New York State Power of Attorney Law Change
On December 15, 2020, Governor Cuomo signed a long awaited new law into place resulting in a change to the New York State Power of Attorney (“POA”). The effective date of the law is June 13, 2021 so for approximately the last month, our clients here at MCCM have been signing the new form POA that needs to substantially conform to the new law. It is important to note that all validly and legally executed POAs prior to June 13, 2021 are grandfathered in as valid documents so there is not a need to change your current POA as long as it was legally executed under prior law.
There are several key differences between the new POA law and the old law that was passed in 2010. Under the previous regime, the short form POA could be signed by the principal and the agents before a notary public. It was only the Gifts Rider addendum that the principal needed to sign in front of two witnesses and a notary. Under the new law, the principal now must sign the POA in front of two witnesses and a notary, while the agents need only sign in front of a notary public.
As noted above, the previous POA regime had a separate addendum the principal could sign to allow their agent more expansive gifting authority, the Gifts Rider. The new law consolidates the incorporation of more expansive gifting authority so that the attorney must now incorporate the gifting authority within the Modifications Section of the short form POA. Where there was two separate documents before, now there is one. If the principal does not wish to incorporate more expansive gifting authority, the basic level of gifting, if authorized by the principal is now a total of $5,000 per year. This number is increased from the prior POA short form including a base level of $500 per year.
Aside from the execution and gifting changes above, New York felt that it was important to clarify the process for banks and other financial institutions to render an opinion concerning the validity of a POA. As of June 13, 2021, a bank or financial institution must refuse to honor a POA in writing to the principal and the agent within 10 business days of presentation. The document must provide specific reasons for the refusal. After this potential initial refusal, the law outlines that the principal or agent can subsequently bring a proceeding before an administrative law judge to compel the acceptance of the POA and the court can award damages including reasonable attorney’s fees.
Lastly, New York State provided more direction to agents under the new law. The new law not only gives more direction to an agent for signing on someone else’s behalf, but also makes it a requirement for the agent to keep good records. An agent must keep a record of all transactions conducted for the principal or keep all receipts of payments and transactions conducted for the principal. It is all too common for an agent to fail to keep good records and it can open the agent up to fiduciary liability for failure to be able to prove that certain transactions were conducted in the best interest of the principal.
What this new law makes clear is that executing a POA and/or becoming an agent for someone has become increasingly complicated. For legal advice related to POAs and their execution, please contact our office.
This publication is intended as an information source for clients, prospective clients, and colleagues and constitutes attorney advertising. The content should not be considered legal advice and readers should not act upon information in this publication without individualized professional counsel.
McConville Considine Cooman & Morin, P.C. is a full-service law firm based in Rochester, New York, providing high-quality legal services to businesses and individuals since 1979. With over a dozen attorneys and a full paralegal support staff, the firm is well-positioned to right-size services tailored to each client. We are large enough to provide expertise in a broad range of practice areas, yet small enough to devote prompt, personal attention to our clients.
We represent a diverse range of clients located throughout New York State and New England. They include individuals, numerous manufacturing and service industry businesses, local governments, and health care professionals, provider groups, facilities and associations. We also serve as local counsel to out-of-state clients and their attorneys who have litigation pending in Western New York courts. For more information, please contact us at 585.546.2500.