Know The Limits Of Your Power Of Attorney (Episode #291)

0:32 Boom. Well, good afternoon, Michiganders. It is Halloween Tuesday, October thirty one, twenty twenty three, and this, of course is Tuesday with Tom, Michigan's only weekly podcast where we answer your questions about estate planning and a state settlement in Michigan, and we don't send you a bill. As always, I'm your host, Tom Doyle, a state planning attorney, lifelong Michigan resident, and ambassador for all things good in this great state of Michigan. Welcome, welcome, welcome to today's program. Well, I hope all of you have a good evening tonight if you're out with your young ones trick or treating, but please stay safe. Last episode a little while ago, because I've been gone for a bit. But who can witness my durable power of attorney? So if you have a durable power of attorney and you're wondering who it is that can witness it, I encourage you to listen to last week's episode and now continuing essentially with what appears to have been. If you've been following a theme lately where we're spending time talking about powers of attorney, today, we want to be sure that you know the limits of your power of attorney. So in that respect, I am going to be replaying that

2:08 discussion in a previous episode of Tuesday with Tom where I talked about the limits on your power of attorney. But as always, please remember that what I'm about to discuss during the program is for educational purposes only. It is not intended to be legal advice. You need to work with your attorney to determine what is appropriate for you and your estate plan. Your power of attorney is not unlimited. Well, as I talked about another program, what is a power of attorney? Essentially, it's a legal document in which you allow or a point, or authorize whatever terminology you want to use someone to act in your place. Now, it might be a durable power of attorney. That would be it's going to allow that person to take care of things even if you're incapacitated, although in Michigan it does require particular language to make it durable.

3:25 If it's not going to be durable, then the power of attorney would end at the point in time you become incapacitated. Well, most people have a power of attorney so that somebody can take care of business for them if they become incapacitated. So most people are going to have or want to have, what's called a durable power of attorney. And as you likely know, there are two basic types of powers of attorney. There is one for financial to take care of your banking, your investments, your life insurance, your retirement plans, whatever that happens to be. And then there is going to be the medical power of attorney, sometimes called a patient advocate, depending upon what terminology is being used in the form. So financial powers of attorney usually are going to include certain powers that might be the power to open a bank account, take money out of the bank, pay your bills, maybe trade in stock, sell real estate, buy real estate. All of those kinds of things are oftentimes included in a financial power of attorney. And then the medical power of attorney, of course, is a document in which you are allowing the agent to make healthcare decisions for you. Now, there are limitations on powers of attorney. Some of those limitations will start with the document.

5:00 It it inevitably happens every few months, someone's going to contact Amanda and I and Amanda and I and one of the questions is going to be, well, I've got this power of attorney. Can I do X under the power of attorney? Well, the problem in answering that question is we can't answer it without seeing the document because the document starts with laying out very specific powers that you have. And it might be a very broad general financial power of attorney that allows somebody to do everything that they need to do relative to someone's finances and filing tax returns, et cetera. Or it might be a very limited power of attorney. Example, let's say that you have a home and you have a closing scheduled on your home in January, but you're going to be in Florida in January. You might give somebody else a limited power of attorney to sign whatever documents need to be signed simply for the purpose of closing on the sale of your house. That doesn't give them the authority to do banking and pay taxes, etc. It's simply limited to that authority. Or you might be a trustee of a trust and you have a bank account and you want someone else to be able to help you manage that bank account.

6:21 You don't want them to be a trustee, You simply want them to have authority to write checks on the account, deposit the accounts. You could in that case have a limited power of attorney drafted for that purpose. I had a client several years ago who was heading off for his military service, and in that case, he had an account and that account was to be used to pay his bills, and he simply wanted his brother to have authority to write checks, to make deposits, to do transactions only on that account. So we created a limited power of attorney. So it starts with the document itself, and that's going to tell us what specific authorities that you have, whether it's limited or a broad type power of attorney. So Number one limitations in the document itself. Number two limitations under the law. There are limitations under the law, some basic limitations that are going to be applicable whether it's a financial or a medical power of attorney. Some of those would be for example, under either whether it's financial or medical, you the agent, the person that's named and given the authority is called an agent or perhaps a patient advocate in the document. They are what the law calls a fiduciary, and

7:54 as a fiduciary, they have a fiduciary duty. And what is that the agent is required at all times to act in the best interest of the person who gave them the power of attorney. That's a fiduciary duty. So the person under your financial power attorney does not have the legal authority do what they want to do to help themselves. It's to help you. That's the fiduciary duty. So everybody appointed under either a financial, medical, limited broad doesn't matter, has that same fiduciary duty. Second, there is always the power that is reserved by the person making the power of attorney to revoke it, then get rid of it or change it. That is their right to do that. Now, under Michigan law, as long as that person is competent, he or she can revoke the financial power of attorney for any reason.

9:05 We will actually see that under a healthcare power attorney in the state of Michigan, the person can in fact revoke it even if they are incompetent. So to revoke a financial they have to be competent. To revoke a medical they don't even have to be competent or do that. But in many cases the power can be revoked. An agent might be removed by a court proceeding. Let's say that the agent is acting improperly. A family member can file a petition to probate court challenging what the agent is doing. And if the court determines that the agent is not acting in the principle's best interest, i e.

9:52 Violating that fiduciary duty or otherwise violating the terms of the power of attorney itself, the court could revoke the power of attorney, and if it was so inclined, even appoint a conservator who would now have the legal authority over that individual's assets. Also, power of attorney ends at death. Financial medical they both end at death. Now, we also in Michigan have some very specific restrictions that apply to financial durable power of attorneys, and that is one, the agent has to take reasonable steps to follow the instructions of the principle.

10:43 So you need to talk to the person about what do you want me to do in managing your assets and paying your bills or making investment decisions, whatever happens to be. Two, if the principle requests it, the agent has to keep the principle informed of what they are doing. They have to provide an accounting to the principle so that the principle can look at the bank account records and know what's being done for them, or if that person is incapacitated, then that accounting would be provided to either their guardian or conservator who would be appointed by the probate court. But there needs to be an accounting provided to the principle or their representative, if you will, so that they can all know what you're doing under that financial power of attorney. You cannot.

11:48 You cannot make a gift from the principle's property unless the durable power of attorney allows you to do that. So you can't just give their stuff away just because that's what you want to do, or in some cases you might think about doing some medicaid planning, and sometimes under medicaid planning, giving stuff away might be a part of a medicaid plan. But you can't do that unless the power of attorney specifically authorizes you to make gifts. Also, you cannot unless the power of attorney authorizes it. You cannot own assets or take the individual's assets and put them into joint accounts with yourself. So you can't take a bank account that's in the principal's name and add your name as a joint owner. You can put your name on it as the agent under the power of attorney, but you can't put your name on it as a joint owner again unless document specifically allows you to do that. Since you're going to have to provide accountings, that means you're going to have to maintain records.

13:11 You have to maintain records of the transactions that you take, receipts, disbursements, investments, bank statements, checks, all of those things. You have an obligation under Michigan law to maintain those records. Also, you might be liable for any damage or loss to the principle and subject to any appropriate remedies if you breach that fiduciary duty, going back that duty that you have to be doing things in the best interest of the principle. If you breach that fiduciary duty, you can be held accountable for that. You might in fact be subject to civil or and or criminal penalties if you violate your duties to the principle. So we have a number of restrictions if you will under Michigan law that apply in addition to those overall restrictions, specifically to your serving as the financial power of attorney. Likewise, Michigan has certain restrictions relative to the agent or patient advocate who's serving under a medical power of attorney. As I noted before, the patient can in fact revoke a medical power of attorney even

14:46 if they are incompetent. That's under Michigan law. Understand that the medical power of attorney is not effective unless the patient is unable to participate in decisions regarding his or her medical or mental health. That financial power of attorney, I can make it effective right now. I can give you the authority to sell my home today or to manage my bank accounts today, if I chose to do that. But a medical power of attorney in the state of Michigan only becomes effective when the patient is unable to participate in his or her own medical or mental health care decisions. Also, the patient advocate decision, even though normally they end at death, if there is a provision in the document allowing for anatomical gifts, that authority is going to be able to be exercised by you even after the patient's death. Next, the patient advocate cannot shall not exercise powers concerning the patient's care or custody, or medical treatment or mental health

16:21 treatment that the patient could not have exercised on his or her own behalf. Remember you're serving as a fiduciary. You're doing what's at the best interest in this case of the patient, and you do not have any authority to make any decisions that the patient him or her could himself or herself could not make. Also, that treatment that you decide to have or treatment that you decide to withdraw, you cannot withdraw or withhold treatment from a patient who's pregnant that would result in the pregnant patient's death. You can make decisions to withhold or withdraw treatment that would allow the patient to die if they're not pregnant and it's not going to result in their death, but again, only if the patient has expressed in a clear and convincing manner that the patient advocate is authorized to make such a decision and that the patient acknowledges that a decision could or would

17:56 allow them to die. So the doc itself has to include language where the maker of the document expresses in a clear and convincing language that you are authorized to make the decision to withhold or withdraw treatment that would allow them to die, and the patient acknowledges that the decision could or would allow them to die. So you don't just have the ability to say, hey, I'm going to withdraw treatment. You need to look at the document and make sure that there's specific language in the document that's going to comport with this very specific requirement under Michigan law. Finally, a patient advocate under a power of attorney for healthcare cannot shall not receive any compensation for serving for performing services. Whoever they may be reimbursed actual and necessary expenses. Maybe you have to travel back to take care of a patient, or you have some other expenses that are incurred, but you cannot be paid for the time that you serve. Contrast that with the financial power of attorney. Under a financial power of attorney, an agent can be paid for serving as a financial power of attorney, but under the healthcare power you cannot be paid. So you have some very specific limitations

19:33 under Michigan law that do apply to your ability as the patient advocate under that health care power of attorney. And then, in addition to, if you will, limitations that would be set forth in the documents, in addition to the limitations that I've talked about that apply are set forth under the law in the state in Michigan, you're also kind to potentially have, under some circumstances, what I would call outside limitations, and what do I mean by those? A bank might not be willing to accept that financial power of attorney.

20:15 Ever. Now, and then we run into that where someone takes a financial power of attorney into a bank. It's appropriate under Michigan law, it's appropriately executed, but for some reason the bank is not willing to accept it, or perhaps a broker isn't willing to accept it, or in the medical arena, it might be that a medical provider is not willing to accept your appointment under that power of attorney for healthcare. Now, what do you do if that happens. Well, Unfortunately, under Michigan law, you cannot force a bank to accept the power of attorney if they're not willing to accept it.

21:03 And you might not be able to force a doctor to accept your power as a patient advocate if they're not willing to accept it. But what those documents at least do is they give you the right to go into court, to be at the head of the line to ask a court to give you the authority. It might be that they're going to have to point you now as a guardian for the person so that you can make those medical decisions, or they're going to point you as a conservator over the assets so that you can make those decisions. Because once you're appointed by a probate court, if you're appointed the conservator, the bank has to accept your authority. If you're appointed as the guardian, the medical provider has to accept that authority. So in that case where someone says no, we're not willing to accept this, it's not the end of the road. But it does give you the right to be first in line to go to the probate court to get yourself whatever authorities you do require. Again, so what do we conclude your power of attorney is not unlimited. We need to look at the document. We need to understand what limitations the law places on those documents. We need to understand what practical limitations sometimes apply. Bottom line is this, make sure that if you

22:34 are appointed and are going to operate under a power of attorney, whether it's financial or medical, make sure that you understand the limitations on your authority to act as power of attorney so that you can assure yourself that you are not violating those limitations. Of course, if you have questions about your powers of attorney or interested in having powers of attorney prepared for you, a man and I would be honored to have the opportunity to help you. We can also help you protect your loved ones by putting together your state plan or perhaps a mending a current plan that you have, or assisting you in settling a loved one's estate. Information on how it is that we can be of assistance to you is available at our website, DOYLELAWPC dot com. There you will find information on scheduling in person consultations or virtual consultations via zoom Er telephone. Of course, we have our legal Store at the website where you can order individual legal dot com documents. Perhaps all you need now is a new power of attorney. You can go to the legal store and order that document online.

24:07 So again I invite you visit Doyle LAWPC dot com where you will find more information. And I think that is going to be it for today's show. As always, oh, if you have a comment about our program, a topic that you'd like to have me discuss, or questions that you'd like to have answered, please send me an email Tom at Tuesday with Tom dot com and we invite you follow us on Facebook and have your friends and family follow us on Facebook. That would be Tuesday with Tom and the office Facebook page is Doyle Law PC. Remember two. The program is available on Apple Podcasts, Spotify, Google Podcasts, iHeartRadio, Spreaker, probably anywhere that you listen to podcast regular Lee, you are going to find Tuesday with Time and you can always ask your smart speaker to play Tuesday with Tom. Well, thanks again for spending some of your time with us today. I hope that you have an awesome day and an awesome week in Michigan. Stay safe. Tuesday with Tom has been brought to you by the estate planning attorneys at Doyle Law PC. To learn how we can help you with your estate plan or with settling a loved one's estate, please call us today at five one seven three

25:37 two three seven three sixty six. That's five one seven three two three seven three six six