Academic journal article Care Management Journals

Sweeping Changes to New York's Powers of Attorney

Academic journal article Care Management Journals

Sweeping Changes to New York's Powers of Attorney

Article excerpt

On January 27, 2009, Governor Paterson signed into law new legislation enacting sweeping changes to New York State's statutory form of power of attorney. 1 The legislation took effect on September 1, 2009, and has focused new attention on this relatively simple but key component of an individual's estate, tax, and disability planning. Technical amendments to the statute were enacted in 2010, effective as of September 12, 2010. This article addresses the use and forms of powers of attorney and discusses in detail the changes to the statutory form contained in the new legislation.

POWERS OF ATTORNEY GENERALLY

A power of attorney is a written document that confers on a person (called an "agent" or "attorney-in-fact") or two or more people acting jointly or separately the power to act on behalf of another person (called the "principal") in a potentially wide range of matters. Under a power of attorney, the agent is authorized to manage some part or all of the principal's financial and personal affairs during periods of temporary or permanent illness or disability. It is an essential document in most estate plans and when planning for the possibility of disability. The power of attorney can also be used at other times, such as when the principal is traveling or for the sake of convenience, particularly for the elderly or infirm, even if the principal is otherwise competent and free of illness.

Who May Act as an Attorney-in-Fact?

Any legally competent individual of at least 18 years of age may grant a power of attorney or serve as an attorney-in-fact, regardless of the relationship between the principal and the agent. (Contrast this with a health care proxy where certain persons, such as the principal's health care providers, cannot serve in that capacity.) A principal may name more than one agent and direct whether each agent may act on his or her own or must act in conjunction with one or more other agents. It is also possible to appoint an alternate agent should the first agent or agents named cease to act.

Scope of the Agent's Authority

Each state has its own laws governing the form and scope of a power of attorney. Powers of attorney can be detailed, lengthy documents laying out each and every power conferred on the attorney-in-fact. These documents are the creatures of common law (i.e., nonstatutory) principles of agency, and they are generally effective to confer authority on the agent without enabling legislation. In addition, many states, including New York, have created "short-form" powers of attorney in which a statutorily mandated form references specific categories of powers that may be conferred on an agent. 2 In New York's case, the General Obligations Law provides a description of what is covered by each category.

There are few areas in which an attorney-in-fact cannot act if properly authorized by the principal. The principal may pick and choose among the powers or confer all of them. It is also possible to add powers to the form or to limit the scope of particular powers, provided that the modifications are not inconsistent with the other provisions of the form. 3 For example, New York's statute in effect prior to September 1, 2009 (the "old law"), conferred powers in the areas of real estate transactions, chattel and goods transactions, bond, share and commodity transactions, banking transactions, business operating transactions, insurance transactions, estate transactions, claims and litigation, personal relationships and affairs, benefits from military service, records, reports and statements, retirement benefit transactions, gifts to a spouse and descendants up to $10,000, tax matters, and all other matters. 4 If the principal confers authority on the attorney-in-fact as to "all other matters," then the agent is authorized to act as the principal's alter ego with respect to any and all things not enumerated elsewhere in the statute. 5 As discussed in this article, the newly amended statute (the "new law") permits certain additional powers to be conferred on the agent, although it limits other powers. …

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