New Amendment Simplifies New York’s Power of Attorney Form

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The Power of Attorney (POA) form allows an individual (the person granting the POA is known as the “principal”) to grant another person (the person receiving the power is known as the “agent”) the authority to perform certain duties and/or responsibilities on behalf of the principal. For instance, Spouse A can grant the POA to Spouse B, which would give Spouse B the authority to act on behalf of Spouse A (the principal). 

A new amendment to New York’s General Obligations Law §15-501 et. seq., which became effective as of June 13, 2021, is intended to simplify the process of drafting, and using, a power of attorney, while clarifying the powers and obligations of an agent. 

The amendment contains provisions designed to make the agent’s responsibilities less burdensome. For example, an agent is now considered a personal representative for the purpose of financial matters related to health care. As a result, health care providers and health plans are required to provide the agent with information needed to determine the legitimacy and/or accuracy of charges for health-related expenses and benefits. It is important to note, however, that while the new POA law entitles an agent to information related the principal’s health, it does not provide the agent with the authority to make health care decisions on behalf of the Principal. The authority to make health care decisions still requires the principal to execute a health care proxy. 

In addition to simplifying the preparation of the POA form, the amendment also creates a presumption in favor of the validity of a POA form. While the old statute required that the “exact language” of the statute be incorporated into the form, the amendment lowers the threshold to “substantially conform.” By eliminating the burdensome exact wording requirement, fewer POAs should be rejected. However, to create this presumption of validity, the new POA law requires that the principal’s signature be acknowledged before a notary public and two disinterested witnesses.

The amendment also attempts to get past a problem that frequently occurred with the old POA form: the refusal by banks and other financial institutions to honor a POA that complied with the law, but was not on the bank’s own form, or which the bank worried would expose the bank to liability for the agent’s actions. The new amendment provides guidance for acceptance or rejection of the POA, and specific steps involved. 

As of June 13, 2021, these new provisions will also apply to any earlier POA signed in accordance with the laws in effect when executed. Thus, POAs that were valid under the former law are still valid. Still, we believe that, if possible, a new POA form should be used going forward, as it represents the current standard, and will minimize the opportunity for a third party to decline to accept the POA. 

Please contact us with any questions about the new Power of Attorney form, or any of your estate planning needs.

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