A power of attorney is a critical legal document that allows you to appoint someone to make financial, healthcare, and legal decisions on your behalf if you are unable to do so yourself. This is a critical part of estate planning, as it can be beneficial in both long-term planning and unexpected situations. The following blog explores some of the different types of powers of attorney in Michigan and how they work.
What Is a Power of Attorney?
A power of attorney allows you to select an individual and give them the legal right to manage certain matters on your behalf in the event that you are unable to do so. Normally, this power is given to a loved one, such as a child, parent, spouse, close relative, friend, business partner, and so on.
Once this person is chosen and the documents are created and implemented, this person is able to pay bills, make bank deposits and withdrawals, have access to medical records, file tax returns, buy or sell property, hire caretakers, transfer assets into trusts, and more. It is important to note that you can pick and choose what this person can access and when.
In Michigan, when you appoint an individual to serve in this role, they are referred to as your “agent” or “attorney-in-fact.” Additionally, depending on how you draft the document, their authority may be broad or limited.
What Does a Power of Attorney Allow Someone to Do?
- Pay bills and manage daily finances
- Make bank deposits and withdrawals
- Access financial and legal information
- File tax returns
- Purchase or list property
- Hire caregivers
- Transfer assets to trusts
- If authorized, access medical records
What are the Different Types of Powers of Attorney in Michigan?
In Michigan, there are various types of powers of attorney that may come into play in different situations.
Main Types of Powers of Attorney
- Immediate power of attorney: This type of power of attorney goes into effect as soon as the document has been executed.
- Springing power of attorney: This power of attorney goes into effect only when a specific event occurs, for example, in the event that an individual has become incapacitated. You can work with an estate planning attorney to set the standards for what you consider incapacitation.
- Durable power of attorney: This document stays in effect when you become incapacitated and remains in effect over time.
- Non-Durable power of attorney: In this situation, the power of attorney is terminated in the event you become incapacitated or disabled
How to Choose the Right Type for Your Situation
- Choose a durable power of attorney if you are worried about incapacitation
- A springing power of attorney is beneficial if you only want to grant this authority under certain circumstances
- An immediate power of attorney allows for immediate management of finances and legal matters
- Consider your health, financial needs, and family dynamics when determining the best option for you
Why Is a Power of Attorney Important?
A power of attorney is one of the most important estate planning tools because it ensures that someone you trust can manage your affairs on your behalf in the event you are unable to do so due to travel, incapacitation, or other issues that render you unable to make these decisions.
Key Benefits of a Power of Attorney
- Ensures continuity in financial and legal decision-making
- Prevents delays in bill payment or asset management
- Avoids the need for a court-appointed guardianship
- Allows you to appoint someone you trust to manage your affairs
- Reduces stress for family members in the event of an emergency
What Happens if You Don’t Have a Power of Attorney?
- Your family may need to go to court to be granted the authority to make decisions for you
- A judge could appoint someone you wouldn’t have chosen
- Important financial decisions may be delayed
- Familial conflict may arise regarding decision-making
How Do You Appoint a Power Of Attorney?
In order to create a power of attorney, it is important to work with an experienced estate planning attorney. An estate planning attorney can help you determine the best type of power of attorney for your unique situation and help ensure that the documents are created properly and are legally sound.
Steps to Create a Power of Attorney
- Decide who you wish to appoint as your agent
- Decide what powers you wish to grant
- Choose when you want the power of attorney to take effect
- Work with an attorney to assist you in creating the document
- Ensure the document is signed in accordance with Michigan legal standards
- Provide copies of the document to all relevant institutions and trusted parties
Michigan-Specific Considerations for Powers of Attorney
In Michigan, powers of attorney must meet specific requirements in order to be considered valid. The document must be executed in accordance with the law to grant power to the agent.
Key Michigan Legal Considerations
- Michigan law dictates how these powers are created and enforced
- Durable powers of attorney must clearly and explicitly state that the document will remain valid after incapacitation
- Improperly drafted documents may be challenged or rejected by the court
- Legal guidance can help ensure clarity and enforceability
Because powers of attorney are governed by Michigan state law, they must be properly executed to be legally enforceable, making legal guidance during the drafting process critical.
Contact Our Michigan Firm
If you are ready to establish powers of attorney in Michigan, please do not hesitate to contact Collis, Griffor & Hendra today to schedule a consultation.