planning.

What is a durable power of attorney?

A Michigan durable power of attorney (DPOA) allows you to appoint a trusted person, who is considered your “agent”, to manage your financial and property matters while you are alive. You can choose to have your agent make decisions on your behalf upon signing the DPOA or limit the authority to be effective upon your incapacity. Incapacity is typically defined as “mentally impaired to the extent of lacking sufficient understanding or capacity to make or communicate informed decisions”. Usually, a person’s incapacity is documented in writing by a licensed physician.

Michigan has updated its durable power of attorney law

On July 1, 2024, Michigan adopted the new Uniform Power of Attorney Act, which made important changes to the document. The new law ensures that banks and financial institutions cannot reject a properly notarized DPOA and provides sanctions for refusing to accept one that is properly notarized. This will help to eliminate the time and expense of having to prove its validity to third parties.

A durable power of attorney is flexible.

In a Michigan durable power of attorney, you can grant a person broad or limited authority to make decisions on your behalf for financial, business and legal matters, which can include:

• managing bank accounts, paying expenses
• managing, selling, or purchasing real estate
• managing a business or fulfilling a contract.
• Managing investments and filing taxes

You can also limit your agent’s authority to specific matters depending on your needs, such as dealing with an identified bank account or a parcel of property.

Choose the right person for your DPOA agent

The person you choose in the DPOA will be considered your “agent” and can have significant authority. It is most important that you choose someone who is both capable and trustworthy. Consideration should be given to appointing a spouse, adult child, or close relative. Note that it is possible to appoint co-agents to act on your behalf; however, both co-agents must act jointly when making decisions. Another consideration is choosing a successor agent should your first choice be unable to serve as your agent for any reason.

A durable power of attorney can be changed or revoked

A DPOA can be changed or revoked as long as you are competent and able to make decisions. Consequently, it is important to review and update your DPOA, along with your other estate planning documents, if there are important family changes such as the death of a spouse or child, or other major life events. A DPOA is effective only when you are alive and expires upon death.

Avoid the risks of not having a durable power of attorney

A durable power of attorney is a cost-effective method of providing clarity about who you want to make decisions on your behalf and the scope of their authority. If you do not have one, the risks include:

• Confusion or potential conflict among family members about who has the right to act on your behalf.
• Banks and financial institutions will not allow family members to act without proper authority.
• Family members may have to petition the probate court for guardianship.
• Court supervision may restrict flexibility and can be expensive and time-consuming.

Consider making a durable power of attorney part of a core estate plan.

Additional documents to consider for a core estate plan include:

• Patient Advocate Designation, which allows you to designate a trusted person to make medical decisions on your behalf if you are incapacitated by an accident or illness.
• Last Will and Testament allows you to determine who will receive your assets after death if probate administration is necessary. Note that an estate that requires probate administration will usually include those assets that do not have beneficiary designations and real estate that is not held in a Trust or as an enhanced life estate deed, sometimes referred to as a “Ladybird Deed."
• Revocable Living Trust is more flexible than a Will and avoids probate administration if your assets, including real estate, are funded to the trust either when you are alive or after death. You should also consider a trust if you have minor children (or even young adults) and would like distributions from the trust assets to be distributed over time for specific purposes.

Schedule a free no-obligation consultation with an experienced Estate Planning Attorney

In my practice at Ager Law Office, I help individuals and families with all aspects of estate planning, including durable power of attorneys, patient advocate designations, Last Wills and Testaments and Trusts. From my Ann Arbor office, I serve clients throughout Washtenaw County. For a free no obligation consultation, call me, Bill Ager at (734) 649-0784, send an email to bill@agerlawoffice.com, or use the online contact form.