Archive for the ‘Powers of Attorney’ Category

Practicioners who have dealt with the New Statutory Short Form Power of Attorney and accompanying Statutory Major Gifts Rider (SMGR) are well versed in the many issues and problems they come with.  However, there is hope on the horizon, as New York State Bar Association (NYSBA) President Michael E. Getnik has established a Working Group on the Power of Attorney Form to address these many issues.

The Working Group is in the process of drafting revisions to the POA Form which include:

  1. Elimination of the presumption of revocation
  2. Excluding most business, commercial and real estate transactions
  3. Elimination of the Statutory Major Gifts Rider (SMGR)

Currently, nine sections of the New York Bar have representatives on the Working Group and we are hopeful that the legislature will work with the Working Group to modify the POA Forms.

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The new Statutory Power of Attorney that became effective on September 1, 2009,  represent a significant change for attorneys and their clients.  The new form is substantially longer and more involved than the old form and there is now an additional Statutory Major Gifts Rider (SMGR) to be completed in the event the client wishes to grant their agent the authority to make such gifts.  However, several issues have arisen with the new forms and the length, complexity and required signatures have made execution of the new form lengthy and cumbersome.  The new law is set out in the General Obligations Law and the statutory form can be found in NY G.O.L. § 5-1513.

The Major changes effective September 1, 2009 are as follows:

1. The new form must be signed, dated and acknowledged by the agent, as well as the principal.  This is true for the primary or alternate agents.  The agent need not sign the POA on the same date as the principal, but the power does not become effective as to that agent until the date that they sign.

2. If two or more agents are designated to act together, the collective power does not become effective until all of the agents have signed.

3. Provisions have been added to specifically allow agents to deal with healthcare billing and payment matters, which should allow agents access to healthcare information in accordance with HIPPA.

4. Modifications:  A “Modifications” section has been added to allow the principal to add, subtract or change provisions as they wish.

5. The new form specifically outlines the fiduciary responsibilities (and liabilities) of the agent.  More specifically, the agent will now be held to the “prudent person” standard of care.

6. Major Gifts:  Major gifts are no longer a delineated power in section A – P.  Now, in order to give agents such authority, the principal must execute an additional “Statutory Major Gifts Rider” (SMGR).  The principal must initial that they wish to grant such authority within the statutory form, and then complete the accompanying rider.  The rider must be signed, acknowledged, and witnesses by two witnesses in the same manner as the execution of a will.  If the principal wishes to allow their agent to gift to themselves, additional information must be provided in the rider.  Note however that the agent may still gift to individuals and charities up to $500 per recipient per calendar year without the execution of the rider.  The SMGR adds additional paperwork and confusion to the will ceremony and, together with the POA form, takes substantial time to complete.  Attorneys need to budget their time accordingly when clients come in to do a traditional Will, POA and HC Proxy.

7. Designation of Monitor:  The principal can appoint a “Monitor” to hold agents accountable and request documentation of their transactions under the power.

8. Compensation of Agents: The new form creates an option for the principal to grant their agents the right to be reimbursed from their assets for the value of reasonable expenses incurred by the agents.  However, there is no definition of “reasonable expenses”.

9. The new form is Durable unless otherwise noted and revokes any and all previously executed Powers of Attorney, unless the principal chooses otherwise by indicating as such in the “Modifications” section.

The new form raises a number of issues, both legal and practical.  The form significantly increases the amount of time it takes for the attorney to review the document with the client and explain the various details.  It also significantly increases the amount of places the client must initial and sign the document.  Additionally, unlike the old form, often the power envisioned to be created by the client will not come to fruition in the attorney’s office the day they come in to execute the form.  It will not be until the requisite agent(s) have properly signed and had their signature acknowledged that the power will become effective.  This creates a real problem in situations where the intended agent is difficult to reach or far away. 

Additionally, under the “Grand of Authority” Section, the language of the “P” line requires that the client indicate which of the powers listed above in the A through O sections that they intend to grant.  Practice Tip – If the client intends to grant all of the above enumerated powers,  have your clients simply initial P and then write “A – O” on the line following the language “identified by the following letters:”. 

This article is not intended to be a comprehensive review of the new Statutory Power of Attorney forms.  It is merely intended to highlight some of the major changes and their implications for attorney’s practicing in this area.  Attorneys should be aware of the changes and how it will affect your clients.  It should be noted that there has already been a lot of push back within the legal community and it is anticipated that the legislature will make further changes to the statutory forms in the future, so stay tuned for updates.

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