On December 15, 2020, New York Governor Andrew Cuomo signed a new bill that modifies the Power of Attorney (PoA) form. The law stands to simplify the New York Power of Attorney form, and strengthen penalties for third parties who unreasonably refuse to accept a PoA. These changes were long-awaited, as the current PoA is thought to be unnecessarily complicated. Here, we give you a run-down of the highlighted changes.
What is Power of Attorney?
A Power of Attorney (PoA) is someone who has been given the fiduciary duty to manage someone’s estate on their behalf. This includes managing the Principal’s business, making gifts, and handling day-to-day operations and transactions. Power of Attorney (PoA) also refers to the legal document that appoints the PoA, as a part of the Principal’s estate plan. As you might imagine, the laws surrounding PoA are often quite stringent as a means to offer protection and minimize opportunities for abuse. We dive deep into the Power of Attorney definition and PoA duties in our guide here.
6 Things to Know about the 2021 New York Power of Attorney Statute
The main complaint surrounding the New York Power of Attorney law is that it is overly complicated, and at times counter-productive. Many rejoiced when Governor Cuomo signed Assembly Bill A5630A this past December. Here are the top X highlights of the changes that are coming through the pipeline:
The new law goes into effect on June 13, 2021.
If you are currently appointed as a PoA, your existing power remains in place.
A PoA will still be valid as long as it substantially conforms to the wording of the statutory form. The previous law rendered the statutory form invalid if any of the wording was changed. The new law only requires substantial compliance, and provisions that aren’t applicable can be omitted without invalidating the document.
Previously, the Principal was required to create a separate Statutory Gifts Rider document if they wanted for their agent to be able to make gifts on their behalf. With the new law, the Statutory Gifts Rider has been eliminated. Instead, it will now be included as a modification in the PoA. Even if the PoA document fails to include a gifts rider in the modifications, the agent can still make gifts up to $5,000 per year. (This is a major increase from $500 in the previous law.)
A third party can now sign the PoA document on behalf of the Principal, at their direction, and in their presence. Until now, the Principal was required to sign the PoA personally, even though they could have their Will signed by a third party. This inconsistency used to cause confusion and difficulty. The new law brings relief to Principals who have full mental capacity but are physically unable to sign documents.
The new law also encourages banks and other financial institutions to accept PoAs. Judges are now allowed to assess penalties and fees to any institutions who reject a valid Power of Attorney. They will also be held responsible for any damages they caused if they unreasonably refused a PoA.
I Live in New York. Do I Need To Do Anything with my Power of Attorney?
If you live in the State of New York and have an existing Power of Attorney form, guidance states that you don’t need to take any immediate action. The new law states that if you executed your PoA lawfully at the time, it remains valid and enforceable. In other words, it won’t be invalidated when the new law goes into effect.
You can also rest assured that at Trust & Will, we keep our documents up-to-date to comply with new laws, and any resulting changes, as they are signed into effect. Regardless, it’s always smart to stay on top of any legal changes that could impact your estate plans.
If you’re interested in updating your Power of Attorney document in light of these new changes, contact one of our representatives today! We are always here to help. Is there a question here we didn’t answer? Reach out to us today or Chat with a live member support representative!