Bill Text: MI HB5769 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Probate; powers of attorney; written acknowledgment of responsibilities by agent appointed under a power of attorney; modify. Amends secs. 1104 & 5501 of 1998 PA 386 (MCL 700.1104 & 700.5501).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2020-05-19 - Bill Electronically Reproduced 05/19/2020 [HB5769 Detail]

Download: Michigan-2019-HB5769-Introduced.html

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HOUSE BILL NO. 5769

May 13, 2020, Introduced by Rep. Wozniak and referred to the Committee on Judiciary.

A bill to amend 1998 PA 386, entitled

"Estates and protected individuals code,"

by amending sections 1104 and 5501 (MCL 700.1104 and 700.5501), section 1104 as amended by 2016 PA 57 and section 5501 as amended by 2012 PA 141.

the people of the state of michigan enact:

Sec. 1104. As used in this act:

(a) "Environmental law" means a federal, state, or local law, rule, regulation, or ordinance that relates to the protection of the environment or human health.

(b) "Estate" includes the property of the decedent, trust, or other person whose affairs are subject to this act as the property is originally constituted and as it exists throughout administration. Estate also includes the rights described in sections 3805, 3922, and 7606 to collect from others amounts necessary to pay claims, allowances, and taxes.

(c) "Exempt property" means property of a decedent's estate that is described in section 2404.

(d) "Family allowance" means the allowance prescribed in section 2403.

(e) "Fiduciary" includes, but is not limited to, a personal representative, funeral representative, guardian, conservator, trustee, plenary guardian, partial guardian, attorney-in-fact under a durable power of attorney, and successor fiduciary.

(f) "Financial institution" means an organization authorized to do business under state or federal laws relating to a financial institution and includes, but is not limited to, a bank, trust company, savings bank, building and loan association, savings and loan company or association, credit union, insurance company, and entity that offers mutual fund, securities brokerage, money market, or retail investment accounts.

(g) "Foreign personal representative" means a personal representative appointed by another jurisdiction.

(h) "Formal proceedings" means proceedings conducted before a judge with notice to interested persons.

(i) "Funeral establishment" means that term as defined in section 1801 of the occupational code, 1980 PA 299, MCL 339.1801, and the owners, employees, and agents of the funeral establishment.

(j) "Funeral representative" means an individual designated to have the right and power to make decisions about funeral arrangements and the handling, disposition, or disinterment of a decedent's body, including, but not limited to, decisions about cremation, and the right to possess cremated remains of the decedent as provided in section 3206.

(k) "Funeral representative designation" means a written document executed and with the effect as described in sections 3206 to 3206b.

(l) "General personal representative" means a personal representative other than a special personal representative.

(m) "Governing instrument" means a deed; will; trust; funeral representative designation; insurance or annuity policy; account with POD designation; security registered in beneficiary form (TOD); pension, profit-sharing, retirement, or similar benefit plan; instrument creating or exercising a power of appointment or a power of attorney; or dispositive, appointive, or nominative instrument of any similar type.

(n) "Guardian" means a person who has qualified as a guardian of a minor or a legally incapacitated individual under a parental or spousal nomination or a court appointment and includes a limited guardian as described in sections 5205, 5206, and 5306. Guardian does not include a guardian ad litem.

(o) "Hazardous substance" means a substance defined as hazardous or toxic or otherwise regulated by an environmental law.

(p) "Heir" means, except as controlled by section 2720, a person, including the surviving spouse or the state, that is entitled under the statutes of intestate succession to a decedent's property.

(q) "Homestead allowance" means the allowance prescribed in section 2402.

Sec. 5501. (1) A durable power of attorney is a power of attorney by which a principal designates another as the principal's attorney in fact in a writing that contains the words "This power of attorney is not affected by the principal's subsequent disability or incapacity, or by the lapse of time", or "This power of attorney is effective upon the disability or incapacity of the principal", or similar words showing the principal's intent that the authority conferred is exercisable notwithstanding the principal's subsequent disability or incapacity and, unless the power states a termination time, notwithstanding the lapse of time since the execution of the instrument.

(2) Subject to subsection (3), all of the following apply to a durable power of attorney executed after September 30, 2012:

(a) A durable power of attorney under this section shall must be dated and signed voluntarily by the principal or signed by a notary public on the principal's behalf pursuant to under section 33 of the Michigan notary public act, law on notarial acts, 2003 PA 238, MCL 55.293. The durable power of attorney shall must be 1 or both of the following:

(i) (a) Signed in the presence of 2 witnesses, neither of whom is the attorney-in-fact, and both of whom also sign the durable power of attorney.

(ii) (b) Acknowledged by the principal before a notary public, who endorses on the durable power of attorney a certificate of that acknowledgment and the true date of taking the acknowledgment.

(b) (3) An attorney-in-fact designated and acting under a durable power of attorney has the authority, rights, responsibilities, and limitations as provided by law with respect to a durable power of attorney, including, but not limited to, all of the following:

(i) (a) Except as provided in the durable power of attorney, the attorney-in-fact shall act in accordance with the standards of care applicable to fiduciaries exercising powers under a durable power of attorney.

(ii) (b) The attorney-in-fact shall take reasonable steps to follow the instructions of the principal.

(iii) (c) Upon On request of the principal, the attorney-in-fact shall keep the principal informed of the attorney-in-fact's actions. The attorney-in-fact shall provide an accounting to the principal upon on request of the principal, to a conservator or guardian appointed on behalf of the principal upon on request of the guardian or conservator, or pursuant to under judicial order.

(iv) (d) The attorney-in-fact shall not make a gift of all or any part of the principal's assets, unless provided for in the durable power of attorney or by judicial order.

(v) (e) Unless provided in the durable power of attorney or by judicial order, the attorney-in-fact, while acting as attorney-in-fact, shall not create an account or other asset in joint tenancy between the principal and the attorney-in-fact.

(vi) (f) The attorney-in-fact shall maintain records of the attorney-in-fact's actions on behalf of the principal, including transactions, receipts, disbursements, and investments.

(vii) (g) The attorney-in-fact may be liable for any damage or loss to the principal, and may be subject to any other available remedy, for breach of fiduciary duty owed to the principal. In the durable power of attorney, the principal may exonerate the attorney-in-fact of any liability to the principal for breach of fiduciary duty except for actions committed by the attorney-in-fact in bad faith or with reckless indifference. An exoneration clause is not enforceable if inserted as the result of an abuse by the attorney-in-fact of a fiduciary or confidential relationship to the principal.

(viii) (h) The attorney-in-fact may receive reasonable compensation for the attorney-in-fact's services if provided for in the durable power of attorney.

(c) (4) Before exercising authority under a durable power of attorney, an attorney-in-fact shall execute an acknowledgment of the attorney-in-fact's responsibilities that contains all of the substantive statements in substantially the following form:

I, ____________________, have been appointed as attorney-in-fact for ________________________, the principal, under a durable power of attorney dated __________. By signing this document, I acknowledge that if and when I act as attorney-in-fact, all of the following apply:

1. (a) Except as provided in the durable power of attorney, I must act in accordance with the standards of care applicable to fiduciaries acting under durable powers of attorney.

2. (b) I must take reasonable steps to follow the instructions of the principal.

3. (c) Upon On request of the principal, I must keep the principal informed of my actions. I must provide an accounting to the principal upon on request of the principal, to a guardian or conservator appointed on behalf of the principal upon on the request of that guardian or conservator, or pursuant to under judicial order.

4. (d) I cannot make a gift from the principal's property, unless provided for in the durable power of attorney or by judicial order.

5. (e) Unless provided in the durable power of attorney or by judicial order, I, while acting as attorney-in-fact, shall not create an account or other asset in joint tenancy between the principal and me.

6. (f) I must maintain records of my transactions as attorney-in-fact, including receipts, disbursements, and investments.

7. (g) I may be liable for any damage or loss to the principal, and may be subject to any other available remedy, for breach of fiduciary duty owed to the principal. In the durable power of attorney, the principal may exonerate me of any liability to the principal for breach of fiduciary duty except for actions committed by me in bad faith or with reckless indifference. An exoneration clause is not enforceable if inserted as the result of my abuse of a fiduciary or confidential relationship to the principal.

8. (h) I may be subject to civil or criminal penalties if I violate my duties to the principal.

Signature: _______________________ Date: _____________________

(d) (5) A third party is not liable to the principal or any other person because the third party has complied in good faith with instructions from an attorney-in-fact named in a durable power of attorney whether or not the attorney-in-fact has executed an acknowledgment that complies with subsection (4). subdivision (c). A third party is not liable to the principal or any other person if the third party requires an attorney-in-fact named in a durable power of attorney to execute an acknowledgment that complies with subsection (4) subdivision (c) before recognizing the durable power of attorney.

(e) (6) An attorney-in-fact's failure to comply with subsection (4) subdivision (c) does not affect the attorney-in-fact's authority to act for the principal as provided for in the durable power of attorney and does not affect the attorney-in-fact's responsibilities or potential liability to the principal.

(7) Subsections (2) to (6) do not apply to any of the following:

(a) A durable power of attorney executed before October 1, 2012.

(f) Subdivisions (a) to (e) do not apply to any of the following:

(i) (b) A delegation under section 5103 or a similar power of attorney created by a parent or guardian regarding the care, custody, or property of a minor child or ward.

(ii) (c) A patient advocate designation or a similar power of attorney relating to the principal's health care.

(iii) (d) A durable power of attorney that is coupled with an interest in the subject matter of the power.

(iv) (e) A durable power of attorney that is contained in or is part of a loan agreement, security agreement, pledge agreement, escrow agreement, or other similar transaction.

(v) (f) A durable power of attorney in connection with a transaction with a joint venture, limited liability company, partnership, limited partnership, limited liability partnership, corporation, condominium, condominium association, condominium trust, or similar entity, including, without limitation, a voting agreement, voting trust, joint venture agreement, royalty agreement, license agreement, proxy, shareholder's agreement, operating agreement, partnership agreement, management agreement, subscription agreement, certification of incorporation, bylaws, or other agreement that primarily relates to such an entity.

(vi) (g) A power of attorney given primarily for a business or a commercial purpose.

(vii) (h) A power of attorney created on a form prescribed by a government or a governmental subdivision, agency, or instrumentality for a governmental purpose.

(3) All of the following apply to a power of attorney executed after June 30, 2021:

(a) An attorney-in-fact shall not do any of the following on behalf of the principal or with the principal's property unless the durable power of attorney expressly grants the attorney-in-fact the authority and is certified under subdivision (b):

(i) Make a gift of any of the principal's assets.

(ii) Create or change rights of survivorship.

(iii) Create or change a beneficiary designation.

(iv) Create an account or other asset in joint tenancy between the principal and the attorney-in-fact.

(v) Delegate authority granted under the durable power of attorney.

(vi) Waive the principal's right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan.

(vii) Renounce or disclaim property, including a power of appointment.

(viii) Receive reasonable compensation for the attorney-in-fact's services.

(b) If a power of attorney grants an attorney-in-fact a power described in subdivision (a), the attorney-in-fact shall not exercise the granted power unless the power of attorney contains the following certification signed under oath by an attorney who has an attorney-client relationship with the principal:

I, ______________, under the penalties of perjury, certify that to my knowledge:

1. I am a licensed attorney for the principal.

2. The principal understands the significance of giving the attorney-in-fact the powers described in this document as listed in section 5501(3)(a) of the estates and protected individuals code, 1998 PA 386, MCL 700.5501, and is knowingly granting those powers to the attorney-in-fact.

(c) Notwithstanding an express grant of authority to do an act described in subdivision (a), an attorney-in-fact may exercise the authority only as the attorney-in-fact determines is consistent with the principal's objectives, and is consistent with the principal's best interest based on 1 or more of the following factors:

(i) The value and nature of the principal's property.

(ii) The principal's foreseeable obligations and need maintenance.

(iii) Minimization of taxes, including income, estate, inheritance, generation-skipping transfer, and gift taxes.

(iv) Eligibility for a benefit, a program, or assistance under a statute or regulation.

(v) The principal's personal history of making or joining in making gifts.

(vi) The principal's existing estate plan.

(d) Without limiting other criminal or civil remedies, if the attorney-in-fact takes an action that violates this subsection, the action can be used as evidence in a criminal or civil proceeding, and the attorney-in-fact is liable to the principal or the principal's successors in interest for the amount required to do both of the following:

(i) Restore the total value of the principal's property to what it would have been had the violation not occurred.

(ii) Reimburse the principal or the principal's successors in interest for the attorney fees and costs paid on the principal's and attorney-in-fact's behalf.