Chapter 644 of he Laws of 2008 amends the New York General Obligations Law to provide new provisions for power of attorney forms. The law is effective September 1, 2009. SEE ARTICLE ON MORE RECENT REVISIONS. The new law contains major changes relating to both the content and the execution of the form, including an acceptance by the agent. Major gifting will now require a second form, called a Statutory Major Gift Rider (SMGR), which has additional execution requirements. The statute also creates specific fiduciary responsibilities for the agent.
The law now provides that the form is durable (i.e. not effected by later incapacity), unless it provides it is terminated by incapacity of the principal. NY G.O.L. § 5-1501A. If a guardian is later appointed the agent shall account to the guardian rather than the principal. NY G.O.L. § 5-1501A.
The Power of Attorney must now be signed, dated and duly acknowledged, not only by the principal, but also by the agent. NY G.O.L. § 5-1501B subd. 1 (c).
To be valid for the purpose of authorizing the agent to make gifts a statutory short form power of attorney must contain the gift giving authority initialed by the principal and be accompanied by a valid statutory major gifts rider (SMGR); the SMGR must be executed pursuant to the requirements of NY G.O.L.§5-1514 subd. 9 (b) which includes being acknowledged and witnessed by two witnesses in the same manner as the execution of a will. Non statutory powers of attorney appear to be still permissible (there is some ambiguity in this provision), provided certain rules are followed, but a non-statutory power of attorney which contains gift giving authority must be similarly acknowledged and witnessed. NY G.O.L. § 5-1501B subd. 2(b). SEE ARTICLE ON MORE RECENT REVISIONS.
The date on which an agent's signature is acknowledged is the effective date of the power of attorney as to that agent; if two or more agents are designated to act together, the power of attorney takes effect when all the agents so designated have signed the power of attorney with their signatures acknowledged. NY G.O.L. § 5-1501B subd. 3 (a). Unless it is a springing power of attorney (to take effect upon the occurrence of a date or contingency) in which case the occurrence of the contingency is also required. NY G.O.L. § 5-1501B subd. 3 (b).
The authority to create and fund trusts is removed from NY G.O.L.§ 5-1502C, and now appears as a specific provision in the statutory SMGR to create, amend, revoke, or terminate an inter vivos trust. Similarly the statutory authority to designate beneficiaries on insurance is removed from NY G.O.L. §5-1502F.
The authority to create joint accounts or modify a totten trust beneficiaries must be included in SMGR. NY G.O.L. § 5-1502D subd.1 (a) and (b). The same is true to change beneficiaries on retirement benefit plans. NY G.O.L. §5-1502L subd. 2.
Certain small gifts ($500 each and under in a calendar year) to individuals and charities, which continue a custom of the principal, can be made by the agent without a SMGR. NY G.O.L. §5-1502I subd. 14.
Provisions regarding health care billing and payment matters, should allow access to health care records in accordance with HIPPA requirements. NY G.O.L. §5-1502K.
Provisions can be added to the statutory short form or SMGR in the section labled modifications. These modifications can eliminate a power in one of the constructional sections of the statute, supplement a power, or add a provision not inconsistent with the other provisions of the form. NY G.O.L. §5-1503.
Acceptance of the new statutory short form power of attorney is mandated and a third party cannot refuse to honor the statutory short form, a SMGR or a POA properly executed under the laws in effect at the time it was executed, without reasonable cause. NY G.O.L. §5-1504. The statute provides it is unreasonable for a third party to require their own form or to object because of the lapse of time since the execution, or to the lapse of time between acknowledgement by the principal and the agent. NY G.O.L. §5-1504 subd. 1 (b).
IMPORTANT PRACTICE NOTE: The new statute provides a prudent person standard of care with defined fiduciary responsibilities. This includes record keeping (with receipts) and imposing on the agent the requirement that records must be made available within 15 days of a written request by a monitor, co-agent, certain governmental entities, a court evaluator, a guardian, or a representative of the principals estate. NY G.O.L. §5-1505. An agent may be liable for conduct or omissions which violate the fiduciary duty. NY G.O.L. §5-1505 subd. 2 (b). However, an agent may resign by following the procedures in the statute. NY G.O.L. §5-1505 subd. 3. In the new form there is an optional provision that the principal can appoint a monitor to request and receive records of transactions by the agent. NY G.O.L. §5-1509. The statute provides for a special proceeding to compel an agent to produce a record of receipts and disbursements and for various other purposes. NY G.O.L. §5-1510. These provisions regarding fiduciary responsibilities and special proceedings apply to all powers of attorney including those executed before the effective date of the new law.
The statutory short form POA is set out at NY G.O.L. §5-1513 and provides: that it is durable, unless you provide otherwise; it revokes any prior power of attorney, unless you provide otherwise. SEE ARTICLE ON MORE RECENT REVISIONS
Statutory Short Form Powers of Attorney properly executed in accordance with the law in effect at the time of its execution remain valid and must be honored. NY G.O.L. §5-1504.