New Yorkers who want to establish a power of attorney, a popular estate planning tool, soon will be able to more easily. On June 13, a new law goes into effect, simplifying and improving New York’s power of attorney form. Most elder law advocates feel that having a power of attorney document in place is an essential part of estate planning.
A power of attorney form allows individuals to designate someone else to manage their financial affairs and property if they are unable to. If an elderly person becomes incapacitated and has a power of attorney in place, their family can avoid the expensive guardianship process (in which a judge appoints a guardian is to handle someone’s affairs). During the coronavirus pandemic, the importance of having a power of attorney became very clear – especially for those who had family members who became seriously ill.
Some of the changes the new law puts in place include the following:
1. Now, power of attorney forms can have substantial conformance with New York’s statutory form. This means even if the language isn’t identical in a power of attorney form with the state’s statutory form, as long as it substantially conforms to the state standard it will be considered valid. Previously, New York financial institutions could reject a power of attorney form for simple mistakes or if they didn’t meet exact internal standards.
2. The statutory gifts rider now is a part of New York’s standard power of attorney form. It isn’t a separate document. With the statutory gifts rider in place, someone serving as a power of attorney can give gifts up to $5,000, which can be increased if necessary.
3. The person seeking a power of attorney (the principal) can direct a third party to sign the power of attorney on their behalf, as long as the principal has the capacity to understand the implications of this. This allows someone who is disabled or sick to complete a power of attorney.
4. Third parties can’t unreasonably reject a power of attorney form. They need to accept power of attorney forms in good faith. If a third party rejects a power of attorney form for unreasonable reasons, the court may award damages.
If you already have a power of attorney in place, New York’s new law won’t negate that document. Yet, it never is a bad idea to review your power of attorney and other estate planning documents every five years. As you get older, you may need to change who will serve as your power of attorney or estate executor. You may decide to change your health care directive. With an attorney’s help, you can ensure all your estate planning documents are up to date and reflect your current wishes.