Understanding Michigan’s new Power of Attorney law

Photo credit: Bridge Michigan

by Laurie D. Brewis

Many people are already somewhat familiar with the concept of assigning someone with Power of Attorney (POA) on their behalf. In general, assigning someone a Power of Attorney (POA) authorizes that person to act on behalf of an individual who is no longer able to act on their own behalf due to illness, injury, or cognitive decline. A valid POA allows an individual to sign financial documents and access financial accounts on behalf of another.

As of July 1, 2024, the Uniform Power of Attorney Act (UPOAA) will take effect in Michigan, which significantly streamlines the rules around POAs, making policies and procedures more consistent with POA laws in other states. This article highlights some important POA updates. The UPOAA repeals and replaces the durable power of attorney provisions of the Estates and Protected Individual’s Code (EPIC) currently the law in Michigan. However, powers of attorney drafted prior to July 1, 2024, will still be effective after the UPOAA goes into effect.

Financial institutions and POA acceptance

The UPOAA was drafted to encourage the acceptance of powers of attorney both locally and across jurisdictions. It can be particularly frustrating to put a POA in place, only to have a bank, insurance company, or other financial institution refuse to accept a valid POA.

From the perspective of a financial institution, there are concerns about fraud, which may cause management to institute strict controls when verifying a POA. However, it is prudent for these institutions to be aware of updates under the UPOAA because it supersedes any internal procedures and requires that any “acknowledged” POA be accepted. For the law, acknowledged means that it has been notarized or otherwise legally authorized.

The consequences of a financial institution failing to accept a valid POA can be harsh, and if a court appearance is necessary, the bank could be liable for court costs.

Signature requirements for durable POA

As a reminder, a durable Power of Attorney is differentiated from a standard Power of Attorney because a durable POA remains in effect even after the person who assigns the POA becomes unable to act on their behalf. By contrast, a standard POA ends and becomes invalid in the above situation.

From a legal standpoint, several signature requirements must be met for a durable POA to be recognized. If even one of the items on this list is missing or invalid, then the POA cannot be accepted.

The signature requirements for a Power of Attorney to be considered durable are:

Principal’s signature: The POA must be signed voluntarily by the principal (the person assigning the POA) or a notary public on the principal’s behalf or in the presence of two witnesses, and neither witness can be the attorney-in-fact.

Notarization: An acknowledgment must be made by a notary public that the principal signed the POA.

Gift giving and statutory references

To ensure that the principal’s wishes and intentions are carried out accurately, anyone involved in gift-giving transactions under a POA should be informed of the latest statutory requirements, especially when gift-giving is done for estate planning purposes.

There are statutory requirements when engaging in gift-giving through a Power of Attorney, which include:

• The scope of authority to make gifts, including the types of gifts that can be given and any restrictions or limitations;
• Requiring that the agent owes a fiduciary duty to the principal;
• Keeping accurate records of any gift-giving activity;
• Ensuring safeguards against abuse; and
• Complying with other applicable laws governing gift transactions.

POA and court proceedings

If a financial institution refuses acceptance of a valid POA, you may find yourself needing to pursue appropriate legal action, including going to court. A common situation would be a bank interfering with the assigned agent’s ability to access an account, pay a bill, make investment decisions, etc., and the agent can then pursue legal action. 

This process can begin by filing a petition with the court to enforce the POA terms, seeking either declaratory relief or an injunction for enforcement. Less extreme means, such as the preparation of a certification of validity form, may also be helpful to ensure acceptance.

Being familiar with Michigan’s updated Uniform Power of Attorney Act is vital to ensuring that the person who has assigned someone as their POA is protected. The main goal for a power of attorney is acceptance by third parties, like banks. Individuals should consider contacting an attorney to confirm that their existing POA meets the updated standards.

In addition to being a Manchester resident and Mirror volunteer, Laurie D. Brewis is an Estate Planning and Probate Attorney with the TGQ Law Firm. Disclaimer: This article is not intended to be legal advice. Everyone’s situation is different and legal advice is only properly given after having reviewed your specific situation.

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by Sara Swanson

Sara Swanson is an editor, writer and founder of the Manchester Mirror.