At Steslicki & Ghannam, PLC, our Plymouth estate planning attorneys understand that there is some confusion about the different types of powers of attorney (POA) and their designations. In Michigan, the scope and limitations of a POA are defined by state law and the specific terms outlined in the POA document.
Here, our Wayne County lawyers discuss the scope and limitations of each type of POA, so our clients can make informed decisions about their designations.
What is the Scope of a Power of Attorney in Michigan
A power of attorney is a legal document that grants an individual (the “agent” or “attorney-in-fact”) the authority to act on behalf of another person (the “principal”) in specified or broad matters, depending on the type of POA.
The purpose of a POA is to allow the agent to make decisions and perform tasks on behalf of the principal, particularly when the principal cannot do so themselves due to absence, illness, or incapacity.
The different types of POA and their scopes include:
- General Power of Attorney: Grants broad authority to the agent to handle various matters, including financial and legal affairs.
- Limited Power of Attorney: Grants specific authority to the agent for certain tasks or periods.
- Durable Power of Attorney: Remains in effect even if the principal becomes incapacitated. This type is often used for long-term planning.
- Springing Power of Attorney: Becomes effective only upon a specified event, such as the principal’s incapacitation.
- Healthcare Power of Attorney (Patient Advocate Designation): Authorizes the agent to make medical and healthcare decisions on behalf of the principal.
Understanding the definition and elements of a Power of Attorney in Michigan helps ensure it is used effectively to manage the principal’s affairs according to their wishes.
What are the Limitations of a Power of Attorney in Michigan?
Limitations on powers of attorney in Michigan are essential to protecting the principal’s interests and well-being. These restrictions ensure that the agent acts within the bounds of the authority explicitly granted, thereby preventing potential abuse or misuse of power.
The fundamental limitations of POA include:
- Principal’s Capacity: The principal must have the legal capacity to understand the nature and consequences of the POA at the time of its creation. If the principal is not mentally competent, the POA is not valid.
- Specified Powers: The agent can only act within the powers explicitly granted in the POA document. Any action beyond these specified powers is not authorized.
- Restricted Actions: The POA document may include specific restrictions or limitations on the agent’s authority.
- Best Interests: The agent has a fiduciary duty to act in the principal’s best interest. This includes acting with honesty, integrity, and loyalty.
- Avoiding Conflicts of Interest: The agent must avoid conflicts of interest and cannot use the principal’s assets for personal gain.
- Principal’s Right to Revoke: The principal can revoke the POA at any time, provided they are mentally competent. The revocation must be in writing and communicated to the agent and any third parties relying on the POA.
- Specified Expiration: The POA may include an expiration date or specific conditions under which it will terminate.
- Incapacity (Non-Durable POA): If the POA is not durable, it terminates if the principal becomes incapacitated.
- Death of Principal: The POA automatically terminates upon the principal’s death, and the agent’s authority to act ends immediately.
In addition, there are prohibited actions and legal and financial limits.
They include:
- Creating or Revoking a Will: The agent cannot create or revoke a will on behalf of the principal.
- Voting: The agent cannot vote in public elections on behalf of the principal.
- Personal Services: The agent cannot perform personal services, such as medical treatments, on behalf of the principal.
- Third-Party Acceptance: Third parties, such as banks or other financial institutions, may refuse to accept a POA if it does not meet their requirements or if they have doubts about its validity.
- State-Specific Forms: Michigan has specific forms and requirements for certain types of POAs, particularly those involving real estate transactions.
A court can intervene if there is evidence that the agent is not acting in the principal’s best interest. Family members or other interested parties can petition the court to review the agent’s actions and potentially remove the agent if misconduct is found. If a court appoints a guardian or conservator for the principal, the POA may be terminated, or the agent’s powers may be limited.
If you already have a POA in place, it is advisable to review it periodically and, if necessary, update the document to ensure it reflects your current wishes and circumstances.
When drafting or updating a POA, consulting with an attorney can ensure it meets legal requirements and clearly outlines the intended scope and limitations. We can help.
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