Financial and Medical Powers of Attorney in Michigan: What Is the Difference?
A complete Michigan estate plan should address more than what happens to your property after your death. It should also identify who may manage your finances and make medical decisions if an illness, injury, or cognitive condition prevents you from acting for yourself.
Two documents commonly used for this purpose are a financial power of attorney and a medical power of attorney. Although both documents allow another person to act on your behalf, they serve different purposes and are governed by different Michigan laws.
What Is a Financial Power of Attorney?
A financial power of attorney allows you—the “principal”—to appoint another person as your “agent.” Depending on the authority granted in the document, the agent may be permitted to:
- Access and manage bank accounts;
- Pay bills and ordinary living expenses;
- Handle insurance and retirement benefits;
- Prepare and file tax documents;
- Buy, sell, or manage real estate;
- Operate or manage a business;
- Address claims and legal matters; and
- Manage investments and other property.
The document can grant broad authority or limit the agent to particular transactions. It can also name one or more successor agents in case the first person is unable or unwilling to serve.
Michigan’s Uniform Power of Attorney Act took effect on July 1, 2024. The Act provides updated rules governing the creation, interpretation, acceptance, and use of financial powers of attorney.
Under MCL 556.205, a financial power of attorney created under the Act must be signed by the principal or, under limited circumstances, by another person acting at the principal’s direction and in the principal’s conscious presence. To be durable, the document generally must either be acknowledged before a notary public or signed in the presence of two qualified witnesses.
Notarization and two witnesses is preferred and may make the document easier to use with banks and other institutions.
What Does “Durable” Mean?
A durable financial power of attorney remains effective even if the principal later becomes incapacitated. This is usually the central reason for preparing the document.
Michigan law generally treats a properly executed power of attorney created on or after July 1, 2024, as durable unless it expressly states that it terminates upon the principal’s incapacity.
A power of attorney may become effective immediately or upon the occurrence of a future event, depending on how it is drafted. An attorney can help determine which arrangement is appropriate based on the principal’s health, family situation, finances, and concerns about protecting assets.
What Is a Medical Power of Attorney in Michigan?
Michigan commonly refers to a medical power of attorney as a “patient advocate designation.” This document allows you to appoint a patient advocate to make medical decisions when you are unable to participate in those decisions yourself.
A patient advocate may be authorized to address matters such as:
- Medical examinations and treatment;
- Surgery and hospitalization;
- Prescription medications;
- Admission to a care facility;
- Home health and nursing care;
- Access to medical information;
- End-of-life treatment;
- Life-sustaining treatment; and
- Mental health treatment, when the document includes the necessary language.
A patient advocate designation is separate from a financial power of attorney. Giving someone control over your finances does not automatically give that person authority to make medical decisions.
When Does a Patient Advocate’s Authority Begin?
A patient advocate does not ordinarily begin making decisions simply because the designation has been signed. The authority becomes effective when the patient is determined to be unable to participate in medical or mental health treatment decisions, as applicable.
Under Michigan law, this determination is generally made by two physicians or by one physician and one licensed psychologist/psychiatrist. Different provisions may apply when the designation addresses mental health treatment or when the patient’s religious beliefs prohibit a standard medical examination.
As long as you remain capable of making your own medical decisions, you retain control over your care.
Michigan’s Signing Requirements for a Patient Advocate Designation
A Michigan patient advocate designation must be signed in the presence of two qualified witnesses. The witnesses must also sign the document.
Michigan law prohibits certain people from serving as witnesses, including the designated patient advocate, specified family members, presumptive heirs, beneficiaries, individuals directly responsible for the patient’s health-care costs, and certain health-care providers or their employees.
The person selected as patient advocate must also sign an acceptance before exercising authority. The acceptance confirms that the advocate understands the position’s legal responsibilities and limitations.
End-of-Life Decisions Require Clear Authorization
A patient advocate may make a decision to withhold or withdraw treatment that would allow the patient to die only when the designation clearly grants that authority and acknowledges that the decision could or would allow the patient’s death.
For this reason, a patient advocate designation should do more than simply name a decision-maker. It should provide meaningful guidance about the patient’s wishes concerning:
- Cardiopulmonary resuscitation;
- Ventilator support;
- Artificial nutrition and hydration;
- Dialysis;
- Pain relief and comfort care;
- Hospice care; and
- Other life-sustaining treatment.
Discussing these choices with the selected patient advocate is just as important as signing the document.
Choosing the Right Agent and Patient Advocate
The agent under a financial power of attorney and the patient advocate may be the same person, but they do not have to be.
A financial agent should be trustworthy, organized, financially responsible, and capable of maintaining accurate records. A patient advocate should understand your medical preferences, communicate effectively with health-care providers, and remain calm when making difficult decisions.
You should also consider naming successor agents and successor patient advocates. A successor can step in if the first person dies, becomes incapacitated, resigns, or is otherwise unable to serve.
Can Powers of Attorney Avoid Guardianship or Conservatorship?
Properly prepared powers of attorney may reduce the likelihood that a court proceeding will be needed if you become incapacitated.
Without a financial power of attorney, family members may need to petition the probate court for the appointment of a conservator to manage your finances. Without a valid patient advocate designation, a guardianship or other court involvement may become necessary when important personal or medical decisions must be made.
Powers of attorney do not eliminate every possibility of court involvement, but they allow you to select your decision-makers in advance instead of leaving that decision to a judge.
A Power of Attorney Ends at Death
A common misconception is that an agent may continue using a power of attorney after the principal dies. A financial power of attorney terminates upon the principal’s death.
After death, authority over estate property generally belongs to the court-appointed personal representative or another legally authorized fiduciary. A power of attorney is therefore an incapacity-planning document—not a substitute for a will or trust.
When Should Powers of Attorney Be Reviewed?
Powers of attorney should be reviewed periodically and after significant life events, including:
- Marriage or divorce;
- The death or incapacity of an agent;
- A change in family relationships;
- A major change in assets or business interests;
- A serious medical diagnosis;
- A move to another state; or
- A significant change in Michigan law.
Documents prepared before Michigan’s Uniform Power of Attorney Act took effect may remain valid, but reviewing older documents can help determine whether they still reflect your wishes and whether banks, medical providers, and other institutions are likely to accept them.
Preparing Powers of Attorney in Michigan
Financial and medical powers of attorney are important parts of a comprehensive estate plan. Each document should clearly identify the people you trust, define their authority, comply with Michigan’s signing requirements, and coordinate with your will, trust, beneficiary designations, and other planning documents.
A generic form may not address real estate, business interests, digital assets, gifting authority, mental health treatment, or other issues that are important to your circumstances.
Aldrich Legal Services, PLLC assists individuals and families with estate planning matters, including financial powers of attorney, patient advocate designations, wills, and trusts. With offices serving Plymouth, Ann Arbor, and surrounding Michigan communities, we can help you create an estate plan designed for your particular needs.
Contact our office to discuss preparing or updating your Michigan estate-planning documents. Phone: 734 404-3000. Website: https://www.aldrichlegalservices.com/
Created by Brad Aldrich
This article is provided for general informational purposes and does not constitute legal advice. Legal requirements may change, and the appropriate documents depend on the facts of each situation.