New York State has taken an important step to aid residents in handling their affairs.
Governor Andrew Cuomo signed Senate Bill No. S3923A last week, which modifies the requirements for an individual to execute a Power of Attorney. The new legislation is intended to minimize the chance a Power of Attorney will be rejected and to provide a path to claim damages if a Power of Attorney is unreasonably rejected.
The issues addressed in the new legislation have been ongoing, but magnified under the COVID-19 pandemic. More and more people are understandably concerned about how their affairs will be handled in the event of sickness.
A Power of Attorney ("POA") is a legal document that can, among other things, appoint an agent to act on your behalf to handle your finances, pay bills, and in some cases, even appear in court on your behalf. A POA grants your agent the authority to handle your affairs without the need of an expensive, time-consuming Article 81 Court proceeding.
The current Power of Attorney form is complex with the potential for minor mistakes resulting in an invalid document. The current law requires the legal language in a POA to be so precise, many POA’s are rejected by banks and other financial institutions.
Important changes to the new Power of Attorney Law, which takes effect in June, include:
- An easing of the requirement that the Power of Attorney must use the exact words, format and use of type of the New York State Statute to be valid. Beginning in June, a POA that substantially conforms to the wording of the statute will be a valid POA. This change should decrease rejection of a POA's with minor word differences from the statute
- An individual will be able to direct someone to sign the POA on their behalf. This is a major improvement for individuals who are competent but physically unable to sign their name.
- The new legislation provides that if a valid POA is rejected without reasonable cause, an individual can begin a process against the institution that rejected the POA for damages. For years, banks could reject a proper NY POA, claiming the POA was not “their form” without fear of being sued for damages. The same institutions that rejected an individual’s POA appointing an agent to pay bills, could then sue the individual for non-payment of credit cards or mortgage debt.
- The Statutory Gifts Rider will be eliminated. The Gift Rider was a separate document with different signing requirements than the POA. The Gift Rider caused confusion, and many were improperly signed. An agent can still be given the power to make gifts under the new statute.
The bottom line is this: the passage of this legislation means more people can sign a Power of Attorney, the rejection of valid POA’s should decrease, and the enforcement of individual choices and rights improves. That’s a win for every New Yorker.
Click here to see the complete bill that Gov. Cuomo signed into law.
The Trust and Estate planning team at Gross Shuman PC has decades of experience assisting in the proper planning and execution of trust and estate documents. John F. Leone and his team are just a phone call away. Don’t leave your lifetime of work at risk. Call us today.