Help for Agents under a Power of Attorney in Michigan

 


Why read this guide?

Like many people, you may never have been an agent under a power of attorney before. That’s why we created Managing someone else’s money: Help for agents under a power of attorney in Michigan. This guide will help you understand what you can and cannot do in your role as an agent or attorney-in-fact. In that role, you are a fiduciary.

For this guide, a fiduciary is a legal term. It is anyone named to manage money or property for someone else according to the law. The law has many rules saying what the fiduciary can do, may do, or absolutely cannot do with the money or property. The legal rules come from statutes, court decisions and agency rules and regulations.

Because the rules about fiduciaries are very complicated, this guide provides brief tips to help you avoid problems, and to give you resources for finding more information. This guide does not provide legal advice.

This guide is for family and friends serving as an agent, not for professionals or organizations. This guide does not teach you how to become an agent or attorney-in-fact.

You should talk to a lawyer if you have questions about the legal rules and your role as a fiduciary.

Let’s start with a scenario about how you might have become an agent under power of attorney.

Your family member or friend is worried that she will get sick and will not be able to pay her bills or make other decisions about her savings and her house. For this guide, let’s call her ‘Martina’. Martina has signed a legal document called a power of attorney. In it, she names you as her agent and gives you the power to make decisions about money and property for her.

The law gives you a lot of responsibility as Martina’s “agent” under a power of attorney.

You are now a fiduciary agent with fiduciary duties standing in a position of trust for Martina’s benefit.

In Michigan, the agent is called “attorney-in-fact.”

What is a fiduciary?

Since you have been named to manage money or property for someone else, you are a fiduciary. The law requires you to manage Martina’s money for HER benefit, not yours. It does not matter if you are managing a lot of her money or a little. It does not matter if you are a family member or not.

The role of the fiduciary is a serious one with strict rules. Judges or agencies or even the police can make sure you follow the rules. Breaking the rules could mean you are removed from your role, have to repay money, and/or even go to jail.

When you act as a fiduciary for Martina, the rules fall into four basic types:

  1. Rules about making you act only in Martina’s best interest.
  2. Rules about carefully managing Martina’s money and property.
  3. Rules about keeping Martina’s money and property separate from your money and property.
  4. Rules about keeping good records.

REMEMBER: IT’S NOT YOUR MONEY!

Different types of fiduciaries exist

In your role as agent, you may act as or deal with other types of fiduciaries. These may include:

Trustees under a revocable living trust—someone names them to manage money and property.

Representative payees or, for veterans, VA fiduciaries—a government agency names them to manage government money that is paid to someone.

Guardians or conservators—a court names them to manage money and property for someone who needs help.

Other guides explaining the duties of these fiduciaries are at: www.consumerfinance.gov/managing-someone-elses-money-michigan.

Power of attorney Q & A

What is a power of attorney?

A power of attorney is a legal document. Martina made a power of attorney to give you legal authority to make decisions about her money or property so that you can make decisions for her about financial or business affairs.  In some states, including Michigan, the type of document that Martina made is often called a durable power of attorney.

Under a power of attorney, Martina is called the principal, the person giving the authority.

In Michigan, you are called the agent and attorney-in-fact, the person receiving the authority.

Martina could also make a power of attorney for health care, often referred to as a Medical Power of Attorney if she names someone to make decisions about her health care.  In Michigan this agent is called a patient advocate.  (We don’t discuss a medical power of attorney in this guide, but if you want more information about that, go to www.ambar.org/healthdecisions.)

Can Martina still manage her money and property after signing a power of attorney?

Yes, as long as Martina is still about to make decisions, signing a power of attorney does not deprive Martina of her right to manage her money or property.

Can a power of attorney be changed or revoked?

Yes. Martina can take away (revoke) your authority to act as her agent at any time if she wants to and is still able to make decisions. If she does take away your authority as her agent, you must stop making decisions for her. Martina should tell any people or businesses you were dealing with about her decision to take away your authority to act on her behalf. In Michigan, the agent is also entitled to notice of the termination of authority.

What if you think the change was the result of fraud or abuse?

If you think Martina does not understand the decision she made to remove your authority and is being abused or exploited by someone else, talk to a trusted family member, a lawyer, or an official from adult protective services, the police, or the sheriff.

When do your responsibilities end?

If Martina revokes your authority, your responsibilities end. In addition, your authority also ends when Martina dies. Promptly notify her bank or other businesses with which you interacted as her agent of the termination of authority. Even if you can easily pay some of her outstanding bills, you will no longer have the authority to do so. If you are married to Martina, your authority to act as her agent may end if you get divorced or legally separated. If a court names a guardian or conservator to act for her, your authority as agent may end. The power of attorney document or state laws govern these situations.

What happens if you can no longer serve as agent?

If you are not able to act as Martina’s agent and she cannot identify someone else to act for her, with her consent you may tell a trusted family member or consider consulting a lawyer. If you cannot act as her fiduciary, she will need someone else to help her.

Don’t expect others to know what an agent is or does.

They may not understand that you have been named as an agent. They may think that you have more authority or less authority than you really have. You may need to educate them. You could show them this guide.

Four basic types of rules for a fiduciary

When you act as a fiduciary for Martina, the rules fall into four basic types:

  1. Rules about making you act only in Martina’s best interest.
  2. Rules about carefully managing Martina’s money and property.
  3. Rules about keeping Martina’s money and property separate from your money and property.
  4. Rules about keeping good records.

1 | Rules about making you act only in Martina’s best interest.

Because you are dealing with Martina’s money and property, your duty is to make decisions that are best for her. This means you must ignore your own interests and needs, or the interests and needs of other people.

To help you follow the rules that make you act in Martina’s best interest, use these guidelines:

  • Read the power of attorney and do what it says. Your authority is strictly limited to what the document and Michigan state law allow. Your authority may be very broad or limited. Follow Martina’s directions in the document, even if you have the best intentions in doing something different.
  • Understand when the power of attorney becomes effective. It may be right away or take effect at specified times or for limited purposes. It may take effect when Martina can no longer make her own decisions. Check to see if the document says how you will know when Martina can no longer make her own decisions.
  • As much as possible, involve Martina in decisions. Many things can affect your decisions about Martina’s money and property. For example, you might feel pressure from others. Martina’s abilities to make decisions might change from time to time. Even after it is clear that you must make decisions for Martina, ask her what she wants if she can communicate. If she can’t say what she wants, try to find out what she would have wanted. Look at any past decisions, actions, and statements. Ask people who care about Martina what they think she would have wanted. Make the decisions you think Martina would have wanted, unless doing so would harm her. Put her well-being above saving money for others who may inherit her money and property. Make sure she is safe and comfortable, and her needs are met.
  • Avoid conflicts of interest. A conflict of interest happens if you make a decision about Martina’s money or property that may benefit someone else at Martina’s expense. As a fiduciary, you have a strict duty to avoid conflicts of interest—or even the appearance of a conflict of interest.
  • Don’t borrow, loan, or give Martina’s money to yourself or others. Even if the power of attorney or Michigan law clearly allows gifts to you or others, be very careful to avoid conflicts of interest. Make sure that any gifts do not increase or complicate Martina’s taxes or change her plans to give away her property when she dies. Any gifts or loans should be in line with what Martina would have wanted. For example, if Martina gave money every year to a charity, the power of attorney may allow you to continue doing that.
  • Avoid changing Martina’s plans for giving away her money or property when she dies. There may be rare situations in which changing Martina’s plans would be in her best interest. But you should get legal advice to make sure that the power of attorney and Michigan law allows what you propose to do.
  • Be very careful if you pay yourself for the time you spend acting as Martina’s agent. In Michigan, you are allowed to pay yourself unless the power of attorney says that you cannot do that. Your compensation should be reasonable. It is wise to carefully document how much time you spend, what you do, and what you are charging. Look for information about what other people charge to do the tasks that you are doing for Martina.

Avoid possible conflicts of interest

Sometimes people have good intentions, but do things they shouldn’t. Because you are now a fiduciary, you should avoid any conflicts of interest. Here are a few examples of possible conflicts of interest:

Whose car is it?

You used Martina’s money to buy a car. You use it to drive her to appointments, but most of the time you drive the car just for your own needs. This may be a conflict of interest.

Should you do business with family?

Martina needs repair work in her apartment. You hire your son and pay him from Martina’s money. This may be a conflict of interest, even though the work was needed. It appears that you have put your personal interest to benefit your son in conflict with Martina’s interests.

2 | Rules about carefully managing Martina’s money and property.

As Martina’s agent, you might pay bills, oversee bank accounts, and pay for things she needs. You might also make investments, pay taxes, collect rent or unpaid debts, get insurance if needed, and do other things written in the power of attorney.

You have a duty to manage Martina’s money and property very carefully. Use good judgment and common sense. As a fiduciary, you must be even more careful with Martina’s money than you might be with your own!

To stay within the rules about carefully managing Martina’s property and money, follow these guidelines:

  • List Martina’s money, property, and debts. To make careful decisions, you need to know what Martina owns and owes. Your list might include:
    • Checking and savings accounts;
    • Cash;
    • Pension, retirement, annuity, rental, public benefit, or other income;
    • Real estate;
    • Cars and other vehicles;
    • Insurance policies;
    • Trusts for which Martina is a beneficiary;
    • Stocks and bonds;
    • Jewelry, furniture, and any other items of value; and
    • Unpaid credit card bills and other outstanding loans.
  • Protect Martina’s property. Keep her money and property safe. You may need to put valuable items in safe deposit boxes (be sure that you and/or others you trust have access to the contents of safe deposit boxes), change locks on property, and make sure her home or other property is insured. Make sure bank accounts earn interest if possible and have low or no fees. Review bank and other financial statements promptly. If Martina owns any real estate, keep it in good condition.
  • Invest carefully. If you are making investment decisions for Martina, talk to a financial professional. The Securities and Exchange Commission (SEC) provides tips on choosing a financial professional at www.sec.gov/investor/alerts/ib_top_tips.pdf. Discuss choices and goals for investing based on Martina’s needs and values.
    • However, if you decide to invest Martina’s money, Michigan law requires you to follow specific rules as outlined in the prudent investor rule found in Estates and Protected Individuals Code (EPIC).
  • Pay bills and taxes on time.
  • Cancel any insurance policies that Martina does not need.
  • Collect debts. Find out if anyone owes Martina money, and try to collect it.
  • Take steps to have the power of attorney accepted. Michigan law may not require the business or person to accept the power of attorney. Sometimes banks or other businesses won’t do what you, acting as Martina’s agent, want them to do. A bank may refuse to accept the power of attorney and want Martina to sign its own form. This is a problem if Martina has lost the ability to act for herself. As soon as you need to act as Martina’s agent, contact any businesses (such as banks) or people that she deals with and give them copies of the power of attorney. Never give away the original document. You can get certified copies of the original document. If someone will not accept your authority as agent, talk to a supervisor. If they still won’t accept it, talk to a lawyer.

Can Martina get any benefits?

Find out if Martina is eligible for any financial or health care benefits from an employer or a government. These benefits might include pensions, disability, Social Security, Medicare, Medicaid, Veterans benefits, housing assistance, or food stamps (now known as Supplemental Nutrition Assistance Program or SNAP). Use the National Council on Aging benefits check-up at www.BenefitsCheckUp.org.

Help her apply for those benefits. The Area Agency on Aging where Martina lives can help you find information. Find the local Area Agency on Aging through the Eldercare Locator in Michigan at www.eldercare.gov.

Medicaid is complicated

Get legal advice and be very careful about decisions that may affect Martina’s eligibility for Medicaid. The Medicaid program provides medical assistance and long-term care to low-income people. It may have another name in your state. To find your state Medicaid agency, visit: www.benefits.gov/benefits/browse-by-category/category/MED. For additional information about Medicaid and/or Medicare eligibility in Michigan, visit the Department of Health & Human Services website at http://www.michigan.gov/mdhhs/ or by calling 1-517-373-3740.

Medicaid/Medical Assistance: For information about Medicaid eligibility and how to apply, contact Michigan Medicare/Medicaid Assistance Program (MMAP, Inc.). MMAP, Inc. is a free health-benefit counseling service provided to Michigan residents. Call 1-800-803-7174 or visit www.mmapinc.org.

3 | Rules about keeping Martina’s money and property separate from your money and property. 

Never mix Martina’s money or property with your own or someone else’s. Mixing money or property makes it unclear who owns what. Confused records can get you in trouble with Martina’s family and also with government agencies such as adult protective services and the police or sheriff.

To avoid breaking the rules about keeping Martina’s money and property separate from your money and property, think about these guidelines:

  • Separate means separate. Never deposit Martina’s money or property into your own or someone else’s bank account or investment account. The agent should not make a gift of part or all of Martina’s property unless provided for in the power of attorney or by judicial order.
  • Avoid joint accounts. If Martina already has money or property in a joint account with you or someone else, get legal advice before making any change. Unless provided in the Power of Attorney or by judicial order, Michigan law prohibits establishing such accounts.
  • Keep title to Martina’s money and property in her own name. This is so other people can see right away that the money and property is Martina’s and not yours.
  • Know how to sign as agent. Sign all checks and other documents relating to Martina’s money or property to show that you are Martina’s agent. For example, you might sign “Juan Doe, as agent for Martina Roe.” Never just sign “Martina Roe.”
  • Pay Martina’s expenses from her funds, not yours. Spending your money and then paying yourself back makes it hard to keep good records. If you really need to use your money, keep receipts for the expense and maintain a good record of why, what, and when you paid yourself.

4 | Rules about keeping good records.

You must keep true and complete records of Martina’s money and property. Michigan law requires the agent to maintain records of their actions for Martina, to include receipts, business, disbursements and investments. The power of attorney, Michigan law, or judicial order may say that someone else can review your records to check up on you. If you have Martina’s permission, you may want to let another family member or friend of Martina’s to see the records unless the power of attorney, Michigan law, or judicial order says you cannot.

Practice good recordkeeping habits:

  • Keep a detailed list of everything that you receive or spend for Martina. Records should include amount of checks written or deposited, dates, reasons, names of people or companies involved, and other important information.
  • Keep receipts and notes, even for small expenses. For example, write “$50, groceries, ABC Grocery Store, May 2” in your records soon after you spend the money.
  • Avoid paying in cash. Try not to pay Martina’s expenses with cash. Also, try not to use her ATM card to withdraw cash or write checks to “Cash.” If you need to use cash, be sure to keep receipts or notes.
  • Getting paid? The power of attorney or Michigan law may say that you can be paid for acting as agent. If you will be paid, be sure you charge a reasonable fee. It is up to you to keep detailed records as you go along of what work you did, how much time it took, when you did it, and why you did it. Your compensation should be reasonable. Look for information about what other people charge to do the tasks that you are doing for Martina.

More things you should know

What if there are other fiduciaries?

Co-agents

Martina may have named one or more co-agents to act with you. The power of attorney document or state law should say whether you and any co-agents can make decisions alone or must agree on decisions, either unanimously or by majority rule. Michigan law allows co-agents to act alone or collectively but beware of deadlocked decisions.

Either way, you must coordinate with any co-agent and share information about decisions. Even if you and a co-agent don’t have to agree on all decisions, you cannot let a co-agent do something that harms Martina. You are still responsible for her and must act in her best interest.

Successor agents

Martina may have named a successor agent to act for her if you are not able or willing to be the agent. A successor agent has no authority if you are still willing and able to act as Martina’s agent.

Other types of fiduciary

Other fiduciaries may have authority to make decisions for Martina. For example, she may have a conservator who is a representative payee who handles Social Security benefits, or a VA fiduciary who handles veteran’s benefits. It is important to work with these other fiduciaries, and keep them informed.

Government benefits require special fiduciaries

As an agent, you cannot manage Martina’s government benefits such as Social Security or VA benefits unless you get a separate appointment from the government agency as, for example, a representative payee or VA fiduciary. For more information, contact the government agency.

How can you avoid problems with family or friends?

Family or friends may not agree with your decisions about Martina’s money and property. To help reduce any friction, follow the rules described above and the guidelines we’ve given you.

Sharing information may help or be required in limited circumstances. BE CAREFUL. It is not always best to share the personal information unless specifically required by Michigan law or judicial order. Check to see what the power of attorney directs you to do about sharing your records.

Some family or friends may be so difficult that it is better not to share information with them but avoid the disclosure of confidential information. Use your best judgment.

If family or friends disagree with your decisions, try to get someone to help sort it out—for example, a family counselor or mediator.

What should you know about working with professionals?

In managing Martina’s affairs, you may need help from professionals such as lawyers, brokers, financial advisors, accountants, real estate agents, appraisers, psychologists, social workers, doctors, nurses, or care managers. You can pay them with Martina’s money. If you need help from any professionals, remember these tips:

  • Check on the professional’s qualifications. Many professionals must be licensed or registered by a government agency. Check credentials with the government agency. Make sure the license or registration is current and the professional is in good standing. Check the person’s complaint history.
  • Interview the professional thoroughly and ask questions.
  • Review contracts carefully before signing. Before hiring any professionals, get their proposed plan of work and expected fee.
  • Make your own decisions based on facts and advice. Listen to their advice, but remember you are the decision-maker.

Watch out for financial exploitation

Family, friends, neighbors, caregivers, fiduciaries, business people, and others may try to take advantage of Martina. They may take her money without permission, fail to repay money they owe, charge her too much for services, or just not do things she has paid them to do. These may be examples of financial exploitation or financial abuse. As Martina’s agent, you should help protect her. You should know the signs of financial exploitation for five important reasons:

  1. Martina may still control some of her funds and could be exploited;
  2. Even if Martina does not control any of her funds, she still may be exploited;
  3. Martina may have been exploited already, and you may still be able to do something about that;
  4. People may try to take advantage of you as Martina’s agent; and
  5. Knowing what to look for will help you avoid doing things you should not do, protecting you from claims that you have exploited Martina.

Look for these common signs of financial exploitation

  • You think some money or property is missing.
  • Martina says that some money or property is missing.
  • You notice sudden changes in Martina’s spending or savings. For example, she:
    • Takes out lots of money from the bank without explanation;
    • Tries to wire large amounts of money;
    • Uses the ATM a lot;
    • Is not able to pay bills that are usually paid;
    • Buys things or services that don’t seem necessary;
    • Puts names on bank or other accounts that you do not recognize or that she is unwilling or unable to explain;
    • Does not get bank statements or bills;
    • Makes new or unusual gifts to family or others, such as a “new best friend”;
    • Changes beneficiaries of a will, life insurance, or retirement funds; or
    • Has a caregiver, friend, or relative who suddenly begins handling her money.
  • Martina says she is afraid or seems afraid of a relative, caregiver, or friend.
  • A relative, caregiver, friend, or someone else keeps Martina from having visitors or phone calls, does not let her speak for herself, or seems to be controlling her decisions.

What can you do if Martina has been exploited?

  • Call the emergency 911 number if Martina is in immediate danger.
  • Call Adult Protective Services (APS) at 1-855-444-3911. You could also call the police or sheriff. You may be required by law to report abuse and should check the Michigan Department of Health and Human Services website to make sure.
  • Alert Martina’s bank or credit card company.
  • Call the office of the local prosecutor or Michigan Attorney General.
  • Call the Michigan Long-Term Care Ombudsman Program or the state Medicaid fraud control unit if Martina is in a nursing home or assisted living.
  • Consider talking to a lawyer about protecting Martina from more exploitation or getting back money or property taken from him.

Each agency or professional has a different role, so you may need to call more than one. 

Be on guard for consumer scams

As Martina’s agent, you should be alert to protect her money from consumer scams as well as financial exploitation. Criminals and con artists have many scams, and change them all the time. They often seek unsuspecting people who have access to money. Learn to spot consumer scams against Martina—and against you as her agent.

How can you protect Martina from scams?

Consumer scams happen on the phone, through the mail, e-mail, or over the internet. They can occur in person, at home, or at a business. Here are some tips:

  • Help Martina put her number on the National Do Not Call Registry. Go to www.donotcall.gov or call 1-888-382-1222.
  • Don’t share numbers or passwords for Martina’s accounts, credit cards, or Social Security, unless you know whom you’re dealing with and why they need the information.
  • After hearing a sales pitch, take time to compare prices. Ask for information in writing and read it carefully.
  • Too good to be true? Ask yourself why someone is trying so hard to give you a “great deal.” If it sounds too good to be true, it probably is.
  • Watch out for deals that are only “good today” and that pressure you to act quickly. Be suspicious if you are not given enough time to read a contract or get legal advice before signing. Also watch out if you are told that you need to pay the seller quickly, for example by wiring the money or sending it by courier.
  • Never pay up front for a promised prize. Suspect a scam if you are required to pay fees or taxes to receive a prize or other financial windfall.
  • Watch for signs Martina already has been scammed. For example, does she receive a lot of mail or e-mail for sweepstakes? Has she paid people you don’t know, especially in other states or countries? Has she taken a lot of money out of the bank while she was with someone she recently met? Does she have a hard time explaining how she spent that money? Is she suddenly unable to pay for food, medicine, or utilities?

What can you do if Martina has been scammed?

If you suspect a scam, get help. Contact a local, state, or federal agency, depending on the type of scam. You may also need to talk to a lawyer.

Local agencies to call are Adult Protective Services (APS), the Michigan Long-Term Care Ombudsman Program, the police or sheriff, and the local Better Business Bureau.

State agencies to call are the office of the attorney general or another agency that deals with consumer protection.

Call a federal agency if scammers are in other states or countries. Federal agencies are the Consumer Financial Protection Bureau, the FBI, the Federal Trade Commission, or the U.S. Postal Inspection Service.

Each of these agencies and professionals has a different role so you may need to call more than one.

Power of Attorney Video (Spanish)

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Acknowledgments

This guide was adapted from the Consumer Financial Protection Bureau’s (CFPB) Managing Someone Else’s Money guides. Sixty Plus, Inc., Elderlaw Clinic, Western Michigan University Cooley Law School prepared this guide with the support from Lansing Area Community Trust and Capital Region Community Foundation to include information about Michigan state law resources. The CFPB has not reviewed or approved the content in this guide and the CFPB does not endorse the final product. 

Michigan professionals who worked on this guide are Professor Kimberly O’Leary, Esq.,   L. Patricia Mock, Esq., Gregory Przybylo, Esq., Michelle Goetz J.D., Luis Vasquez J.D. and Dr. Janet S. Hahn (Center for Gerontology for the Western Michigan University Cooley Law School). 

 

©October 2017

 

These guides were adapted from the Consumer Financial Protection Bureau’s (CFPB) Managing
Someone Else’s Money guides. The CFPB has not reviewed or approved the content in this guide and the CFPB does not endorse the final product.

Sixty-Plus, Inc. prepared this guide with financial assistance from Western Michigan University-Thomas M. Cooley Law School, Lansing Area Community Trust, and Capital Region Community Foundation to include information about Michigan state law and resources.

Managing Someone Else’s Money in Michigan is supported by the Prevent Elder and Vulnerable Adult Abuse, Exploitation, Neglect Today (PREVNT) Initiative state fund grant awarded to Sixty Plus, Inc. Elderlaw Clinic from the Aging and Adult Services Agency/Michigan Department of Health and Human Services (AASA/MDHHS).

The information or content are those of the authors and should not be construed as the official position or policy of, nor should any official endorsement be inferred by the AASA/MDHHS.