New Power of Attorney Form Required in New York Effective June 13, 2021
On December 15, 2020, Governor Cuomo signed into law changes to the New York Power of Attorney (“POA”) law, which will took effect on June 13, 2021. A new POA form must be used as of that date. However, POA’s that were executed prior to June 13, 2021 in accordance with the then applicable law, will not be impacted and the agency granted may continued to be relied upon. All POA’s drafted or executed after June 13, must “substantially conform” to the new POA law.
The major changes to the POA law are: (1) the new POA does not have to follow the exact format proposed by the new statute, rather a “substantial” conformity suffices; (2) there is no longer a requirement to have a separate Statutory Gifts Rider (“SGR”) signed contemporaneously with the POA in order for the Agent to be permitted to make gifts; (gift giving capability is usually the most significant aspect of the POA as it permits the Agent to plan for tax savings as well as Medicaid eligibility); (3) penalties for the unreasonable denial of institutions or individuals to accept the POA (finally!); and (4) and safe harbors for third parties acting in good faith. The changes to the POA law also greatly expand an Agent’s authority regarding health care and health care finances. The POA law is Section 5-1513 of the General Obligations Law and can be located at: https://www.nysenate.gov/legislation/laws/GOB/5-1513
Because the new POA does not have to follow the exact statutory format, POA’s will be examined in their totality now to determine whether or not they are compliant and thereby enforceable. This is a wonderful change to the strict conformity standard previously used because scriveners errors, or other insignificant errors will no longer invalidate the forms.
The elimination of a separate gifts rider also enable the POA to be used easier and eliminates unwanted prevention of the Agent’s gifting abilities. However, the Principal must still initial next to the relevant segment that permits the gifting. The gifting authority may be as expansive or limited as the Principal wishes. This is just one example of why it is still vital for a knowledgeable attorney to both draft the POA and oversee its execution.
Previously, there was no remedy available other than injunctive relief if a POA was not accepted by a financial institution or other third party. A wonderful facet of the new POA law is that courts are now empowered to award damages for the failure of third parties to accept the new valid POA’s (of course limiting such award where the non acceptance of the POA was not reasonable. Now, the recipient of a POA has ten days to decide whether to accept or reject it. The recipient may request an affidavit (usually the Agent will have to attest that to the best of their knowledge, the Principal is still alive and has not revoked the POA), or may request the opinion of an attorney. Should the third party refuse to accept the new POA, they must now notify the Principal and Agent of such refusal and explain the reasons for their refusal (within seven days of their receipt of the affidavit of letter from counsel). The Agent may then respond to such refusal.
Finally, it is very significant that the new POA law creates a safe harbor for recipients of the POA who acted in good faith in accepting it. This is truly a sweeping change as it greatly empowers third parties such as financial institutions to rely on POAs without fearing that they may eventually be found liable should the POA be deficient. In order for the good faith standard to be met, the third party must vet that the POA is signed by the Principal in front of a notary who duly notarized the signature; and the third party must not have “actual knowledge” that the POA is invalid.
There are many nuances to the new POA law. Furthermore, a properly executed POA can save you many thousands of dollars and headaches in court (e.g. via the avoidance of Guardianship proceedings if you become incapacitated). Reach out to us at the Law Offices of Irina Yadgarova PLLC to make sure your POA is properly drafted, executed and is custom tailored to your unique needs and concerns.