What You Need to Know About Michigan's New Uniform Power of Attorney Act (UPOAA)
Michigan's Uniform Power of Attorney Act (UPOAA) was signed into law by Governor Gretchen Whitmer on November 7, 2023, and is set to revolutionize how we approach standard Power of Attorney (POA) documents. The UPOAA expands agent responsibility and liability, creates guidelines for financial institutions, provides clearer terms for succession and termination. While the changes won't officially roll out until July 1, 2024, Thompson Legal has detailed what's in store and how it affects you and your family. Some of the key updates to the UPOAA include:
1. Enhanced Accessibility
The UPOAA champions accessibility, making it easier for individuals to create and execute Power of Attorney documents. A standout change is the elimination of the specification of durability, streamlining the process and ensuring that your wishes are clearly outlined. This means greater ease for families in establishing essential decision-making frameworks. Most importantly, the UPOAA provides free access to a form version of a generic POAs that individuals can use.
2. Dynamic Co-Agents and Successor Agents
The UPOAA introduces the option for individuals to designate not just one, but multiple independent co-agents and successor agents. This means that two parties can both act simultaneously without the approval of both agents. This allows for a dynamic approach, ensuring that there's always a trusted individual ready to step into the role if needed. It's all about providing more choices and security in your decision-making team.
3. Expanded Responsibilities for Agents
The UPOAA doesn't just streamline, it also empowers. The expansion of powers under MCL 556.301 ensures that your designated agent has the authority needed to effectively manage your affairs. Michigan’s prior code provided authority broadly approved actions of any POA authorized by a document, which the UPOAA details each individual POA power. From handling financial transactions and making gifts, to making healthcare decisions, the UPOAA gives agents a broader scope to act in your best interest. The UPOAA specifically details an agent’s general authority with respect to real property, tangible personal property, stocks and bonds, commodities and options, banks and other financial institutions, operation of an entity or business, insurance and annuities, estates and trusts, claims and litigation, personal and family maintenance, government or military benefits, retirement plans, and taxes. MCL 556.304–.317.
4. Third-Party Liability Clarification
Financial institutions, take note! The UPOAA encourages wider acceptance of POA documents by third parties, particularly financial institutions. This means less hassle when executing your powers through an agent, creating a smoother experience for all involved parties. Under the new terms of the UPOAA, a third party, is required to either accept a power of attorney, request an agent’s acknowledgment, certification, translation, or opinion of counsel within seven business days after the power is presented for acceptance. Once supporting documentation is provided, the person must accept the POA within five business days, absent certain circumstances. A financial institution that refuses to accept an acknowledged power of attorney in violation of the UPOAA is subject to a court order mandating acceptance of the power and liability for reasonable attorney fees and costs incurred in any action or proceeding that confirms the validity of the power or mandates acceptance of the power. MCL 556.220.
5. Clearer Agent Termination Procedures
Sometimes, things change, and the UPOAA acknowledges that. It provides clearer guidelines under MCL 556.210 for agent termination, ensuring a smooth transition when it's time for a change in your designated decision-maker. Clarity is key in navigating these transitions, and the UPOAA brings it to the forefront. Under the UPOAA
6. Mandates and Penalties for Agents
Accountability matters, and the UPOAA takes this seriously. With stricter mandates and penalties outlined in MCL 556.217(2) and MCL 556.215, agents are held to a higher standard, emphasizing their fiduciary duty to act in your best interest. It's an added layer of protection for you and your assets. Under the UPOAA, if the power of attorney contains a provision relieving an agent of liability for breach of duty, that provision is binding on the principal and the principal’s successors in interest unless the provision relieves the agent of liability for breach of duty committed in bad faith or the provision was inserted as a result of abuse of a confidential or fiduciary relationship with the principal. MCL 556.215. An agent who violates the UPOAA is liable for the amount required to restore the principal’s property, including attorney fees and costs . MCL 556.217(1). An agent is also liable for three times the value of the property, if the agent embezzles or converts the principal’s property or refuses to transfer possession of the principal’s property to the principal on demand. MCL 556.217(2). The provisions provide principals with clear right to damages in the event an agent breaches their duty.
7. Access to Statutory Forms
To make things even more straightforward, the UPOAA provides access to statutory forms (Power of Attorney MCL 556.401; Agent Acknowledgment MCL 556.402; and Certification of Validity MCL 556.403). These standardized forms offer a convenient and reliable option for individuals creating generic POA documents, ensuring that legal requirements are met without unnecessary complexity. Individuals should still take care to ensure their documents are executed with witnesses and/or a notary.
Frequently Asked Questions:
Q: How will the UPOAA impact the durability specification in my existing Power of Attorney document?
A: The UPOAA removes the requirement for durability specification, making the document creation process more straightforward. Existing documents that comply with the new standards should remain valid.
Q: Can I designate multiple co-agents and successor agents under the UPOAA?
A: Absolutely! The UPOAA provides the flexibility to designate independent co-agents and successor agents, allowing you to tailor your decision-making team to your preferences.
Q: How does the UPOAA clarify third-party liability for financial institutions?
A: The UPOAA encourages financial institutions to accept POA documents more readily, reducing challenges that individuals may face when executing their powers through an agent. It also provides agents with financial recourse should financial institutions reject a validity certified power of attorney.
Q: What happens if an agent fails to fulfill their responsibilities under the UPOAA?
A: The UPOAA introduces stricter mandates and penalties for agents who breach their fiduciary duties, ensuring accountability and protection for the principal.
As we anticipate the arrival of Michigan's Uniform Power of Attorney Act, stay tuned for more updates and insights from Thompson Legal. If you have any questions or concerns about how the UPOAA may impact you and your estate plan, don't hesitate to reach out. We're here to guide you through the changes and ensure your estate planning journey remains smooth and secure.
Cheers to the power of planning ahead!
This blog is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with an estate planning attorney about your case Contact Us at (734) 743-1646 to schedule a consultation.
