A New Burden for Agents Under Powers of Attorney

In an effort to prevent potential abuse of elders and other vulnerable adults, the Michigan legislature recently added a new provision to the law governing durable powers of attorney. Powers of attorney, in a nutshell, are documents whereby we designate another person (called our “agent” or “attorney-in-fact”) to speak and act for us. “Durable” powers of attorney are those that remain in effect even if we become incapacitated. In fact, they’re good for life unless we revoke them.

Powers of attorney can be limited to specific matters or periods of time. For example, I could give my husband limited power of attorney to sign for me at a real estate closing. Powers of attorney prepared in conjunction with a will or a trust, on the other hand, are usually both all-purpose and durable. These are called “general durable powers of attorney” and are the ones targeted by the new law.

The new law mandates that an agent named under a durable power of attorney signed on or after October 1, 2012, must sign an “acknowledgment” of responsibilities before acting as agent. The acknowledgment does not create a duty for an agent to act. Rather, it merely states certain requirements and restrictions that apply if and when the agent does decide to act (for example, the duty to keep good records).

An acknowledgment form that meets the requirements of the new statute should be part of every estate plan signed on or after October 1, 2012. In addition, some are predicting that title insurance companies and other institutions may begin asking agents to sign an acknowledgment of responsibility even though their powers of attorney may be signed before October 1, 2012, or may be specifically excluded from the statute. It will be interesting to see how this unfolds!

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