Detailed Answer

This article explains how a financial power of attorney (POA) operates under Michigan law and what authority a named agent may exercise if the principal becomes unable to manage financial matters. This is an educational overview and not legal advice. For legal help tailored to your situation, contact a licensed Michigan attorney.

What a financial POA is

A financial power of attorney is a legal document in which a person (the principal) names another person (the agent or attorney-in-fact) to handle property and financial affairs on the principal’s behalf. The scope of the agent’s authority depends on the language in the POA document. Michigan recognizes durable financial POAs that may continue to operate if the principal becomes incapacitated, as governed by the Michigan statutes that make up the Estates and Protected Individuals Code (see MCL Chapter 700): Michigan Legislature — Chapter 700.

Typical powers an agent may have

Unless the POA limits authority, an agent can be granted very broad powers. Common powers include the ability to:

• Access bank and brokerage accounts, deposit and withdraw funds, and manage day-to-day banking.
• Pay bills, mortgages, taxes, insurance premiums, and household expenses.
• Buy, sell, lease, mortgage, or refinance real estate and other property.
• Manage investments and hire or fire financial advisors and managers.
• Receive government and private benefits on the principal’s behalf (Social Security, VA benefits, pension payments), including applying for benefits and appealing denials.
• File, prepare, and sign tax returns and handle tax matters.
• Operate a business owned by the principal, including signing contracts related to the business.
• Access safe deposit boxes and handle records and documents related to the principal’s finances.
• Make gifts or transfers of the principal’s property if the POA specifically authorizes gifting (many POAs restrict this to avoid misuse).

Limits and special considerations

The agent’s power is controlled by the POA’s written terms and by Michigan law. Important limitations and considerations include:

• Scope: The POA can be narrowly tailored. If it lists specific powers (e.g., only paying bills or managing a single bank account), the agent cannot lawfully act beyond those instructions.
• Durability: A POA can be durable (it remains effective if the principal becomes incapacitated) or non-durable (it ends upon incapacity). To remain effective during incapacity, the document must include durable language. Michigan’s statutes address durability and the effect of incapacity—consult the chapter referenced above for statutory language. MCL Chapter 700.
• Springing POA: Some POAs only take effect upon a stated event (commonly the principal’s incapacity). Michigan permits springing powers, but institutions may require clear proof of the triggering event and may be reluctant to accept a springing POA without a medical certification or court determination.
• Fiduciary duty: Agents owe duties to act loyally, in good faith, and in the principal’s best interests. They must avoid self-dealing unless the POA specifically permits a particular transaction.
• Bank and third-party acceptance: Banks, investment firms, and government agencies often have their own forms and policies. Even with a valid Michigan POA, a third party may request the original document, an affidavit, or additional verification before allowing the agent to act.
• Restrictions by statute or third-party rules: Some actions (for example, transferring certain retirement accounts or signing some benefit forms) may have additional federal or institutional rules that limit what an agent can do.

When a POA starts and ends

Start: A POA can start immediately when signed or only after a future condition (such as incapacity). If the document is durable, it continues even after the principal lacks capacity. Michigan law and the POA’s wording determine these details (see MCL Chapter 700).

End: A POA ends when the principal dies, when the principal revokes it while competent, when a court invalidates it, or when a named termination event occurs. A guardian or conservator appointed by a court may supersede an agent for matters subject to the guardianship order.

Agent responsibilities and risks

An agent must keep clear records of all transactions, avoid conflicts of interest, and act prudently. Misuse or embezzlement of the principal’s funds can result in civil liability and criminal charges. If abuse is suspected, family members or institutions can seek court intervention. In cases of dispute or suspected misuse, a court can remove an agent and appoint a guardian or conservator.

Sample hypothetical to illustrate

Hypothetical: Maria signs a durable financial POA naming Jason as her agent and grants him broad financial powers. Maria later develops a cognitive impairment and cannot manage bills or investments. Because the POA is durable and broadly worded, Jason can access Maria’s bank accounts to pay her mortgage and utilities, work with her investment broker to rebalance accounts, and file Maria’s tax returns. If the POA did not specifically authorize gifting, Jason should not make large gifts from Maria’s accounts without court approval or explicit authority in the POA.

When to consult an attorney

Because POAs can be drafted in many ways and institutions vary in how they accept them, talk with a Michigan attorney if you:

• Want a POA tailored to complex assets (real estate, businesses, retirement accounts).
• Are naming an agent and want to set safeguards (successor agents, reporting requirements, or limits on gifting).
• Need help enforcing a POA, obtaining bank acceptance, or responding to suspected agent abuse.

For the controlling statutory framework, review Michigan’s Estates and Protected Individuals Code (Chapter 700): https://www.legislature.mi.gov/mileg.aspx?page=chapter&chapter=700.

Disclaimer: This information is educational only and does not create an attorney-client relationship. It is not legal advice. For advice specific to your situation, consult a licensed Michigan attorney.

Helpful Hints

• Use a durable POA if you want the agent to act after you become incapacitated; confirm the document uses durable language.
• Be specific about powers you want to allow or forbid (gifting, real estate transactions, business operations).
• Name successor agents in case the first agent cannot serve.
• Keep the original signed POA in a safe place and give copies to your agent and key financial institutions.
• Ask the bank or brokerage in advance what documentation they require to honor a POA.
• Require periodic reporting or account statements from your agent if you want more oversight.
• Review and update your POA after major life events (marriage, divorce, death of the agent, major changes in assets).
• If you suspect financial abuse, contact the institution holding the funds and consider filing for court review or a guardianship petition.
• Keep health care directives separate from a financial POA—use a health care power of attorney or advance directive for medical decisions.