Establishing a power of attorney (POA) for health and/or financial matters is an important part of the estate planning process for many Michigan residents. The basic gist of a POA’s role is that it names an individual — the agent — who will be designated to act on behalf of someone — the principal. It is clear why this might be a critical part of a comprehensive estate plan, as there are many circumstances where someone may need financial or health decisions made but they might not be able (mentally or physically) to do so themselves. Here are two things people should know about POAs:
- One must be mentally competent to establish a POA: To sign any legal document, individuals must be of sound mind and aware of what they are doing. For this reason, it is extremely important for people to establish their POAs in advance of becoming incapacitated. If an individual does not complete these designations ahead of time, loved ones could be left with only a guardianship or conservatorship as their options, which can be a much more intensive process than a POA.
- Those designated with this critical role must act in the best interests of the principal: Some people may be uncomfortable with designating an agent for these responsibilities because of the amount of power that individual will have. It’s important that everyone involved clearly understand the fiduciary duty that an agent has. They are legally bound to make decisions in the best interest of the principal.
It is important to have a power of attorney document custom-created by a legal professional in order for it to properly reflect one’s unique situation. This will also allow the principal to add specific instructions as well as ensure it meets all the requirements of the state where he or she resides. This can be accomplished by having the help and support of an experienced Michigan estate planning attorney.