Scarcely a day goes by around here that someone in the office doesn’t mention durable powers of attorney. Before you start thinking that our water cooler conversations must be really boring, remember that we are a law office, where things like powers of attorney are dealt with pretty much every day. Acknowledging in advance that few people (other than lawyers) think about powers of attorney very often, the fact remains that they are an integral part of most comprehensive estate plans and are otherwise commonly used in a variety of situations and transactions. When not drafted correctly, the results can be both frustrating and expensive.

A power of attorney is a legal document in which one person (the “principal”) designates another person (the “agent” or “attorney in fact”) to act on the principal’s behalf and in the principal’s name. Powers of attorney can be “general” (meaning they cover a wide range of things that the principal can do on his or her own behalf) or “limited” (meaning that they apply to a specific transaction or situation). Since a power of attorney conveys no more authority than what the principal himself has, if the principal becomes incapacitated or disabled, an agent under an ordinary power of attorney can no longer act. That’s where “durable” powers of attorney come in. A durable power of attorney is not affected by the principal’s disability, incapacity or by the lapse of time. If a parent or spouse becomes incapacitated, for example, someone acting under a proper durable power of attorney can continue to conduct basic business and legal affairs on the incapacitated person’s behalf.

Starting October 1, 2012, Michigan law governing durable powers of attorney will change. Most notable is the new requirement that the attorney-in-fact must sign an acknowledgment of responsibilities. The acknowledgment includes an affirmative recognition of the attorney-in-fact’s legal duties and obligations to act within a certain standard of care. Further, within the acknowledgment, the attorney-in-fact agrees that she may be subject to civil or criminal penalties if she violates her duties to the principal.

While these requirements do not affect powers of attorney that were executed before October 1, 2012, the estate planners here at Wright Beamer have already begun to include these requirements in our documents. Click here

, if you want to read the new statute.