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POWER OF ATTORNEY
A Power of Attorney is an important legal document that allows you to designate an agent to handle your property, financial and legal affairs during your lifetime. The Power of Attorney enables you to delegate legal authority over your property, financial and legal affairs to another person of your choosing. The person who executes (signs) the Power of Attorney is called the Principal. The person who is given the legal authority to act on the Principal’s behalf is called the Agent or Attorney-in-Fact.
A principal can give an agent broad legal authority, or very limited authority. Powers delegated typically include the power to pay bills, handle insurance claims, bring or defend a lawsuit on your behalf, pay taxes, and may include much further and far reaching powers such as the ability to mortgage, sell or dispose of your real or personal property, make loans, borrow money, negotiate business transactions and sign leases as well as handle other important financial matters. The power of attorney should only be given with great caution, and only to an agent you trust completely. The power of attorney is frequently used to help in the event of a principal’s illness or disability, or in legal transactions where the principal cannot be present to sign necessary legal documents.
There are “nondurable,” “durable,” and “springing” Powers of Attorney. The "nondurable" power of attorney takes effect immediately or at a specified time and remains in effect until it is revoked by the principal, or until the principal becomes mentally incompetent or dies. It is most often used for a specific transaction, such as the closing on the sale of property, the handling of the principal’s finances while the principal is traveling or otherwise unavailable, or where the principal cannot be present to sign necessary legal documents. The “durable” power of attorney allows the agent to begin or continue to act for the principal after the principal becomes mentally incompetent or physically unable to make decisions or act. Both the nondurable and the durable power of attorney become ineffective if revoked by the principal or upon the principal’s death. Durable powers of attorney are frequently used to plan for a principal’s future incapacity or disability and loss of competence resulting, for example, from dementia, disease or a catastrophic accident. By appointing an agent under a “durable” power of attorney, the principal is setting up a procedure for the management of his or her financial affairs in the event of incompetency or disability. Durable powers of attorney enable a principal to decide in advance who will make important financial and business decisions in the future. They are also helpful in avoiding the expense of having a court appoint a guardian to handle the principal’s affairs in the event of incompetency or disability.
A power of attorney does not authorize your agent to make medical decisions for you. Those decisions have to be made by your health care agent designated in a health care proxy.
Important Changes to the Power of Attorney in New York
Effective September, 2009, as further amended September, 2010, Chapter 644 of the laws of 2008 amended the provisions of the General Obligations Law relating to the use of powers of attorney in New York and created a new statutory short form incorporating the following changes:
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To be valid, a power of attorney (POA) must contain the acknowledged signatures of both Principal and Agent.
- An Agent’s authority to make gifts must be granted through a separate Statutory Gifts Rider and executed in the same manner as a Will (i.e., 2 witnesses required), at the same time the Power of Attorney is executed.
- Unless otherwise specified, where more than one Agent is designated, they must act together.
- The Principal can appoint someone to monitor the Agent’s actions. A designated “Monitor” will have the authority to request records of transactions entered into on behalf of the Principal. The Principal can also provide for compensation to the Agent.
- The Principal’s rights are stated on page one in bold faced language.
- Agent’s role, fiduciary obligations, and legal limitations are explained. Agent’s signature at end of document constitutes an acknowledgement of his or her fiduciary responsibility.
- 12 point font is required by the statute.
- No deviation from the statutory short form is permitted except in the specified sections and modifications. POA statutory short forms executed after these amendments must follow the specific language of the statutory short form.
Powers of Attorney in effect prior to these changes continue to be valid provided they were valid under the laws in effect at the time of their creation.
Powers of attorney created prior to the effective date of September 1, 2009 will continue to be valid provided they were valid under the laws in effect at the time of their creation. POA forms executed on or after September 1, 2009 must follow the specific language of the statutory forms.
For further information contact Fern J. Finkel or Julie Stoil Fernandez at Finkel & Fernandez, LLP
16 Court Street, Suite 1007, Brooklyn, New York 11241, 347-296-8200 (telephone), 718-965-3185 (fax), ffinkel@ffelderlaw.com, jstoilfernandez@ffelderlaw.com.
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