A power of attorney (POA) for finances is an important estate planning document. It gives another person the permission and authority to act on your behalf in financial and business matters.
The power of attorney can be a “durable” POA, which means that the power for the person to act on your behalf goes into effect when you sign the document and continues in effect when you become incapacitated. Alternatively, the POA can be “springing” and go into effect when you become incapacitated.
Although there are many durable power of attorney forms available, you should understand that a form is not a substitute for consulting with an attorney. Customized drafting ensures that issues important to you are addressed, and a skilled attorney can help you identify issues you many not have considered. A well-drafted power of attorney can help avoid unnecessary probate litigations to resolve disputed issues.
Bill Ager is an experienced attorney who can help you decide the type of power of attorney that best suits your needs and what should be included. A power of attorney for finances is included in Bill’s reasonable flat fee for drafting a will or trust.
It is very important to understand that in March of 2012, Michigan enacted a new law which deals with new requirements for durable powers of attorney for finances. Although the new requirements do not apply to a durable power of attorney signed before October 1, 2012, if your durable power of attorney does not meet the new requirements, you should contact your attorney to execute a new one.
One of the new requirements is that in order to be valid, the durable power of attorney must be signed, dated, and either witnessed by two individuals (neither of whom is the agent named in the document) or notarized.
Another new requirement is that before acting as an agent under a durable power of attorney, a person must first sign an acknowledgment (i.e. acceptance) outlining the agent’s responsibilities, and the acknowledgment must include language that is substantially the same as the suggested language provided in the new law.
In addition, an agent is now required by law to maintain records of their actions, including transactions, receipts, disbursements, and investments. Finally, there are specific restrictions on the agent’s authority written into the Act, including that an agent may not be paid for his/her services unless the durable power of attorney allows such compensation for services.
If you are concerned that your durable power of attorney does not meet the new requirements, you should consult with an experienced attorney about a new one. Banks and other financial institutions will be required to follow this new law, and there may be problems getting your durable power of attorney accepted if it doesn’t meet these requirements – even if it was executed prior to October 1, 2012.
Contact Bill Ager at (734) 649-0784 or at firstname.lastname@example.org for more details on reasonable flat fees for these services.
Who should I consider appointing as my agent for a Power of Attorney to make financial decisions?
You should appoint someone who you trust absolutely, because when another person can act with full authority on your behalf, that person could use the power to make transactions that are not in your best interest.
However, if you are able to have a trustworthy person, such as a spouse or trusted family member, act on your behalf if you become incapacitated, you can avoid the need for obtaining probate court orders to handle your affairs.