By Andrew M. Lamkin, Esq.
On January 27, 2009, Governor Patterson signed into law revisions to the New York laws which powers of attorney. The news laws became effective on September 1, 2009. Many of the changes substantially affect the power of attorney. It is not surprising that, during the execution ceremony, my clients have had many questions regarding some of the changes. The following is a sample of some of the questions I have been posed with.
- Is the old Power of Attorney still valid?If the old power of attorney was signed prior to September 1, 2009, it is still valid. However, the new form should be used going forward. Therefore, if you have an unsigned power of attorney, drafted under the old law, you should not sign that form and ask your attorney to prepare a new form for execution.
- What is the reason for using the new Power of Attorney form?The purpose of the law is to ensure that the principle is aware of the powers he/she is granting to the agent. The new form also describes the consequences of granting such powers, particularly as it relates to the ability of the agent to make gifts or asset transfers on behalf of the principle.
- Is it true that the agents I appoint also need to sign the Power of Attorney? If so, why?Yes, the agent must accept the responsibility and fiduciary duties of serving as an agent. The new form contains instructions to the agent, such as to act in accordance with previous instructions from the principle or in the best interest of the principle, to avoid conflicts that would impair the agents ability to act in the best interest of the principle, keep receipts and a record of all transaction made and keep their property separate from the principles property. While the agent does not need to sign at the same time as the principle, the document is not effective until the date is signed by the agent before a notary public.
- Why would I also sign the Statutory Major Gifts Rider?Quite often a Power of Attorney is used to transfer assets out of the name of the principal. The transfer is considered a gift – whether it be given to the agent making the transfer to a 3rd party. In the older version of the POA, the principal could initial next in a box next to the “gifting Power” and thus their agent would have the authority to “gift” on their behalf. The form has additional rider whereby the principal can authorize the agent(s) to gift on his/her behalf. Without using this additional rider (SMGR), the agent will not be allowed to transfer assets on behalf of the principal – thus defeating the purpose of Power of Attorney.
- I’ve heard that banks and other financial institutions have in the past refused to accept the Power of Attorney. Are they allowed to do that?It is true that many have previously encountered difficulties with their financial institutions when attempting to use the power of attorney. The new law addresses this issue by making it unlawful to refuse to accept an original (or certified copy of the original) power of attorney. Specifically, the law provides that financial institutions may refuse a power of attorney for “reasonable cause.” The financial institution has reasonable cause if the agent refuses to provide an original or certified copy of the power of attorney, if it has actual knowledge of the death of the principle, if it has actual knowledge of the revocation of the power of attorney, if it has actual knowledge of a report or investigation by the local adult protective services concerning the principle or if it has actual knowledge of the principle incapacity if the power of attorney presented is “Non-Durable.” The new law also goes to the extent to allow a special proceeding to be brought to compel a financial institution to accept the power of attorney.
Andrew Lamkin is principal in the law firm of Andrew M. Lamkin, P.C., where he focuses his practice in the areas of elder law, estate planning and special needs planning, including Wills and Trusts, Medicaid planning, estate administration and residential real estate transactions. He is admitted to practice law in New York and New Jersey.
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