Suggestions for Lawyers
When drafting a statutory POA under the new law, drafters need to include any modifications that would be helpful for the client’s goals. Here are a few of the most common modifications:
- Immediate Authority or Authority in the Future? – One of the most common modifications to a POA is to require some event to happen before the agent’s authority begins. This could be a certain date, a certain event, or most commonly, the incapacity of the principal. The trigger mechanism can be any procedure the client and drafter want to use.
- Durability – The default rule is that a POA continues to be valid after the incapacity of the Principal. If the principal wants the agent’s authority to end if the principal becomes incapacitated, this should be included in the modification’s sections.
- Compensation – A statutory POA with no modification no longer provides compensation for agents. This means “reasonable compensation” must be defined in the modifications section, and the POA must also state that the principal wishes the agent to be compensated for his or her actions as agent. Compensation could be defined through reference to New York executor’s commissions, New York Trustee Commissions, an hourly or flat rate, or any other system the principal wants to use.
- Revocation of previous POAs – When executing a new POA, most principals want to revoke previous POA’s they signed. This must be included in the modifications section. See the below section regarding revocation which goes into detail on the mechanics of revoking an agent’s authority.
Using the Power of Attorney for Estate and Incapacity Planning
Under the new law, a statutory POA with no modifications will not be useful for estate and incapacity planning. Previously, the Statutory Gifts Rider provided some limited gifting options without modification of the document. Now, all gifting abilities must be granted within the modification section of the document. The following is a list of some of the modifications that should be added if the POA is to be used as a general estate planning and incapacity planning tool:
- Addition or removal of a joint account owner from the principal’s bank accounts
- Addition or removal of Totten Trust beneficiary designations, also known as payable on death accounts
- Modification of beneficiary designations on brokerage accounts and other financial accounts
- Gifting – To provide flexibility, the gifting provisions should be broadly worded. They might include:
- Transfer of Property, real, tangible, and intangible, for income and transfer tax planning, Medicaid planning, or other planning that qualifies the principal for any other government benefit
- Creation and funding of trusts
- Gifts in any amount from the agent to him or herself individually
- Gifts in any amount to family members
- Whether all transfers must be in the best interest of the principal – Is it in the best interests of the principal to qualify for Medicaid if his or her assets could be used for placement in a private pay facility instead? Make sure to define the goals of any gifting program if the principal does not want the agent to be unrestricted when making gifts.
- Anything else the drafter can think of that would be relevant. The more specific the wording, the more likely it is that an action will be allowed without further investigation
Revocation of the Power of Attorney (NY GOL § 5-1511)
What if somebody comes to you and wants to revoke a POA they signed previously?
A principal may revoke his or her POA by delivering written notice of the revocation to the agent. This notice must be signed and dated to be effective if (1) delivered by a third person, (2) mailed, (3) emailed, or (4) faxed. Absent Article 81 Guardianship, a properly executed revocation is effective even if the principal is incompetent.
If the Power of Attorney has been recorded with the county clerk, the revocation must also be recorded.
Third parties may continue to accept a revoked power of attorney without liability until the principal notifies that third party. This means that if the agent has been working with financial institutions, the principal must make sure to notify each institution in writing that the former agent’s authority is now revoked. Further, the principal must make sure to get back the original POA from the agent to stop further use without the principal’s consent.
|Revoking the Power of Attorney||YES||NO|
|Did the principal deliver the revocation to the agent?|
|If delivered by any manner other than the principal handing it to the agent, is the revocation signed and dated? (Third Party hand delivered, mailed, faxed, or emailed)|
|Has the principal notified third parties he or she knows were dealing with the agent under the power of attorney of the revocation?|
|Has the principal taken back the signed original power of attorney document?|
|If the original Power of Attorney was recorded, was the revocation also recorded with the same County Clerk?|