If you are planning ahead for your senior years as a Mount Clemens, Michigan resident, you should definitely consider the possibility of incapacity. Clearly, this is not a very pleasant subject to think about it, but it is important to look forward pragmatically with your eyes. According to the Social Security Administration, if you live long enough to collect your full benefit at the age of 66 or 67, it is likely that you will live into your 80s.
About 40 percent of elders that are at least 85 years of age have contracted Alzheimer’s disease. Clearly, you are not going to be able to handle your affairs if you are one of the victims. Plus, there are other underlying causes of incapacity, so it is very important to brace yourself in advance. A legal device that is used for incapacity purposes is the power of attorney, but it has to be a particular type of power of attorney.
A power of attorney is a very important legal document. It conveys substantial authority to one person over the affairs of another. As with all legal documents, in order for it to be effective, it must be drafted properly. There are mistakes that can be made in creating a power of attorney – mistakes that can actually make the document invalid.
More importantly, even if the document is legally valid, if you don’t draft the language correctly, it may not operate the way you expect. Although there are many do-it-yourself power of attorney forms out there on the Internet, remember that one size does not fit all when it comes to a power of attorney, or any other estate planning tools. These legal documents are meant to be customizable, in order to be the most effective.
Establishing the Agent’s Authority
The main substance of a power of attorney is the language that establishes the agent’s powers. These powers can be broad or limited, depending on how the terms of the power of attorney are drafted. There are some powers that will not actually be recognized unless they are specifically included, such as the authority to make gifts or to designate the beneficiaries of your insurance proceeds.
Determining When the Power of Attorney Will Become Effective
A power of attorney does not have to take effect immediately. But, it can if that is what you desire. The language of the power of attorney will determine when it becomes effective. Powers of attorney that do not take effect until some specific event occurs, such as your incapacity or disability, is called a “springing” power of attorney. This may seem like a good option, but it can actually create delays and be more expensive, because your incapacity must be determined.
Executing the Power of Attorney
In order to be valid, the power of attorney document must be executed in compliance with the laws of your state. Some states required a signature with witnesses, while others require the document be notarized. In Michigan, the principal’s signature is only valid if the power of attorney is signed in front of two adult witnesses. If the power is going to include the ability to enter into real estate transactions on behalf of the principal, it must be signed in the presence of a notary.
Accepting a Power of Attorney
Assuming you get everything right and your power of attorney is legally valid, there may still be some institutions, like banks, that will be reluctant to honor your power of attorney. Luckily, the Uniform Power of Attorney Act was passed in 2006. The purpose of the act is to bring uniformity to powers of attorney. There is a specific provision of the act that requires third parties to either accept an acknowledged power of attorney or request a certification. Michigan as adopted this law.
Durable Power of Attorney
A standard power of attorney would no longer and in effect if the grantor of the device was to become incapacitated. However, a durable power of attorney will remain active, so durable powers of attorney are used for incapacity planning. You could execute a durable financial power of attorney to name someone to handle your financial affairs, and the durable medical power of attorney for health care decision-making.
Attend a Free Seminar!
We are holding a number of seminars over the upcoming weeks, and you can obtain a lot of valuable information you attend the session that fits into your schedule. To get all the details, click the following link: Mount Clemens Estate Planning Seminars.