At our law firm, we have come across a troubling trend. Some of our clients,
acting as agents under Powers of Attorney, have been turned away by banks
and other financial institutions simply because the Power of Attorney
document was executed prior to 2010, when the New York State Legislature
updated its recommended Power of Attorney form.
A useful tool in estate planning, a Power of Attorney (POA) is a legal
document, by which one person, known as the "Principal," authorizes
another person or persons, known as the "Agent" or "Agents,"
to act on the Principalâ€™s behalf, with respect to legal,
business or financial matters. Effective use of a Power of Attorney can
eliminate the need for expensive and time-consuming Guardianship proceedings.
It can make it more convenient to assist an aging or infirm family member
or friend, and assures that there will be someone with clear legal authority
in the event of an emergency.
New York State has a recommended form, known as the Statutory Short Form.
Use of the Statutory Short Form has a great many advantages:
- its terms are clearly defined by the statute
- it includes protections which make it easier for third parties to honor it
- it is generally recognized and respected by lawyers, title companies, Courts
and financial institutions.
The state legislature has made changes to the Statutory Short Form over
the past several years. The latest version of the form went into effect
on September 12, 2010. The greatest change was the introduction of the
Statutory Gifts Rider, which must accompany the POA. An agent no longer
has a presumed or implied power to make gifts on behalf of the Principal.
Without the Rider, the gifting power is now severely limited.
Although the state legislature has always provided that Powers of Attorney
executed prior to a change in the law remain valid, and although financial
institutions and other third parties doing business in New York State
cannot refuse to recognize the Statutory Short Form, some financial institutions
are rejecting POAs that do not adhere to the current (2010) form, especially
if the Agent is attempting to exercise gifting authority. Many financial
advisers or customer service representatives simply do not know the law
and they turn away the client without making further inquiry. The gifting
issue has become particularly problematic, since older Powers do not include
the Statutory Gifts Rider.
For this reason, we recommend that if you executed a Power of Attorney
prior to September 12, 2010, you contact us to update it. We can revise
your documents to meet all the latest requirements and eliminate the potential
for problems when the time comes for the Power to be used. While we are
at it, we can review other aspects of your estate plan, to be certain
your existing plan still meets your needs.
It pays to anticipate estate planning and asset management issues, and
to address them before they cause you or your family any unnecessary expense
or inconvenience. Please call us if you would like assistance with your
estate plan, or have any questions regarding your existing documents.
James F. Burdi, Esq., a Partner in the Business & Transactional Law
Practice Group, also works with the Trusts & Estates Practice Group
in estate planning and administration. He can be reached at JBurdi@vmmlegal.com
or at 516-437-4385, ext. 130.