A new, more simplified, power of attorney law is coming to New York effective June 13, 2021. The new New York power of attorney law reforms the statutory short form and other powers of attorney for purposes of financial and estate planning. The new law simplifies not only the power of attorney document itself, but also the process of executing a power of attorney. Assembly Bill A5630A was signed on December 15, 2020, and goes into effect on June 13, 2021.
The Highlights of New York’s 2021 Power of Attorney Law
There are several highlights of New York’s new 2021 power of attorney law. The main point is that the overly complex and sometimes counter-productive law in place until June 13, 2021 will be updated with a law that is easier to comply with and still protects the principal. You can read the law effective until June 13, 2021 here.
Here are five other highlights of New York’s 2021 power of attorney law:
- Substantial Conformance. The new power of attorney law requires that the power of attorney only has to “substantially conform” with the statutory form. This is an improvement, since under the prior law the slightest deviation could invalidate the entire power of attorney. Under the new law, a presumption exists that the power of attorney is valid.
- No Statutory Gifts Rider. Under the new New York power of attorney statute there is no requirement for the principal to execute a separate gifts rider, which is required under the prior law. Under the new law, all of the powers that the agent is granted under the power of attorney will be in the document itself. Also under the new law, aggregate gifts can be made of $5,000 each year, instead of $500. The $5,000 maximum can be increased in a modification section on the power of attorney form.
- Signature of Principal. The new power of attorney statute also allows the principal to direct another person to sign the power of attorney in the principal’s presence if the principal is physically unable to sign the document. This allowance is similar to the law permitting a testator who is creating a will in New York to direct another person to sign the will for the testator. In addition, the document must be executed in the presence of two witnesses and a notary. The witnesses must be disinterested, meaning they cannot be the principal’s agents or successor agents.
- No Unreasonable Rejection. Under the new statute, an institution is not permitted to unreasonably reject a power of attorney. A third party that is presented with the power of attorney must either honor or reject the form within ten business days of being presented with the form. If the third party unreasonably rejects the form, they are subject to sanctions issued by the court with jurisdiction, including damages, attorney’s fees, and costs to the principal.
- Records. Under New York’s new power of attorney law, the agent is required to maintain records and receipts of the transactions made on behalf of the principal. This is one way that the agent is held accountable to the principal.
If you created a New York power of attorney under the prior law, it is not invalidated under the new 2021 law, as long as the documents were executed in conformance with the prior law. If are considering updating your New York Power of attorney in light of the 2021 update, contact a New York probate lawyer.