The Durable Power of Attorney Gets a Makeover
A new statutory Power of Attorney became effective in New York on September 1, 2009. The old statutory form continues to be valid if executed prior to September 1, 2009. The new Power of Attorney was designed with the goal of minimizing abuse by an agent, providing the agent with notification of the agent's obligations as a fiduciary and enhancing the document's acceptance by third parties. There are a number of features in the new Power of Attorney which are very different from the previous one.
The new Power of Attorney requires that both the principal and the agent sign the document. The new Power of Attorney is not effective until both the principal and the agent sign it and those signatures are notarized. The agent can sign the document long after the principal has signed and even after the principal has become incapacitated.
Document Remains Effective After Incapacity
Under the new law, the Power of Attorney continues to be effective if the principal becomes incapacitated although the principal can indicate otherwise in the document. As with the old law, an agent under a Power of Attorney has no authority after the death of the principal.
Gifts by Power of Attorney
At Raskin & Makofsky, LLP we often include additional language in the Power of Attorney to authorize gifting by the agent to family members to facilitate tax and/or Medicaid planning in the event such planning is required at a later time. Under the new law, in order for the agent to have the authority to make gifts of the principal's assets which exceed $500 per year, the principal must sign a Major Gifts Rider. The Major Gifts Rider must be attached to the Power of Attorney and executed simultaneously with it. The rider gives the principal the opportunity to express his or her directions regarding the authority of the agent to make gifts.
Agent is a Fiduciary
The new form includes a notice to the agent that he or she is a fiduciary and therefore has responsibilities to the principal which are itemized in the document. The agent is on notice that there are limitations to the agent's authority. The new law additionally allows the principal to appoint a monitor to oversee the actions of the agent.
This provides an extra layer of protection to assure that the agent is acting in the principal's best interest but can also make the agent's role more complicated and difficult.
Acceptance by Third Parties
Under the old law, only financial institutions which include banks, credit unions, pension funds and retirement systems, were required to honor the Power of Attorney. The new law additionally identifies securities brokers, dealers and firms and insurance companies as other third parties that now must accept the statutory Power of Attorney. All financial institutions and other third parties are now prohibited from requiring their own form or refusing to accept a Power of Attorney merely because it is too old. If a financial institution or other third party unreasonably refuses to accept a valid statutory form, the law provides that a court procedure be made available to enforce acceptance.
Attorney Can Certify a Copy as an Original
An attorney will be able to certify that a copy of the Power of Attorney is a true copy of the original. This provides a way to replace the original if it is lost.
Do You Need To Do Anything If You Currently Have a Valid Power of Attorney?
Powers of Attorney executed prior to September 1, 2009 continue to be valid. Many of our clients have Powers of Attorney which were executed prior to September 1, 2009. These remain effective and continue to give the agent authority to handle financial matters for the principal. If you wish to discuss the new form to see what it may offer you or if you are not sure your current Power of Attorney includes all of the powers your agent may need, give us a call and we will set up an appointment to discuss the document and your concerns.