If you have spent your whole life building up your estate, it would be a tragedy if you were unable to determine how those assets are managed. But in the event that you become unable, due to serious illness or mental incapacity, to manage your financial affairs, all the property and other assets you have accumulated might be in peril.
When planning for a situation in which you may become unable to make decisions
for yourself, you should consider making arrangements in two main areas:
1) Preservation and management of assets, and
2) Healthcare decision-making.
The first planning area can be addressed by a Property Power of Attorney, while the second can be addressed by a Healthcare Power of Attorney (as well as other advance directives).
A Property Power of Attorney will allow you, through your proxy, to have managerial control over your estate even if you become unable to make informed decisions for yourself. If you become incapacitated and do not have a Property Power of Attorney, a court might appoint an agent to act in your behalf, and that agent may not be someone that you would want managing your affairs.
You may also choose to create a Property Power of Attorney simply because you no longer wish to manage the day-to-day affairs of your finances. In this way, a Property Power of Attorney can help to provide you with sound financial decisions that will increase the likelihood of steady income for the rest of your life.
A Property Power of Attorney designates a person of your choosing (your agent or attorney-in-fact) and allows that person to make financial decisions and sign documents on your behalf. A change in Michigan law requires a Personal Representative named in a document after October 1, 2012 to accept the authority to act as your agent and sign an acknowledgment to that effect. The acknowledgment sets forth the responsibilities of the agent in clear terms.
A Property Power of Attorney can be created to take effect at any time. It must be in writing and witnessed by two adults. Your agent cannot be a witness to the Property Power of Attorney. The document must also be notarized.
In your Property Power of Attorney, you should specify the powers and responsibilities of the agent. These may include any of the following:
Remember that the powers of your agent are solely up to you to determine. The Property Power of Attorney can be very broad and cover any possible transactions, or it can be limited only to a few particular situations. For example, you can authorize your agent only to deposit checks into your bank account and to pay your bills.
In short, you should be very cautious in:
1) Designating an agent who will manage your property responsibly and in accordance with your wishes, and
2) Detailing the specific actions that your agent has authority to take on your behalf.
Under Michigan law, there are limits to what agents may do. For example, agents may not create or amend a will. And agents also may not name themselves as beneficiaries of insurance policies. Agents also may not make gifts (unless you write that power into the Property Power of Attorney).
It is also important to remember that a Property Power of Attorney remains in effect only as long as you are alive. After you die, the agent named in your Property Power of Attorney has no authority over your assets.
Of course, you can always change the named agent or the terms of your Property Power of Attorney, as long as you are mentally competent to do so. The notice revoking the Property Power of Attorney should be written and distributed to all the parties with whom your agent has been in contact (customers, banks, brokers, insurance agents, etc.).
If you live in Michigan and need experienced estate planning help, contact Michael Einheuser for a free consultation. Michael helps families in Bingham Farms, Troy, Farmington Hills, Rochester Hills, Southfield, West Bloomfield Township, Bloomfield Township, and the surrounding Michigan areas.
Schedule your Free Consultation today: (248) 398-4665.