A power of attorney form is one of the most commonly used legal documents. It allows an individual (known as the “Principal”) to appoint an agent to act on his or her behalf with regard to financial transactions and alleviates the need for a court-appointed conservator.  For New York residents, the recently updated New York Power of Attorney law (effective June 13, 2021) simplifies the current statutory form and adds significant benefits for agents. The changes will make the power of attorney more user-friendly. Do not be concerned if you have an older version of the power of attorney as it will still be accepted.

The previous power of attorney form has been criticized for being overly complex and difficult to understand by the lay person. In addition, the form required strict adherence to the exact language of the statutory form.  This requirement added confusion for clients, and if an attorney tried to simplify the language to make it easier to understand, it ran the risk of being invalidated.  Although the new form is still complex, it removes the requirement that the form be identical to the statutory form and now merely requires the form to be “substantially conforming.”

The new law also creates a presumption that the power of attorney is valid. If a financial institution intends to reject the power of attorney, it must set forth in writing its reasons within ten business days. Further, the law authorizes judges to impose penalties and attorney’s fees if a financial institution unreasonably refuses to accept the power of attorney.

The previous power of attorney form also required a separate statutory gifts rider if the individual wanted to allow his or her agent to make gifts of over $500. This rider is now incorporated within the power of attorney. Additionally, the gift amount is increased from $500 to $5,000.

Finally, the new law allows for another individual to sign the power of attorney if the Principal is competent but unable to sign it. Prior to this change, if a competent adult was unable to physically sign the document, the form was not accepted.  For more information, please contact Kimberly T. Smith (ksmith@brodywilk.com) or another BW attorney.