Michigan's recently updated Power of Attorney (POA) law brings important changes that may affect how your estate is managed in the future. Whether you're drafting a new POA or revisiting an existing one, it's essential to understand these changes to ensure your wishes are fully honored. The new law became effective in July 2024.

Key Changes in Michigan's Power of Attorney Law

While the new law preserves the validity of preexisting POAs, it introduces several significant updates designed to enhance the clarity, effectiveness, and enforceability of these documents. Below are some of the key changes:

1. Enhanced Clarity on Agent Duties: The new law provides clearer guidelines on the duties and responsibilities of an agent (also known as an attorney-in-fact). This includes a requirement for agents to act in the principal's best interest, avoid conflicts of interest, and keep detailed records of their actions. These provisions help make sure agents are held accountable and follow the principal's intentions.
2. Witness and Notary Requirements: To further protect against fraud and ensure authenticity, the new law requires that a POA document be signed in the presence of two witnesses or a notary public. This makes the document more robust and helps prevent disputes about its validity.
3. Third-Party Acceptance: One of the challenges with older POAs was getting third parties, like banks or financial institutions, to accept them. The new law includes provisions that make it more difficult for third parties to refuse to honor a valid POA. This change is important for ensuring your agent can manage your affairs without unnecessary roadblocks.
4. Springing Power of Attorney: The new law clarifies the use of "springing" POAs—those that only take effect upon the occurrence of a specific event, typically the principal's incapacity. The law now requires clear language indicating how the triggering event is to be determined, often requiring certification by one or more doctors. This makes sure a POA isn't activated prematurely or without proper evidence of need.
5. Digital Assets Management: Recognizing the growing importance of digital assets, the new law includes provisions that let your agent manage your online accounts and digital property, provided the POA document explicitly grants this authority. This is important for modern estate planning, where online banking, investments, and social media accounts are increasingly common.

Why You Should Review Your Existing Power of Attorney

Even though your existing POA is still valid, it's wise to have it reviewed given these updates. Ensuring your POA is comprehensive and reflects modern needs will better equip your agent to manage your affairs effectively. Here are a few areas where an update might be beneficial:

• Medicaid Planning: If there's a possibility that you or your spouse may need long-term care, your POA should explicitly authorize your agent to engage in Medicaid planning. This could involve asset transfers, trust creation, and other strategies to ensure eligibility while protecting your estate. If your agent does not have this power, it will be difficult if not impossible to protect a substantial amount of your savings.
• Conducting Business Online: Ensure your POA grants your agent the power to manage online accounts and digital assets. This can include everything from online banking and investments to bill payments and managing email or social media accounts.
• Updating Beneficiary Designations: Life events can change your intended beneficiaries. If a beneficiary you've named is deceased, your agent should have the authority to update these designations if you are incapacitated and cannot do so yourself. A common situation where this occurs is an elderly person has dementia and has their spouse designated as beneficairy on their IRA, annuity, and life insurance. The spouse dies. Since the surviving spouse has dementia, they cannot update their beneficiary designations. That increases the chances that these accounts will have to be probated or go to the wrong person upon the survivors death. However, if the POA authorizes the agent to make the updates, this problem is avoided. This ensures your assets go to the right people without complications.

Taking Action: Why You Shouldn't Wait

While your current POA remains valid, the recent changes to Michigan law present a perfect opportunity to review and possibly update your documents. As an estate planning and elder law attorney, I can help ensure your POA is comprehensive and fully aligned with your current needs and the latest legal requirements. By doing so, you can protect your interests and provide your loved ones with clear instructions during challenging times.

Conclusion

Michigan's new Power of Attorney law strengthens the protections for principals and clarifies the responsibilities of agents. Although preexisting POAs are still valid, a review of your documents is advisable to ensure they are comprehensive and include essential powers, such as Medicaid planning, digital asset management, beneficiary updates, and more. Taking the time to update your POA now can provide peace of mind and prevent future complications.

If you have more questions or need further information, feel free to contact me, Andrew Byers, at my law office in Troy, Michigan. I am an experienced estate planning and elder law attorney and I enjoy guiding my clients so that they can create a comprehensive plan that protects their family and assets.  You can contact me now by using the online form or calling me directly at (248) 469-4261. On this initial call, I'll answer your preliminary questions and get some background information to make sure it's a situation I can help with. After that, you can decide if it make sense to schedule a more in-depth consultation.