Author Gabrielle Wasenius
Laws always evolve. Here at the Law Offices of Max Elliott, we stay current on estate planning, estate administration, and probate laws of the jurisdictions we serve. The laws related to the New York Power of Attorney (POA) underwent significant changes in 2021, bringing more flexibility for those preparing POAs and greater safeguards for those relying on them.
One notable improvement is that the POA no longer requires an “exact wording” match but only wording that that “substantially conforms” to the statute. Previously, even minor typos or small mistakes could invalidate POAs.
While the wording requirement changed, the fundamental rule that an agent’s powers are limited to those listed in the POA remains unchanged. However, the new law allows for more powers to be granted to agents, especially regarding gift-giving.
Before the law changed, an agent could only make annual gifts of less than $500 unless the principal initialed a section of the POA to grant authority to the agent to make larger gifts and then also executed a separate Statutory Gifts Rider. The Statutory Gifts Rider had to be notarized and signed by 2 witnesses. These requirements were meant to combat fraud and abuse. But, requiring 2 forms created confusion.
While POA forms properly executed under the law in effect at the time of their signing remain valid, the new POA law eliminates the Statutory Gifts Rider completely and allows for gifting provisions to be included in the POAs Modifications section. It also includes a standard provision allowing up to $5,000 in gifts per year, with the option to specify other amounts in the document itself, specifically in the Modifications section. This significantly simplifies the process.
The new law also makes POAs easier to use. The law ensures that third parties like banks cannot reject a properly executed POA without good cause, and the statute provides a specific timeframe for them to do so. If they unreasonably refuse to recognize the agent’s authority, they may be held responsible for damages and reasonable attorney fees and costs by a court.
The law also protects those who rely on POAs. The safe harbor provision shields third parties from liability if they act in good faith, even if the POA turns out to be invalid. However, for this protection to apply, the POA must appear to be executed correctly, and the recipient must not have actual knowledge of forgery, voidness, or misuse of authority. This provision does not protect parties involved in fraudulent activities.
These legal changes in the New York POA make it easier for agents, principals, and estate planning attorneys to work within the system. A well-prepared POA, along with other advanced directives, can provide valuable protection when needed. Don’t wait until a crisis; start planning today for a more secure tomorrow.