Types of Power of Attorney in Michigan

You’ve probably heard that you should have a power of attorney as part of your estate plan. But what kind do you need? If you’re like many people, you may not know exactly what a power of attorney is or how it works. That’s understandable, because there are different types of power of attorney. To make matters more complicated, there are certain limitations that can be placed on powers of attorney, having to do with when they take effect, how long they last, and what authority they grant. 

What is a Power of Attorney?

A power of attorney is a legal document through which one person (the principal) grants another person (the agent, also known as the attorney-in-fact) authority to act on their behalf.

Durable Financial Power of Attorney

If someone has told you that you need a power of attorney in your estate plan, they probably meant that you need a durable financial power of attorney. A financial power of attorney means that someone can act on your behalf in financial matters, such as managing your bank accounts and investments, paying bills and debts, applying for government benefits, or paying taxes. A durable power of attorney can be very broad and general, allowing the agent to manage a range of financial, legal, and business matters for the principal.

“Durable” means that the power of attorney does not expire when you become incapacitated. That makes it a good tool for ensuring that your financial affairs are handled by someone you trust should you develop dementia or become otherwise unable to handle your money matters. Without a power of attorney in place, your loved ones might need to seek a conservatorship in court to be able to take care of your finances. 

Thanks to recent changes in Michigan power of attorney law, all powers of attorney are now durable. Previously, a power of attorney needed to explicitly state that it was durable in order to survive the principal’s incapacity. A durable financial power of attorney can also be made “springing.” That means that it does not take effect unless and until a certain event, such as the principal’s incapacity. 

In addition to incapacity planning, many people have a power of attorney for convenience, such as if they are deployed with the military or travel frequently for work and need someone to act on their behalf while they are unavailable.

Other Types of Power of Attorney

There are a number of other types of power of attorney in Michigan which are limited in scope. For example, you can execute a power of attorney to allow someone to conduct a single transaction on your behalf, like the purchase or sale of real estate or a vehicle.

Why Should I Have a Power of Attorney in My Estate Plan?

In a nutshell, every adult should have a power of attorney in their estate plan as protection in the event of future incapacity. As mentioned above, having a POA in place can prevent the need for your loved ones to have to seek legal authority in court to make decisions on your behalf. The court process can be costly and stressful for your family, so it is best avoided if possible. 

Also, when you create powers of attorney, YOU are the one choosing who will make decisions for you if you cannot. If a guardian or conservator is appointed for you in court, it might be someone other than the person you would choose. 

Because these powers of attorney are part of your incapacity planning, they must be executed while you still have the legal capacity—while you can still capably think and act for yourself. Incapacity doesn’t only happen to the elderly; a sudden accident or illness can mean that you need someone to act in your stead. Because life is unpredictable, you should put powers of attorney in place as soon as possible—for your own peace of mind, and for your loved ones.

Work with an Experienced Estate Planning Attorney

If you don’t have a power of attorney in place, speak with an experienced estate planning attorney to create documents that will meet your needs, serve your interests, and critically, be legally effective when you need them to. 

To learn more about the different types of power of attorney, or how they fit in with your estate plan, contact Estate Planning &Elder Law Services to schedule a consultation.