New York State’s new form for a power of attorney which takes effect on September 1, 2009 marks a major change in the law. It may be found in Section 644 of New York’s General Obligations Law. As I reported earlier, the effective date of the law was postponed from this past February to give the bar a chance to become familiar with the new form and its pitfalls. The changes are so complex that a second law to amend the first and to correct some of its inconsistencies and shortcomings was needed. Unfortunately, those unruly children who comprise the august body some folks call the New York State Senate were so busy this summer having what can only be seen as a legislative food fight that virtually no meaningful work was done for weeks and this most important piece of legislation has not yet been signed into law. This can only add to the possibility that the new law will become an attorney’s relief act.
While any duly drawn and executed power in existence prior to the new law will remain in full force and effect, we will all have to get used to some sweeping changes . It is necessary to take particular notice of the new form which requires not only the signature of the giver of the power but also of the agent. Specific and extensive warnings to both the giver and the agent must be acknowledged and the major gifts portion of the document must be executed simultaneously with the basic power . The major gifts portion of the power requires two witnesses and must be executed in the same manner as a will. The clear intent of the law is that both the giver of the power and the agent are far more aware of the importance of the document . The exposure of the giver is clearly spelled out as are the responsibilities of the agent who may be entitled to compensation for his or her service.
All new powers of attorney are to be durable unless it is specifically noted in the instrument that they are not.
The law mandates that banks accept the power and further provides that attorneys may certify that a photocopy of a duly executed power is a true copy of the original.Banks are required to accept these certified copies. This will help to eliminate the problems which arise when a bank insists that only its own power of attorney be used — something that may be impossible where the depositor has become incompetent and can no longer issue a new power.
There is a wide range of open issues and questions that have arisen as a result of the new power of attorney. Litigation is a likelihood in order to have resolution of these items and the potential that some folks will suffer drastic unforeseen outcomes exists. It will be years before the first cases work their way through the courts and we have some definite answers and directions. The best way I can think of to avoid ending up in a casebook is to do a lot of reading, take a class or two, and stick slavishly to the forms without improvising (the exact language needed to create a valid power is mandated and there does not appear to be room for variations). Your faithful law blogger will try to come up with additional information and pointers in the near future.