Durable Power of Attorney In Michigan
7 Things You Need To Know
In difficult times such as after a serious accident, an unfavorable diagnosis, or incapacitation, the last thing anyone wants to worry about is finances.
Who will pay your mortgage? Who will pay your bills and file your taxes? Who will move money around your bank accounts or apply for benefits on your behalf?
Unfortunately, tragic events often happen out of nowhere, which is why it’s good to plan for these scenarios ahead of time. Being prepared with a Durable Power of Attorney can alleviate some of the burden and prevent your family from having to go to court to get permission to manage your financial affairs.
What Is A Durable Power of Attorney?
A Durable Power of Attorney in Michigan is a legal document that gives someone you appoint the legal authority to manage your financial affairs while you are alive. For this reason, a Durable Power of Attorney (DPOA) is often referred to as a Financial Power of Attorney, a Durable Power of Attorney for Finances, a Property Power of Attorney, or a Durable Power of Attorney for Property. The person you assign authority to manage your finances is referred to as your agent while you are referred to as the principal. The document is considered “durable” because your agent will be able to continue managing your affairs during any period when you become incapacitated.
When Do I Need A Financial Power of Attorney?
You should have a Financial Power of Attorney in place before something devastating happens such as a serious car accident, or the mental and physical decline that comes with age. If you become incapacitated without a valid Power of Attorney, your family will have to apply to the Probate Court to get a guardianship and/or conservatorship over you. The person appointed may not be the person you would choose. Petitioning the court can also be much more stressful and expensive than planning ahead of time.
Do I Still Need A Durable Financial Power Of Attorney If My Spouse And I Own Our Home and Bank Accounts Jointly?
Even if you and your spouse own your home and bank accounts jointly, it’s usually best to have a Durable Financial Power of Attorney just in case something unforeseen happens to one of you. Let’s say you were in an accident and your spouse needed access to additional funds and assets beyond just your jointly held bank account in order to take care of your medical expenses. While your spouse would be able to sign checks and withdraw money from the jointly held bank account, they might NOT be able to access or manage other potentially high value assets like separately held accounts or 401(k) or IRA accounts held solely in your name. Some jointly held accounts may require the signatures of both spouses. Some agencies will require a Power of Attorney to apply for benefits for the incapacitated spouse. Also, you will need a Durable Power of Attorney to sell some jointly held property such as your home. The same applies to changing the name of a beneficiary on life insurance or retirement benefits. To provide your consent to these types of transactions while you are incapacitated, your spouse must be named as your agent under a Durable Power of Attorney.
What Can Your Agent Do?
When selecting your agent, it is very important to appoint someone that you trust. An agent can:
- Sign your checks
- Make deposits
- Pay your bills
- Contract for medical or other professional services
- Sell your property
- Buy insurance for you
You can give your agent the authority to do anything you would be able to do if you weren’t incapacitated, or you can limit their authority to only do certain tasks like paying your bills or selling your home.
Non-Durable vs Durable Power of Attorney
Non-durable Powers of Attorney become invalid upon incapacitation. Their use is generally limited to carrying out a single task on behalf of an individual.
Durable Powers of Attorney, however, are effective during incapacitation and allow for the named representative to act on behalf of the principal. A Durable Power of Attorney for Health Care (also called a Medical Power of Attorney) is also necessary and appoints someone to make medical decisions. To be completely protected, it is important to have both financial and medical Powers of Attorney in place.
When Does A Financial Power of Attorney Become Effective?
A Financial Power of Attorney can become effective immediately, letting the agent make decisions regardless of the principal’s status, or at a later point in time. When a Power of Attorney is set to activate at a certain time or event, it is called a Springing Power of Attorney. Usually, the “springing” event is when the principal becomes incapacitated. However, all Powers of Attorney end at the death of the principal and any actions past that point must be governed by a Trust or Will.
When it comes to making your Durable Power of Attorney valid in Michigan, you must follow very specific procedures (called the signing ceremony). It’s usually best to consult with an attorney to confirm the exact method for signing a Power of Attorney. No one wants to go through the trouble of drafting a complex document only to find out later that it was not effective because of the manner it was signed.
How Do I Get A Durable Power Of Attorney In Michigan?
It’s usually best to consult with an experienced Estate Planning Attorney who can answer any additional questions and help you create a legally binding document that will protect your family and assets.
Over the past decade at Rochester Law Center, we’ve helped 1,000s of Michigan families plan for situations just like this. If you are looking to have a Durable Power of Attorney made, we can help. Contact us today at (248) 613-0007 to schedule a free consultation with an experienced Estate Planning Attorney.
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Written By Chris Atallah - Founder, Rochester Law Center, PLLC
Written By Chris Atallah - Founder, Rochester Law Center, PLLC
Chris Atallah is a licensed Michigan Attorney and the author of “The Ultimate Guide to Wills & Trusts – Estate Planning for Michigan Families”. Over that past decade, Chris has helped 1,000s of Michigan families and businesses secure their futures in all matters of Wills, Trusts, and Estate Planning. He has taught dozens of seminars across the State of Michigan on such topics as avoiding the death tax, protecting minor children after the parents’ death, and preserving family wealth from the courts and accidental disinheritance. If you have any questions, Chris would be happy to answer them for you – just call at 248-613-0007.