For over a decade, New Yorkers have been using the New York State Statutory Short Form Power of Attorney (“2010 POA”) which also contained the Statutory Gifts Rider. The implementation and execution of the 2010 POA have been confusing and complex for most New Yorkers. At a time of crisis, when the Power of Attorney is most needed, families would then learn that the 2010 POA executed many years ago by the principal was improperly drafted or executed. This had led to unintended consequences, such as guardianship proceedings and family disputes.

New legislation has passed that significantly changes the 2010 POA to simplify the process for New Yorkers.  Effective June 13, 2021, New Yorkers are required to use the new Short Form POA (“new POA”). Here are some of the important highlights of the new POA:

• Replacement of the exact language requirement – The prior statute had a rigid requirement that the 2010 POA form must have exact wording of General Obligations Law, Article 5, Title 15. Any deviation from the requirement would have invalidated the 2010 POA. The new statute has been replaced by a “substantially conform” standard and the form no longer needs to be exact.

    

• Elimination of the Statutory Gifts Rider – The 2010 POA only authorized the agent to make gifts that the principal customarily makes to individuals, including the agent, and charitable organizations, of no more than $500 in a given year. In order to do estate, gift, or Medicaid planning beyond $500, the principal must have also contemporaneously executed the Statutory Gifts Rider giving the agent authority to transfer assets out of the principal’s name. If the Statutory Gifts Rider is missing or improperly executed, or the requisite powers in the Statutory Gifts Rider are lacking, the agent would not be able to carry out the wishes of the principal and would be required to commence a guardianship proceeding to obtain a court order permitting transfers of assets beyond $500.

   

• Increase of default annual gift from $500 to $5,000 – Any amounts greater than $5,000 must be stated in the Modifications section of the new POA. Further, if the principal wishes to authorize the agent to make gifts to himself or herself, the principal must expressly grant such authorization in the Modifications section.

   

• Changes in execution procedure – The prior statute had two signature requirements. For the Short Form portion, it required that the principal’s signature be notarized without any witnesses. As for the Statutory Gifts Rider portion, it required that the principal’s signature be notarized and executed before two disinterested witnesses. The new POA will now require that the same execution procedure as the Statutory Gifts Rider be followed. Further, the witness cannot be a permissible recipient of gifts, or an agent or successor agent; however, the witness can also serve as a notary public.

   

• Recordkeeping requirement – The new POA has clarified the recordkeeping requirement for the agent. The agent must keep a record of all transactions conducted for the principal or keep all receipts of payments and transactions conducted for the principal.

    

• Obligation of third parties and remedy for agents – The new statute now provides that third parties, such as banks and other financial institutions, must make a written decision regarding whether to reject or honor the new POA within 10 business days of presentation. Third parties must provide specific reasons for the rejection. If the rejection was made unreasonably, the court can award damages and attorney fees.

   

• Prior executed power of attorney still effective – Existing POAs that were properly executed will remain valid. Unless the principal has no mental capacity to do so, it is advisable that the principal execute a new POA to conform to the new law.

Despite the goal of the new statutory changes to simplify and improve the old law, the new POA is still a complicated document. There are many intricacies and nuances when it comes to drafting and execution of the document. Consumers should not just download the new POA online and complete the form without seeking the advice of an attorney. Care and attention must be made to ensure that the POA is properly drafted and executed, so that it can be used as intended in the future when the need arises.

Pauline Yeung-Ha, Esq., is a partner in the law firm of Grimaldi & Yeung LLP. Ms. Yeung-Ha concentrates in the practice areas of trusts, wills and estates, elder law as well as special needs planning. She received her undergraduate degree from Vassar College and her law degree from St. John’s University School of Law. She is admitted to practice in both New York and New Jersey. Ms. Yeung-ha has also been a member of the house of delegates of the New York State Bar Association (NYSBA); a member of the board of directors of the New York Chapter, National Academy of Elder Law Attorneys (NAELA); vice-chair of the Practice Management Committee of the Elder Law Section of NYSBA; and chair emeritus of the Pro Bono Clinic of the Asian American Bar Association of New York (AABANY). She was also awarded New York State Bar Association’s Bar Leaders Innovation Award for 2020.