Ann Arbor Legal Alert: Law Change May Affect Your Financial Power of Attorney
October 17th, 2012
A recent, important change in Michigan law impacts your financial power of attorney. The new Michigan statute related to financial powers of attorney went into effect October 1, 2012, and may cause you serious challenges in using your power of attorney. We recommend all clients have their power of attorney updated to comply with the new law and avoid costly problems for their families.
Most people approach their estate planning as a to-do item, to be completed and crossed off the list. However, changes in the law, in how the courts are dealing with certain matters, in how your assets are titled, and in your personal life are always changing and can call for changes to your plan.
There are three major items that a power of attorney must specifically contain.
1. An acceptance form, signed by the persons in the document, the attorneys-in-fact. Before the persons named to act in the document can use it they must sign this acceptance acknowledging their duties as attorney-in-fact. The acceptance must contain very specific language and should be prepared by your estate planning attorney.
2. A statement that you either allow, or do not allow, gifting of assets. Gifting can be important if you make routine gifts to, for example, your grandchildren or your church. Gifting can also be critical if your family ever needs to try to qualify you to receive certain government benefits to help pay for nursing home care. If your power of attorney does not specifically state that your attorney-in-fact can gift for you, it is presumed they cannot and therefore may not be able to help you qualify for benefits.
3. A statement that you can hold a joint account with the person you appointed as your attorney-in-fact in your power of attorney. Since people often appoint their spouse, child or trusted friend it may be important that you are able to hold a joint account with this person.
A fourth change we’ve added to our powers of attorneys is not required by the State, but something we’ve noticed many clients having trouble with. So many clients have online accounts these days it is causing their helpers tremendous confusion and delay because they do not have login information to access the accounts and for privacy purposes, the companies will not release it to them. To assist in this situation that is becoming more and more common, we’ve added specific language to our powers of attorney allowing the attorneys-in-fact to access and obtain information regarding online accounts.
Legally, powers of attorney signed prior to October 1, 2012 will be grandfathered in and do not need these new provisions. However, the practicality of your attorneys-in-fact walking into a bank or financial institution and them accepting a power of attorney that is not current with the new statute is questionable. Institutions have their own rules and protocols on accepting powers of attorney. At best your helpers may have to have an attorney get involved and speak with the institution’s legal department to try to have the power of attorney grandfathered in. This is not an ideal situation when you may be in a crisis and your family is trying to help you by use of your power of attorney.
• If you are in our Estate Planning Maintenance Program, a new power of attorney will be provided to you in your 2013 review meeting at no additional charge. It is included in your annual maintenance program membership. Important changes like this are exactly why we created the maintenance program!
• If you are a client of ours, but not in the Maintenance Program, we are happy to prepare a new power of attorney for you for a preferred client price. Please contact Laney to arrange a meeting.
• If you are not a client of ours but would like to have a power of attorney prepared that is compliant with this law change, we are happy to assist you with this. Please contact Laney to arrange a meeting.
Overall, it’s important that you meet periodically with your law firm to see what has changed, legally and personally, and how it might impact your plan. Just like this power of attorney change, other changes happen that can throw a wrench in the effectiveness of your plan. Otherwise, the time, effort and money you invested in a plan to protect you and your family may end up not working. It would be similar to buying a car, but never having it tuned up. It will likely end up not working the way it should and what would have been minor tune ups can instead have devastating costs, not just financially, but by impacting your family’s well-being.