On May 22, 2012, Governor Rick Snyder signed Public Act No. 141 into law which sets forth significant requirements for durable power of attorneys. The new requirements only apply to a durable power of attorney executed after October 1, 2012. However, because many experts anticipate that banks and other financial institutions may not honor a durable power of attorney unless these requirements are met, it is recommended that everyone execute a new durable power of attorney. The new durable power of attorney requirements are summarized as follows:
- A durable power of attorney must be signed, dated and either witnessed by two individuals (neither can be named agent) or notarized.
- An agent named under a durable power of attorney must sign an acknowledgement (i.e. acceptance) setting forth the agent’s responsibilities.
- An acknowledgement signed by the agent must include language similar to that set forth in the statue stating the agent’s responsibilities including the agent’s potential liability for damages to the principal as well as possible civil or criminal penalties.
- An agent must maintain record of any transactions as attorney in fact, including receipts, disbursements and investments.
- An agent cannot create a joint account with the principal or make a gift from the principal’s assets unless specifically allowed under the durable power of attorney.
- An agent cannot be paid for his or her services as agent unless permitted under the durable power of attorney.
Durable powers of attorney are a critical estate planning tool. In the event a person suffers a stroke or other disability, a durable power of attorney is often essential to permit a loved one to handle the individual’s financial affairs without requiring a conservatorship. Under the new law, a durable power of attorney may not be honored by a bank or other financial institution unless the law’s requirements have been met. To avoid any potential issues if you or your loved one should become disabled, this is an excellent time to review your durable power of attorney. As always, be sure to consult with an experienced elder law attorney.