POWER OF ATTORNEY
A Power of Attorney (POA) is an important legal document that allows you to designate an agent(s) 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(s) of your choosing. The person who executes (signs) the Power of Attorney is called the Principal. The person(s) who is given the legal authority to act on the Principal’s behalf is called the Agent(s) or Attorney(s)-in-Fact.
As the principal, you can grant your agent(s) broad legal authority over all or part of your property, or you may grant very limited authority. Powers delegated typically include the power to pay bills, handle insurance claims, bring or defend a lawsuit, and pay taxes. Broader powers may include the power to engage in asset protection, enter into and fund trusts, mortgage, sell or dispose of your real or personal property, make loans, borrow money, negotiate business transactions, sign leases, and handle other important financial matters. The Power of Attorney should only be given with great caution, and only to an agent(s) 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 durable and non-durable Powers of Attorney.
A durable Power of Attorney authorizes your agent(s) to act for you even if you one day become unable to make decisions or to act on your own behalf. Durable Powers of Attorney are frequently used to plan for a principal’s future incapacity or disability resulting, for example, from dementia, disease or a catastrophic accident. By appointing an agent(s) under a durable Power of Attorney, you are preparing for your trusted agent(s) to manage your financial and property interests if you become unable to do so. A strong Power of Attorney is also helpful in avoiding the expense of having a court appoint a guardian to handle your financial affairs in the event of your incapacity.
The non-durable Power of Attorney takes effect immediately upon signing, or at a specified time. 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. This type of Power of Attorney will not, however, be honored in the event of your incapacity.
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.
Your Power of Attorney can be revoked by you at any time, with or without cause. Your Power of Attorney ends with your death, terminating your agent(s)' authority to act on your behalf.
Finally, Important Recent and Long-Awaited Changes to the Power of Attorney in New York
Effective June 13, 2021, the provisions of Chapter 5, Title 15, of the General Obligations Law governing Powers of Attorney in New York were significantly changed, and a new statutory short form was created. Most significantly, for the first time, sanctions may be imposed on financial institutions unreasonably refusing to accept a validly executed power of attorney. The following key changes were also enacted:
To be a valid statutory short form, a Power of Attorney must "substantially conform" to the language set forth in the General Obligations Law; exact wording is no longer required.
The annual gifting limit under the general grant of authority increased from $500.00 a year in the aggregate to $5,000.00 a year in the aggregate.
An agent’s authority to make gifts in excess of this limit no longer requires a separate Statutory Gifts Rider. Instead, all additional powers granted to the agent, including gifting authority if desired, must be included in the Modifications section. If gifting powers are included, the principal must also initial this grant of gifting authority in section (g) of the form.
Two witnesses (one of whom may be the Notary Public) must sign the Power of Attorney form following the principal's signature.
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.
A party can bring a Special Proceeding to compel a third party to honor a validly executed statutory short form Power of Attorney. The Court may now award damages, including reasonable attorney's fees and costs, if the third party is found to have acted unreasonably in failing to accept the document. These provisions apply to all Powers of Attorney validly executed under the laws in effect at the time of execution - not only the post-June 13, 2021 forms. This is a huge victory for our clients; finally some consequences for refusing to honor a validly executed Power of Attorney.
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), firstname.lastname@example.org, email@example.com.
*Disclaimer: The information contained on this website is provided only as general information and is not intended as legal advice, nor should it be used as a substitute for a complete review of your case by an experienced elder law attorney. All situations differ. By visiting this website, there is no attorney-client relationship established between you and Fern J. Finkel, Julie Stoil Fernandez, or Finkel & Fernandez, LLP.