On December 15, 2020, as a result of advocacy by the New York State Bar Association, Governor Andrew Cuomo signed a new law that changes New York State’s power of attorney short form. The document is called a “short” form, not because it is particularly short, but because it does not state every single power listed in the statute. That being said, additional powers can be added - and often are added - to the document by drafting attorneys in the Modifications section of the document. The law will take effect June 13, 2021.
A power of attorney enables an individual (“agent”) to step into the shoes of another individual (“principal”) to handle his or her financial affairs. Powers of attorney are used for transactions such as paying rent if the principal is in the hospital, paying bills, selling property, creating trusts or engaging in estate planning and Medicaid planning.
Without a valid power of attorney, if an individual becomes incapacitated, it is often necessary to petition the court to appoint a guardian for that person. As such, a power of attorney is one of the most important documents one can have and, to date, there has been a great deal of confusion regarding the document.
The confusion with the current form has often resulted in banks and financial institutions refusing to accept it as valid. In addition, people have found the current form to be too complicated and difficult to use. The major reason for this is the requirement of the current law that the exact language of the statute be incorporated into the document. This has caused many issues and rejections, created by even the most minor mistakes.
The new law is designed to address the problems caused by these insignificant mistakes. The new law allows the language of the power of attorney form to substantially, rather than exactly, conform to the statute. This should result in the document being more easily accepted.
Another major change is that the Statutory Gifts Rider (SGR) has been eliminated. Currently there is a lot of confusion because the SGR is a separate rider placed after the page where the agent signs, while having to be signed simultaneously with the power of attorney. The new law simplifies the document by allowing gifting provisions to be included in the Modifications section of the power of attorney, rather than in a separate document.
Another very positive change is that individuals who are physically unable to sign a power of attorney can now direct someone else to sign on their behalf as long as they can make it understood that they wish for another person to sign for them and they direct that individual to do so.
If banks or financial institutions unreasonably reject the power of attorney, there will be a process to having it accepted as valid. There is a list of specific reasons for which banks can reasonably deny a power of attorney. However, the law also imposes penalties and requires payment of attorney’s fees by financial institutions and banks that unreasonably refuse to accept a valid form.
It is safe to say that while the current law causes the presumption to be in favor of a document being considered invalid, the provisions of the new law create a presumption in favor of the form being deemed valid.
Ronald A. Fatoullah, Esq. is the founder of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Stacey Meshnick, Esq. is a senior attorney of the firm. The law firm can be reached at 718-261-1700, 516-466-4422, or toll free at 1-877-ELDER-LAW or 1-877-ESTATES. Mr. Fatoullah is also a partner with Brightside Advisors, a wealth management firm with offices in New York and Los Angeles.
This is not intended to be individual legal advice which can only be provided if you retain our firm. If you need legal advice please contact our offices to schedule a consultation at 1-877-ELDERLAW (1-877-353-3752).