Ronald Fatoullah & Associates - Elder Law

New Revisions to the Power of Attorney Law


A new Statutory Short Form Power of Attorney form became effective on September 1, 2009. At that time, many estate planning and elder law practitioners found much to criticize about the new law. Many complained that it was too complicated, while others maintained that the form still did not provide adequate protection for the unwary power giver (the "principal"). The NY State Bar Association Power of Attorney Working Group submitted recommendations to the legislature, many of which were incorporated into a technical corrections bill signed by the Governor on August 13, 2010.

Effective September 12, 2010, and retroactive to September 1, 2009, New York's General Obligations Law was amended ("the Amendments") to make technical corrections, clarifying certain provisions and amending others.

One of the first noteworthy changes made by the Amendments is that henceforth a power of attorney will no longer automatically revoke prior powers of attorney. The 2009 law provided for automatic revocation of prior powers of attorney executed by the same principal. This provision was problematic because many people signed powers of attorney for specific purposes prior to executing a statutory power of attorney form. For example, an individual who has a specific bank account in a certain location might have executed a bank power of attorney form appointing a nearby relative to deal with that particular bank while granting statutory power of attorney to someone else. Executing the 2009 power of attorney would have automatically revoked that earlier bank power, which was probably not the intent of the principal. Because the new Amendments are retroactive, prior powers of attorney that did not specifically address revocation are not deemed to revoke previously executed powers.

The Amendments also clarify that there are certain transactions to which the new power of attorney law does not apply. These exclusions generally pertain to certain commercial and governmental transactions. For example, powers of attorney given to secure stock transfers, powers given to asset management institutions and powers given to a real estate brokers in order to take action with respect to a real estate listings or leases are some examples of powers to which the Amendments do not apply. This addressed concerns by commercial entities about the need for most business transactions to comply with the New York requirements.

The list of powers deemed to be exempt from the Amendments does not include real estate transactions. Accordingly, title companies will have to require the new format when accepting any powers of attorney executed after September 1, 2009. Further, the Statutory Major Gifts Rider has been renamed as the "Statutory Gifts Rider" and must accompany any power of attorney used in a gift transaction. In the context of the transfer of real estate, if the title company feels that the property is being sold for less than the full fair market value, a Statutory Gift Rider will be required. In its absence the title company will have to engage in due diligence to ensure that the principal has approved the transaction.

It is important to note that the statutory form of the power of attorney alone will not be sufficient for individuals requiring estate planning or for the planning needs of seniors and the disabled. For these individuals, it is essential that the power of attorney as well as the Statutory Gifts Rider be substantially modified to give the agent the ability to undertake any and all possible planning needs that may arise. Modifications may include unlimited gifting, the power to have the agents to gift to themselves, the right to disclaim assets, the right to create, modify & revoke trusts, etc. Powers of attorney and the Statutory Gift Rider should be modified in order to meet the specific needs of the principal.

While there are some improvements to the 2009 statute, there is also a provision requiring the New York State Law Revision Commission to study the new law and its implementation and report back to the legislature and the Governor on its findings.

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