May 28, 2021 What Are the Changes to the New York Power of Attorney Form?
Starting June 13, 2021, changes to the New York Power of Attorney (POA) form go into effect. Among these changes, discussed in detail below, is the major switch that the New York Statutory Short Form Power of Attorney no longer must contain the exact wording set forth within the law. In New York, a power of attorney form will now be required to only “substantially conform” with the statutory form.
The current POA was too complicated and difficult for people to use. The exact and inflexible requirement that the exact language of the statute be incorporated in the document meant that the form could be rendered null and void for insignificant errors.
The changes are designed to make the power of attorney easier to use, provide a structure for the acceptance or rejection of a POA, and clarify the power and obligations of an agent.
All existing powers of attorney remain effective. Let’s examine the changes:
Witnesses. With the new law, executing a POA will require two witnesses. Potential recipients of gifts effected through a power of attorney can’t serve as witnesses to the execution of the power of attorney.
Agent Record-Keeping. The agent of a power of attorney is required to maintain a record of all transactions made on the principal’s behalf. The agent can also keep all receipts of payments and transactions conducted for the principal.
Health Care Financial Matters. The principal designated agent will be considered a personal representative for purposes of health care financial matters. As such, health care providers and health plans must provide the agent with information required to determine the legitimacy and accuracy of charges for health-related expenses and benefits.
Statutory Gifts Rider. The separate statutory gift rider is no longer required for new powers of attorney. With the new law, any authority granted to the agent will be within the power of attorney document under the modifications section. If a POA document fails to include the power to gift, the agent will still be permitted to gift up to $5,000 each year on behalf of the principal. That’s an increase from $500 per year under the old law.
A POA can be Signed at the Principal’s Direction. Now, if a principal is unable to physically initial or sign the document, he or she can direct a third party to do so in the principal’s presence.
More Difficult for Banks to Refuse to Recognize POA. In the past financial institutions could reject a power of attorney for a number of reasons. Now, institutions can’t unreasonably reject a POA. If they do, the bank is subject to penalties by a court. That said, an institution may request the POA agent to certify any facts regarding the principal and request an attorney opinion letter.
If a bank or other institution refuses to honor a power of attorney, it must do so in writing to the principal and the agent within 10 business days of presentation. This refusal must state the specific reasons for the refusal. In addition, if legal action is brought to compel the acceptance of a statutory short-form power of attorney, the court can award damages including reasonable attorney’s fees.
Insignificant Mistakes Okay. The new law says that an insignificant mistake in wording, spelling, punctuation, formatting, or the use of bold or italic type will not automatically invalidate a POA.
POA is Presumed Valid. The new law states that there’s a presumption that a POA is valid.
Safe Harbor for Third Parties Acting in Good Faith. An individual who accepts and acknowledged a witnessed power of attorney in good faith—without actual knowledge that the signature isn’t genuine—may rely on the presumption that the signature is genuine. Likewise, a person who in good faith accepts an acknowledged and witnessed power of attorney without actual knowledge that the subject power is void, invalid, or terminated, or that the agent’s authority is void, invalidated, or terminated, or that the agent is exceeding or improperly exercising the power of attorney—may rely on the power of attorney. Thus, there are two conditions that must be met:
- The POA must contain the principal’s signature and have been verified by a notary public or an authorized person to take acknowledgments; and
- The recipient must not have “actual knowledge” that the principal’s signature is forged, that the POA is invalid, or that the agent is abusing his or her authority under the POA.
Again, this new power of attorney legislation won’t invalidate older power of attorney documents that were properly executed prior to June 13, 2021. Properly executed power of attorney documents under the prior law are still valid. That being said, it is important to make sure that the wishes and powers given under your power of attorney are still appropriate. It may be advisable for you to consult with an experienced estate planning and elder care attorney to determine if it would be beneficial to update your documents.
Ask an experienced estate planning and elder care attorney at Ely J. Rosenzveig & Associates, PC, to help you draft your power of attorney, as well as other important estate planning documents, such as a health care proxy, living will, Last Will & Testament, and various types of trusts.