SB-0092, As Passed House, May 1, 2012

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 92

A bill to amend 1998 PA 386, entitled

"Estates and protected individuals code,"

by amending section 5501 (MCL 700.5501).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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 ~~and the 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) A durable power of attorney under this section shall be

dated and signed voluntarily by the principal or signed by a notary

public on the principal's behalf pursuant to section 33 of the

Michigan notary public act, 2003 PA 238, MCL 55.293. The durable

power of attorney shall be 1 or both of the following:

(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.

(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.

(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:

(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.

(b) The attorney-in-fact shall take reasonable steps to follow

the instructions of the principal.

keep the principal informed of the attorney-in-fact's actions. The

attorney-in-fact shall provide an accounting to the principal upon

request of the principal, to a conservator or guardian appointed on

behalf of the principal upon request of the guardian or

conservator, or pursuant to judicial order.

(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.

(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.

(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.

(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.

(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.

(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:

(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.

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

the principal.

informed of my actions. I must provide an accounting to the

principal upon request of the principal, to a guardian or

conservator appointed on behalf of the principal upon the request

of that guardian or conservator, or pursuant to judicial order.

(d) I cannot make a gift from the principal's property, unless

provided for in the durable power of attorney or by judicial order.

(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.

(f) I must maintain records of my transactions as attorney-in-

fact, including receipts, disbursements, and investments.

(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.

(h) I may be subject to civil or criminal penalties if I

violate my duties to the principal.

Signature: _______________________ Date: ______________________

(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). 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)

before recognizing the durable power of attorney.

(6) An attorney-in-fact's failure to comply with subsection

(4) 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.

(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.

attorney relating to the principal's health care.

(d) A durable power of attorney that is coupled with an

interest in the subject matter of the power.

(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.

(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.

(g) A power of attorney given primarily for a business or a

commercial purpose.

(h) A power of attorney created on a form prescribed by a

government or a governmental subdivision, agency, or

instrumentality for a governmental purpose.