Powers of Attorney
- What is a power of attorney?
- What is in the New York statutory power of attorney?
- Can I make any changes to the statutory form of power of attorney?
- Who should I choose as my Agent?
- What are the obligations of the Agent under a Power of Attorney?
- Who can create a power of attorney?
- Who may act as an agent under a power of attorney?
- What is the difference between a general and a limited power of attorney?
- How does an agent use a power of attorney?
- What are the formalities of signing a power of attorney?
- When does a power of attorney become effective?
- What is a “durable” power of attorney?
- Should I have a general power of attorney?
- What is the main reason for having a general power of attorney?
- Should I have a power of attorney for health care?
- How does a power of attorney terminate?
- Under a power of attorney, can my agent make a gift on my behalf?
- Must third parties honor a power of attorney?
- Are there disadvantages of a power of attorney?
A power of attorney is a document authorizing someone else (your agent) to act on your behalf (the principal). The purpose of giving someone such a power in connection with your estate planning is to enable the agent to act on your behalf when you cannot act for yourself.
Powers granted under a New York Statutory Power of Attorney
In September, 2009, New York State adopted a new statutory durable power of attorney form, with many changes from the previous statutory form. If you are considering executing a Power of Attorney (everyone over age 18 should have one), then be sure you understand the powers you are granting. The following are the basic powers that can be granted, with the meaning of each of these set forth in the statute itself:
“I grant authority to my agents with respect to the following subjects as defined in sections 5-1502A through 5-1502N of the New York General Obligations Law:
- (_) (A) real estate transactions;
- (_) (B) chattel and goods transactions;
- (_) (C) bond, share, and commodity transactions;
- (_) (D) banking transactions;
- (_) (E) business operating transactions;
- (_) (F) insurance transactions;
- (_) (G) estate transactions;
- (_) (H) claims and litigation;
- (_) (I) personal and family maintenance (if you grant your agent this authority, it will allow the agent to make gifts that you customarily have made to individuals, including the agent, and charitable organizations — the total amount of all such gifts in any one calendar year cannot exceed five hundred dollars);
- (_) (J) benefits from governmental programs or civil or military service;
- (_) (K) health care billing and payment matters; records, reports, and statements;
- (_) (L) retirement benefit transactions;
- (_) (M) tax matters;
- (_) (N) all other matters;
- (_) (O) full and unqualified authority to my agents to delegate any or all of the foregoing powers to any person or persons whom my agents select;
- (_) (P) EACH of the matters identified by the following letters: ___________”
Yes, you can modify the statutory form by granting additional powers that may enable your agent to assist you in ways that are not specifically set forth in the statute, and that might not be enabled by the express language of the statute. However, you should not attempt to revise the basic statutory form without consulting with an attorney.
You should always be as sure as possible that the person you are asking to be your agent is truly a trustworthy and responsible person, because it really is a big commitment to you, and you will be depending on this person. The person most appropriate for you is not necessarily your spouse, child, cousin or other relative. You should consider the age and capacity of the person you will appoint, and you should appoint a successor agent just in case. If, for example, you appoint your spouse and you are both older, then be sure that you appoint a successor agent just in case neither of you is as capable to help the other as time passes.
Since September 2009, the statutory Power of Attorney form in New York State has required the Agent to execute acceptance of the Power of Attorney given by the Principal (the person appointing and authorizing the Agent). The form requires the Agent to specifically acknowledge the following:
“When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must:
- act according to any instructions from the principal, or, where there are no instructions, in the principal’s best interest;
- avoid conflicts that would impair your ability to act in the principal’s best interest;
- keep the principal’s property separate and distinct from any assets you own or control, unless otherwise permitted by law;
- keep a record or all receipts, payments, and transactions conducted for the principal; and
- disclose your identity as an agent whenever you act for the principal by writing or printing the principal’s name and signing your own name as “agent” in either of the following manners: (Principal’s Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal’s Name).
You may not use the principal’s assets to benefit yourself or anyone else or make gifts to yourself or anyone else unless the principal has specifically granted you that authority in this document, which is either a Statutory Gifts Rider attached to a Statutory Short Form Power of Attorney or a Non-Statutory Power of Attorney. If you have that authority, you must act according to any instructions of the principal or, where there are no such instructions, in the principal’s best interest. You may resign by giving written notice to the principal and to any co-agent, successor agent, monitor if one has been named in this document, or the principal’s guardian if one has been appointed. If there is anything about this document or your responsibilities that you do not understand, you should seek legal advice.
Liability of agent:
The meaning of the authority given to you is defined in New York’s General Obligations Law, Article 5, Title 15. If it is found that you have violated the law or acted outside the authority granted to you in the Power of Attorney, you may be liable under the law for your violation.”
Generally, any individual can create a power of attorney if over 18 years of age, a resident of the state in which it is created, and legally competent.
In general, an agent may be anyone who is legally competent and over the age of 18. Usually, it is a family member such as a spouse or a child. More than one person can be named as an agent. However, sometimes naming two or more individuals to act together can prove inconvenient, particularly if a power of attorney must be exercised promptly. A better course is to name one individual as agent and then another as an alternate
A general power of attorney authorizes your agent to do almost everything on your behalf which you could do for yourself. A limited or special power of attorney authorizes your agent to perform only certain acts specifically listed in the document
Your agent presents the power to the other party involved in the transaction and signs any necessary documents needed for such transactions on your behalf. Your agent signs “Your Name, by His or Her Own Name, Attorney-in-Fact for Your Name.”
Requirements vary from state to state, but in New York State signing the power in the presence of a notary is necessary.
This depends upon what the power says. It can be made effective at the time of signing or it can become effective at the time of your incapacity.
All powers of attorney done in connection with estate planning are “durable.” A durable power of attorney is simply a power of attorney that remains effective even if you become incapacitated. Generally, unless the power of attorney document specifically indicates it is durable, it is not durable and will terminate upon your incapacity. A non-durable power of attorney would, of course, be useless in connection with estate planning or disability planning
Yes. Everyone doing estate planning should execute a durable general power of attorney for financial, property, and legal affairs. This document is also often used in conjunction with a revocable living trust to enable your agent to transfer your assets into your trust in the event you become disabled. A general power of attorney can be made effective immediately upon being signed or can become effective at the time of your incapacity, which is also called a “springing” power of attorney.
A general power of attorney is a much better way to deal with incapacity than a guardianship or conservatorship. If you become disabled, A general power of attorney authorizes your agent to act on your behalf and sign your name to financial and/or legal documents. Having a general power of attorney will generally avoid the need to go through the time consuming, expensive, and publicly embarrassing process whereby someone has to go to court to have you declared mentally or physically incompetent and then seek appointment to serve as your legal guardian and/or conservator subject to ongoing court supervision
Yes, it is equally important to have a health care power of attorney, to make decisions with respect to your medical care in the event that you are physically or mentally unable to do so, as certified by two physicians. This document includes the type of provisions that used to be in what was commonly called a “Living Will,” allowing you to indicate your wishes concerning the use of artificial or extraordinary measures to prolong your life artificially in the event of a terminal illness or injury. You will also use this document to indicate your wishes with regard to organ donation, disposition of bodily remains, and funeral arrangements.
Death revokes a power of attorney. You may also cancel your power of attorney by signing a revocation. The best way to revoke a power of attorney is to destroy all copies. If the power is a non-durable power of attorney it will terminate upon your incapacity, while a durable power of attorney survives your incapacity.
Yes, but your power of attorney must specifically authorize your agent to make gifts from your assets to persons whom you would likely make gifts. This is one area in which a power of attorney prepared by an elder law attorney may be drastically different from a power of attorney prepared by an attorney who only does estate planning.
The power of attorney prepared by an experienced elder law attorney will contain special provisions to permit special planning, such as Medicaid planning, on your behalf. These special powers for the agent may include the creation of trusts as well as gifts that would transfer your assets in a manner consistent with your best interests and your estate planning objectives. If, for example, you needed nursing home care, your agent could undertake to protect some of your assets from having to pay for that care, and at the same time enable you to qualify for that care.
There is no way to force a third party to accept a power of attorney without going to court, although in New York State financial institutions are required to do so as long as the power of attorney appears to have been properly executed.
Many banks will require you to complete their own forms to authorize your agent to write checks on your account, so it is advisable to inquire as to whether your banking institution requires such forms that can be completed in conjunction with executing a power of attorney.
Although a general power of attorney may authorize the agent to handle tax matters, [the IRS generally may not honor any power of attorney that does not specify the tax matter and the tax year at issue]
Third parties may not recognize your power of attorney, although in New York State financial institutions are required to do so as long as the power of attorney appears to have been properly executed.
It can be difficult to revoke a power of attorney, especially if your agent has given copies to third parties that have honored it.
The agent can reach your assets without court approval or supervision. Therefore, it is imperative that you select an agent with great care and have tremendous confidence in that individual.