Your faithful lawblogger has recently prepared and given a podcast on  the new statutory Power of Attorney in effect here since September 1. It led me to further thoughts over just what some of the implications of this new power may pose for lawyers and clients alike. Three months after the effective date, it is clear that most of the profession has barely yawned but make no mistake about it, even though it is still evidently under the radar, a quiet revolution in an important segment of the practice of law has taken place.

 

In true legislative fashion, we have a form of ten or so pages labeled as "POWER OF ATTORNEY  NEW YORK STATUTORY SHORT FORM" ! An important feature of the form is that where any transfer of the principal’s property in excess of five hundred dollars is involved a "major gifts rider" must be executed as part of the power. That would not only apply to the gifts which an agent is now entitled to make from the assets of the principal but also most banking transactions and probably all real estate and insurance transactions made for the benefit of the principal by his or her agent.

The new law specifically requires that both the principal and the agent sign the form and that there should be two witnesses signing in addition. The law requires that the power be executed and witnessed ":with the same formality as a will".

In the words of Shakespeare "Aye, there’s the rub!" No more can an attorney responding   to the client who discovers he or she is leaving town tomorrow and wants to execute a power of attorney appointing a spouse, adult child, or the lawyer to act in his or her place simply say that the office staff will prepare a power and the client can drop by at a convenient time, sign the power before one of the notaries in the office and leave (this was always a service I could cheerfully provide without charge). Now a formal appointment is needed where both the agent and the principal are present . How about when the trusted adult child who is to act under the power is in another city and cannot be present? No real direction from the law there so we must assume all parties must be present.

We are also going to be under the requirement of conducting a formal ceremony about identical to the rite of execution of a will. Issues of "due execution" will certainly arise and will be complicated by the fact that a much higher level of competence is going to be required to have been shown for the execution of such a broad and sweeping power than a will which requires minimal cranial candlepower to establish testamentary capacity.

What happens when a client scheduled to handle an important real estate deal calls his trusted lawyer and asks his counselor to close on powers because of an emergency business trip to a distant city? Let us say that the power is executed and the transaction takes place as scheduled with the attorney filling in for the client. Now let fate throw us a zinger when the client simply doesn’t wake up in his hotel room the next day and there are those folks back at home who would like to set aside the transaction. Better believe that the ceremony surrounding the execution of the power is going to be the subject of extensive legal scrutiny from some well-paid lawyers on the other side!

The bottom line here is that a whole new routine of dealing with the execution of powers of attorney needs to be put in place . It would also be a good idea simply to study the statutory form and to read the law which is Section 644 of New York’s General Obligations Law. Then take at least one good CLE course. The New York State Bar has an excellent two hour webcast which I believe can still be obtained and many local bar associations have run programs. Follow the same procedures you would have in place for the execution of a will but be sure to include some time to make sure that both the agent and principal understand their roles, responsibilities and exposure. Finally, this is no longer a courtesy you can give away. It is no legal "loss leader" and both lawyer and client will have to understand that there is considerable time that a lawyer will be investing in the preparation and execution of a power of attorney and a reasonable charge for this would be appropriate and should be expected.