There is a new simplified power of attorney coming to New York State. A power of attorney is a legal document which appoints an Agent to act on behalf of the Principal with regards to the Principal’s financial and legal matters. On December 15, 2020, Governor Cuomo signed Assembly Bill A5630A to help simplify the power of attorney document and the execution process. This is what you need to know:
- The new law goes into effect on June 13, 2021.
- The power of attorney only has to ‘substantially conform’ with that of the statutory form.
- There will no longer be a requirement for the Principal to execute a separate statutory gifts rider. Instead, any powers granted to the Agent will be within the power of attorney document, under the modifications section. If the document fails to include the power to gift, the Agent may still gift up to $5,000 each year on behalf of the Principal.
- If the Principal is unable to physically initial or sign the document, the Principal may direct a third party to do so in the Principal’s presence.
- Institutions cannot unreasonably reject a power of attorney. Doing so subjects them to penalties issued by a court of competent jurisdiction. However, an institution may request the Agent to certify to any facts as it relates to the Principal and request an attorney opinion letter.
Back in 2009, the State Legislature made various changes to the law governing power of attorneys, which went into effect in 2010 and continues to be the law today. Under this law, all power of attorney documents must strictly comply with the language of the state’s statutory short form. A slight alteration could invalidate the whole document. The law also states that the Principal must execute a statutory gifts rider to authorize his or her Agent to make gifts beyond $500, and to create or change estate planning documents. The power of attorney is to be signed in the presence of a notary public and the statutory gifts rider is to be signed in the presence of two witnesses and a notary public. Without a properly executed power of attorney and gifts rider, the Agent may find themselves in a situation where they cannot legally act on behalf of the Principal.
While the goal of the 2009 overhaul was to provide more protection to the Principal, the changes have since proven to be too complex and burdensome. The document is difficult to execute, especially during the COVID pandemic where the need for a power of attorney has been more widespread. Additionally, many institutions continue to reject power of attorneys and instead require the Principal to sign the institution’s own form.
Under the new law, there is a presumption that a power of attorney is valid. The new power of attorney will not invalidate older power of attorney documents that were properly executed prior to its effective date. The document that you executed may still be valid so long as it was properly executed under the prior law and includes all the powers you wish to grant to your Agent. As such, it may still be advisable to consult with an experienced Estate Planning attorney to see if updating your documents would be in your best interest.