How do durable powers of attorney work?

| Sep 12, 2019 | Powers Of Attorney |

It is important to know about Michigan estate documents that can help a resident when they are unable to make decisions and deal with their needs. Some of these cover health and medical matters, while others deal with financial issues. In a durable power of attorney, a person may grant powers to a trusted agent to handle their financial affairs.

The word durable means that the power of attorney becomes effective when a person, known as the principal, is no longer competent and cannot make financial decisions. The principal can describe the disability or incapacity that grants power to that that individual.

The individual who receives this authority, known as the agent, can do the things that the principal normally does on their own. These include signing checks, making deposits, paying bills, entering agreements for health care and other professional services, selling real estate and other property, obtaining insurance and managing their everyday business. The power of attorney can also restrict an agent from doing any of these and other tasks.

One or more people may be appointed as agents. They can act individually or together. It is important to select a capable individual to act as an agent and to name successor agents to take over if an agent is unable or unwilling to act on a person’s behalf.

Agents must follow the principal’s instructions and act in their best interest. They need to keep receipts and have accurate records about the principal’s assets.

A durable power of attorney also helps married couples deal with their financial matters. A spouse may sign checks and withdraw money from joint bank accounts. Without a power of attorney, however, a spouse may not make transactions involving jointly owned stock or a home or change beneficiaries on insurance policies or retirement benefits. A spouse needs authorization as an agent under a power of attorney to do any of these transactions.

A power of attorney must be executed before the person becomes incapacitated. It should be signed in front of a notary or two witnesses. The agent is also required to sign an acknowledgment of their duties and responsibilities that contains specific language.