What is New York’s New Power of Attorney Form?

New York’s New Power of Attorney

Starting June 13, 2021, New York State will enact a new statutory Power of Attorney. This new law requires a different form to be used for all Power of Attorney documents executed on or past this date. So, is this new law necessary and, more importantly, do you need to redo your existing power of attorney? The short answer is yes and maybe.

This new law is a welcome change –the bar associations have been lobbying for a more simplified form with stronger protections. Unlike the previous 2009 change in the law, Power of Attorney forms executed on or after June 13, 2021, must only substantially conform rather than contain the exact wording of section 5-1513 of the General Obligations Law. This allows POA forms to be valid despite insignificant errors in spelling, formatting and language– so long as the document, in its entirety, satisfies the purpose of the statute.

The separate Statutory Gifts Rider has been eliminated. Instead, gifting provisions may be included in the Modifications section of the Power of Attorney form itself. Whereas gifts in excess of $500 had to be expressly authorized, the new law allows up to $5,000. The modification section must contain express instructions that substantial gifts over $5,000, such as real estate, are authorized. Variations such as caps on gifting and limiting gifting to to certain people or classes can be included – allowing for a more tailored solution.

One of the most significant changes is that Powers of Attorney no longer needs to be personally executed by the Principal, meaning that a third party may sign for the Principal in the principal’s presence and at the Principal’s direction. Of course, the Principal must have the requisite mental capacity; this new provision allows anyone with a physical disability to more easily execute a power of attorney.

In an effort to ensure greater compliance, institutions can be sanctioned for “unreasonably” rejecting a power of attorney – including awarding attorney fees and costs to the principal. The previous law limited relief to an injunction compelling acceptance of the POA – at the Principal’s own cost. Examples of unreasonable rejections included in the statute are: (1) requiring the principal use the institution’s own form;  (2) lapse of time since the execution of the power of attorney; and (3) lapse of time between the date of acknowledgment of the signature of the principal and the date of acknowledgment of the signature of any agent. These are all issues people have run into with financial institutions. Such third parties now have ten business days to either accept the POA, set forth the reasons for the rejection in writing, or request a full force and effect affidavit. If there is a lapse of time since the POA was executed or when the agent signs, best practice is to submit the full force and effect affidavit with the initial submission of the POA.

The statute also puts forth reasonable reasons third parties can reject a facially valid power of attorney – with the commonality of protecting against fraudulent actions. For example, the institution can deny if the agent refuses to produce an original or a certified copy of the POA, has reason to refer the matter to Adult Protective Services (APS) or is aware of an APS report containing allegations against the principal. A third party can also deny if there is actual knowledge or a reasonable basis to believe that the Principal has died, the principal was incapacitated at the time the power of attorney was executed, the power of attorney was procured through fraud, duress or undue influence, or the POA was revoked.

There are also changes to the execution of the Power of Attorney. The old statutory short form only required the Principal’s signature be notarized, but two witnesses to the statutory gift rider. Now that the forms are combined, the Power of Attorney must be acknowledged and witnessed by two persons not named in the instrument as agents or as permissible recipients of gifts. A common mistake we see in DIY powers of attorney is exactly that – a child who is the agent witnessing the document.  Any such POA is invalid.

Finally, those with existing powers of attorney do not need to execute a new one if it was done properly.  A power of attorney signed prior to the June 13th date using the outdated form will remain valid and enforceable under the new law – so long as it was properly executed in the first place. However, given the amount of poorly drafted powers of attorney –not witnessed properly, worded incorrectly, or missing crucial modifications—this a perfect time to have an estate planning attorney review yours as part of an overall assessment of your existing estate plan. My consultations are always free and you can make an appointment easily online.

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