Significant updates to the power of attorney (POA) law in New York were implemented on June 13, 2021. Existing POAs and statutory gift riders will not be affected, provided that they were executed under the provisions prior to the changes.
The purpose of the revisions involved improvements while addressing and resolving various problems that existed with earlier POA’s. The more prominent alterations include:
- Substantial conformity standards
- Elimination of separate SGRs
- Penalties for unreasonably denying valid POAs
- Providing “safe harbors” for third parties acting in good faith
- Expansion of the authority agents may possess regarding health care and estate planning, and increasing the principal’s capacity to authorize oversight of related finances
The former law provided for a separate Statutory Gift Rider which was optional and separate from the POA. Instead, the new law incorporates the authority to make gifts in the main POA and modifies the standard form to allow for principals to authorize agents to use assets as gifts and for long-term care or estate tax planning. These provisions can also authorize other gift transactions and changes to the principal’s property interests.
Safe Harbor for Third Parties Acting in Good Faith now incorporates the Uniform POA Law provisions and protects recipients acting in good faith when they accept the POA. It also includes liability protection should the recipient unreasonably refuse to accept the document as valid.
An additional benefit of the new POA forms is the acceptance of “substantial conformity” in the language. This allows enforcement by financial damages when financial institutions and third parties reject POAs unreasonably. There is a presumption that the document is legitimate and will enable courts to award financial damages.
We urge our clients to review their current Powers of Attorney to ensure that the documents adhere to their wishes or consider executing a new POA, and consider any other changes to your estate plans. If you have any questions, please do not hesitate to call.