I am preparing to execute my first estate plan, and I always thought I just need a Last Will and Testament. Is a power of attorney necessary?
A power of attorney is an estate planning tool that most experienced Michigan estate planning attorneys will include in a comprehensive portfolio. While it is true that a Last Will and Testament or revocable living trust are the cornerstones of a properly-drafted plan, there are a number of corollary documents that are equally as necessary to ensure the entire estate plan works interactively to achieve your goals, including a power of attorney. What's more, is that this fundamental document can help avoid the costly experience of petitioning for conservatorship over a loved one who is no longer capable of executing legal or financial documents – which is explained more thoroughly below.
What is a power of attorney?
In Michigan, a power of attorney is a formally-executed document that creates an agency relationship between the principal (yourself) and the individual(s) you choose as agents to act on your behalf. The document may be very limited in scope or extremely broad, the latter affording the agent authority to engage in virtually any transaction on your behalf. The document must be witnessed and notarized, and may be revoked at any time.
Why do I need a power of attorney?
A power of attorney is necessary to finalize any transaction requiring your signature at which you are unable to appear or participate. At your direction, you may authorize your agent to sign tax documents, conduct banking business, pay your bills, engage in litigation, execute a contract or sell real estate. At a minimum, the document allows for increased convenience and alleviates your need to appear in person if you are unable. The document also will be necessary should you reach a point of incapacity and are no longer deemed competent to handle your own affairs.
What happens once I am deemed incompetent?
If you are considered by at least one licensed physician to be under the effects of mental incompetence, your agents may continue to rely on the power of attorney – provided it is a “durable” power of attorney – to conduct your affairs on your behalf. Otherwise, your loved ones will be required to petition the court for a conservatorship over your person and property, which is an expensive legal exercise that may take several weeks or months to conclude – particularly if there is an objection.
If you are considering the best way to execute an estate plan and would like to discuss your options, contact experienced Auburn Hills estate planning attorney Andrew Byers by calling (248) 301-1511.