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August 14, 2020

NYS Legislature Approves Changes to Power of Attorney Law

The NYS legislature recently approved changes to the state’s Power of Attorney (POA) Law. The bill, which passed both the NYS Senate and Assembly, awaits approval or veto by the governor. 

A summary of the changes is as follows:

Substantial Compliance With Statutory Short Form Language Permitted

The existing POA Law requires strict compliance with New York State’s prescribed POA form, known as the statutory short form. Under the amended law, a NYS POA will include any document that “substantially conforms” to the wording of the statutory short form. Supporters of the bill point out that the amended statute “eliminates the unduly burdensome exact wording requirement in favor of a more user-friendly standard.”

Separate Statutory Gifts Rider (SGR) No Longer Required to Authorize Gifting

Under the existing law, an agent can’t make gifts of a principal’s assets in excess of $500 in the aggregate each year unless a principal has signed (in the presence of a notary public and two disinterested witnesses) a statutory gifts rider (SGR). The new law would eliminate the requirement that a separate SGR be prepared, allowing instead for gifting to be expressly authorized by the principal within the POA itself. Additionally, absent express gifting authorization by the principal, the agent is allowed to make gifts up to $5,000 in the aggregate each year, up from $500.

Sanctions Permitted for Unreasonable Refusal to Accept a Valid POA

The new law would allow sanctions against third parties who unreasonably refuse to accept a properly executed POA, allowing a court to award damages, including reasonable attorney’s fees and costs. 

Safe Harbor Provisions Added for Good-Faith Reliance on POA

On the flip side of the sanctions provision, the new law adds safe harbor provisions for third parties in the event the third party accepts, in good faith, a POA that’s void, invalid, or terminated. The third party is also allowed to request and rely upon an agent’s certification of any factual matter concerning the principal and is also allowed to request an opinion of counsel regarding any matter of law concerning the POA.

Technical Corrections

The bill makes a few technical changes to the existing law, including, among others, allowing a person to sign at the direction of a principal who’s unable.

The New York State Bar Association applauded the legislature’s approval of the bill, stating the new law “provides long-overdue changes to the state’s overly complex short form.” 

For more information on the POA bill or to learn how a POA can be an effective part of your estate plan, please contact one of Barclay Damon’s trusts and estates attorneys. 

If you have any questions regarding the content of this alert, please contact Marcy Robinson Dembs, partner, at mdembs@barclaydamon.com; Rachelle Nuhfer, counsel, at rnuhfer@barclaydamon.com; or another member of the firm’s Trusts & Estates Practice Area.

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