A Power of Attorney (POA) is a legal document that allows you (the principal), to appoint another person or entity (agent) to act on your behalf to administer your financial affairs. It is an essential component of proper estate planning and safeguarding of your personal assets. If you suffer dementia, are in a disabling accident, or incur other debilitating circumstances, your Power of Attorney agent will be able to make important financial decisions on your behalf.
The Power of Attorney may be as broad or narrow as the principal wishes it to be, by expanding or limiting the powers granted. The principal can also appoint multiple agents to act independently or only jointly. The POA is governed by the laws of the state in which it is transacted (executed).
In New York State, the POA underwent a significant change in the law, effective September 1, 2009, requiring that both the principal and the designated agent(s) or attorney-in-fact sign the POA document, with notary attestation. This change in POA also outlines the agent(s) fiduciary responsibilities.
A “Durable” Power of Attorney is effective from the moment it is executed (signed and notarized), and continues in full force in the event of the principal’s disability or incapacity. A “Springing” Power of Attorney, however, is not immediately effective, and its enforceability is triggered by a future event usually tied to the principal’s physical or mental health and capacity. This trigger event typically requires independently verifiable proofs and authentications and can be quite unwieldy. The Durable POA is by far the most common advanced directive of its kind in practice.
A Statutory Major Gifts Rider, an instrument often executed simultaneously with a Power of Attorney, may be necessary to facilitate estate and medicaid planning on the principal’s behalf. Some individuals are setting up a Power of Attorney from documents obtained online. However, it is likely that the form is wrong, incomplete, or invalid and unenforceable, potentially leading to exorbitantly expensive litigation, or a guardianship battle.
Ensuring that the right Power of Attorney and associated documents are in place will allow you and your loved ones to prepare well for your future, and prevent potential obstacles and challenges. Contact our White Plains office, serving New York and New Jersey, to begin proper planning.