New York has a new Power of Attorney law. The state legislature amended the General Obligations Law to provide an entirely new form with new execution requirements for powers of attorney that goes into effect on September 1, 2009.
A Power of Attorney is a document that appoints another person (the agent) to act on behalf of someone (the principal) in certain enumerated areas. A Durable Power of Attorney remains valid even if the principal becomes incapacitated. This is ideal for estate planning and elder care. It allows a trusted person to take care of the principal’s affairs without a long and costly guardianship proceeding.
The new law creates a new form, new execution requirements and new powers. Most importantly, the new form requires that both the principal and the agent sign the form and that their signatures be notarized. They do not have to sign at the same time, but the form is not valid until both have signed.
If the principal wants the agent to have the power to make major gifts he must execute a separate Statutory Major Gift Rider (SMGR). A principal may want this to continue a plan of gift giving for estate planning and estate tax reduction.
Acceptance of the form is mandatory. In the past many institutions like banks and brokerages had their own forms that they insisted on. They cannot require that anymore and must accept the new form.
The new form is durable unless otherwise indicated on the form.
This new POA law provides some protections to the principal from abuses by the agent. It imposes a fiduciary relationship on the agent which carries a much stronger requirement of honesty on behalf of the agent. There are also rules regarding increased reporting and accounting by the agent.
While older powers of attorney will remain valid, they will lack some of the more exacting features of the new forms. We strongly urge our clients to review all powers they may have and we will be pleased to assist you in determining whether a new form is necessary.