We are proud of our colleagues and friends in the New York State Bar Association who worked tirelessly – for five years – to negotiate changes to the Power of Attorney (POA) statute. The changes were signed into law in December 2020, and any POA executed on or after June 13, 2021, is enforceable under the new law.
Common Sense Wins Over Minor Errors
The old New York State POA law required that every POA use exactly the same wording as the statute. A misplaced comma or one misspelled word and the document could be rejected. A POA form executed on or after June 13, 2021, must be accepted as long as it substantially conforms to Section 5-1513 of the General Obligations Law.
Mentally Competent Adults May Authorize Another Person to Sign on their Behalf
For people who are physically challenged but have mental capacity, a third party may now sign for the person at the person’s direction. This is an especially important change for people who are physically unable to manage a pen but are mentally competent.
The Statutory Gifts Rider Is Eliminated
In the past, a person’s representative was limited to gifts of $500 a year. Anything over that amount had to be documented with a Statutory Gifts Rider, an unwieldy process that caused a great deal of confusion and costs. There is no longer a need for a Statutory Gifts Rider. The gifting provision may be included in the modifications section of the Power of Attorney form.
Statutory Gifting Ceiling Is Lifted
The basic statutory gifting amount has increased from $500 to $5,000. Any gifts in excess of $5,000 must be expressly authorized by the principal in the Modifications section of the form.
Witness Requirements Clarified
The Power of Attorney must be acknowledged and witnessed by two people who are not named in the instrument as agents or as recipients of gifts. The person who takes the acknowledgement can serve as one of the witnesses. By simplifying the requirements for witnesses, it will be easier for POAs to be executed.
Penalties for Unreasonably Refusing a POA
Banks and financial institutions are notorious for refusing to accept POAs, often blaming the refusal on an internal policy of only accepting the institution’s own POA forms. This caused enormous problems for families, including increased costs, delays, and stress when a properly prepared POA was rejected for no good reason.
Now, these institutions must accept the POA as long as it meets the rules set forth in the statute. An institution has ten (10) days to accept or reject the POA. If it’s rejected, the financial institution is required to explain its decision, in writing. To encourage compliance, a company can be sued for damages and attorney fees if the POA is unreasonably refused.
If you have a POA but it has not been updated in two to four years, we suggest a review. Relationships change and life events like birth, death, divorce, marriage, and other trigger events are always an important time to review your estate planning documents. Call our office at 516-307-1236 to learn more.