On May 22, 2012 Governor Snyder signed into Law new updates regulating the form and function of power of attorneys. It made several changes, although the changes will not apply to powers of attorney created before the effective date of October 1, 2012. Some of the most noteworthy changes include:
- A requirement that attorneys in fact sign an acknowledgment of duties. This document does not necessarily have to be attached to the POA. It must be signed prior to exercise of duties, but failure to have it signed will not affect authority to act per se.
- Two witnesses or a notary are now required. This was always best practice, but is now codified. There is no requirement that the acknowledgment of duties be signed.
- If a spouse serves as the attorney in fact for a spouse (A common phenomenon), the new law limits the ability of the attorney in fact to grant themselves any interest in property as a joint owner. As with all requirements of the new law, this can be contracted around and in many cases should be.
- If an attorney in fact is to receive reasonable compensation this much be specifically provided for.
- A preemptive exoneration clause may not provide indemnification for attorneys in fact for behavior that is in bad faith or made with reckless indifference
The policy behind these changes is to prevent elder abuse. A power of attorney is a very powerful document because it puts almost complete power into the hands of whomever you designate. It is not to be entered into lightly. These new provisions seek to eliminate what is perceived to be a growing problem of abuse of fiduciary duties via powers of attorney. It remains to be seen whether they will work, and how courts will interpret the new provisions.
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