New York’s New Power of Attorney – What Does it Mean for You?
On September 1, 2009 New Yorkâs new power of attorney law became effective. There has been much written about it. The intent of lawmakers was to correct the financial abuses that seem to increase in frequency, probably due to the aging of our populace. As with any new law, however, what lawmakers envision and what actually occurs often differ greatly. But, what does the new law mean for you?
First, letâs run through the major changes. One of the biggest changes is the creation of a âstatutory major gifts riderâ. This is a document separate from the power of attorney that specifically authorizes major gifts and other transfers (defined as greater than $500 per person per calendar year). No longer can the principal (the person executing the power of attorney) authorize gifts in the body of the power of attorney document. This will impact many long term care plans in which assets are placed in trust, for example. If the principal can no longer make the transfer and a child, as agent under power of attorney, needs to complete that transaction, New York law now requires this separate rider.
A second important change focuses on the execution of the document. Now the principal and the agent must sign the document in front of a notary and two disinterested witnesses. The signings need not, however, occur at the same time. The agent may sign at a later date than the principal.
A third major change is one that at first might not seem like much. Any new power of attorney automatically revokes all previous power of attorney unless the principal expressly states otherwise in a special âmodificationsâ section. This could really wreak havoc upon estate and long term care plans. Think about it. How many times have you gone into a bank and executed a limited power of attorney appointing a family member as agent for a particular account? If that document doesnât expressly state your wish not to revoke your general power of attorney or any other limited power of attorney that you signed previously then they all are revoked. What if the bank employee doesnât point this out to you? They may not even be aware of this provision.
It will be interesting to see what impact the new law will have. Will it correct financial abuses of the elderly? Will it be too restrictive and hamper families in their ability to care for elderly members? Will there be any unintended consequences that nobody foresaw? And will other states follow suit? One thing should be clear. Consult your elder or estate planning attorney before you execute any other powers of attorney.