The COVID-19 pandemic has changed the way we do a lot of things. It has brought special attention to the need to update your estate plan to give clear direction for your health and hospital care if you get sick. But what about your finances? Michigan residents may need to update their financial power of attorney forms following the COVID-19 pandemic.
In the early days of the COVID-19 pandemic response, doctors and lawyers were encouraging Michigan residents -- and people nationwide -- to update their estate planning documents in case they contracted a severe case of the Coronavirus. In particular, because of the potential severity of the virus, the focus was on making sure that patients had a Power of Attorney for Health Care in place.
This document appoints a patient advocate and informs doctors what you want done to save your life and who should be in charge of making medical treatment decisions if you are unable to do so yourself. Because COVID-19 may affect a person’s ability to breath and speak, doctors look to a designated patient advocate under a power of attorney to make decisions for intubated patients and those unable to voice their care preferences.
Although COVID-19 has been with us for over a year, the impact the pandemic has had on estate planning hasn’t gone away. Not only is it important to have a health care power of attorney, you should also make sure your financial power of attorney forms are up to date.
Just like a health care power of attorney gives a person the right to make medical decisions on your behalf, a financial power of attorney designates someone to manage your money and business affairs when you can’t. A power of attorney for finances is a legal document appointing someone as your “attorney-in-fact.” It empowers your agent to make financial decisions on your behalf and manage your business affairs including dealing with your insurance company or employer, paying your bills, filing your taxes, and opening or closing accounts in your name, to name a few.
Unlike the health care power of attorney, a person with a financial power of attorney doesn’t have to wait until you are incapacitated to act on your behalf (though you can write it that way if you prefer). Some people use temporary financial power of attorney designations to allow family members or business partners to make decisions while they are:
Those kinds of financial power of attorney designations can be treated as extensions of your own financial decision-making. Your attorney-in-fact (aka your “agent”) is exercising your authority and making decisions that you could make yourself, if you were available.
If you want your agent to be able to make financial decisions for you when you are medically incapacitated -- physically or mentally -- then you will need to prepare a durable power of attorney for finances.
A durable power of attorney anticipates the possibility that you may become incapacitated and specifically grants your attorney-in-fact the authority to continue making decisions on your behalf in that event. In many cases, an effective durable power of attorney can replace the need to obtain a conservatorship (something requiring court supervision, costing valuable time and money) to manage your finances if you have a debilitating illness or degenerative disease that interferes with your ability to manage your own affairs. If you have been following the legal issues surrounding Brittany Spears, she was required to have a conservator appointed for her business and financial decisions, which has been supervised by the courts for over a decade. Often, a simple durable power of attorney for financial decisions can take the place of court supervision and the need for a conservator.
In the post-COVID era, many banks and financial institutions are requiring that your power of attorney form be recent (as in only a few months old, in certain circumstances), be drafted by an attorney (in some cases), or be on a form supplied only by the financial institution itself. These institutions are very careful about the forms they accept, oftentimes forwarding them to their legal departments for approval before accepting them.
Banks, credit unions, and financial institutions have gotten more careful with the way they treat power of attorney designations. Many are requiring their members to update their financial power of attorney post-COVID. They are paying more attention to whether the documents are properly notarized or witnessed. They may only honor POAs created or reauthorized within the last year. Others are requiring the use of their own power of attorney forms, rather than applying those created by third parties companies or private estate planning attorneys.
If you rely on a durable financial power of attorney to help you manage your family’s affairs, or to avoid getting the Michigan probate court involved, you should contact an estate planning attorney today to update your financial power of attorney post-COVID. Your attorney can communicate with you financial institutions to make sure the forms you sign will be honored should something prevent you from going to the bank or making financial decisions yourself.
At NSSSB, our experienced estate planning attorneys have their eyes on the way estate planning documents are used. We understand how Michigan banks and financial institutions are treating the estate planning documents designed to make our clients’ lives easier. We will make sure your estate plan, particularly your financial power of attorney forms, are up to date and properly written to protect your interests, and your family. Click here to schedule a consultation with an attorney and update your estate plan today.