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Published in Long Island Business News by Julianne Mosher
Back in December, Gov. Andrew Cuomo signed new legislation, making significant changes to the power of attorney statute.
The changes revised, and essentially simplified, the old form and replaced it with one that is easier to understand. But the changes also offer an opportunity for people to reassess their power of attorney documents.
Mary O’Reilly, a partner at Meltzer, Lippe, Goldstein & Breitstone, LLP, said a power of attorney is a typical document which authorizes someone to act for individuals with respect to legal and financial matters. She noted there was consensus in the legal community that a new, uniform document was needed.
“This newest power of attorney, the way that it improved is that if the (paperwork) is substantially the same as what’s in the statute, the banks will not get in trouble,” she said. “Whereas before, if it had a typo, or if it had something bold that wasn’t supposed to be bold, the banks would get too nervous and not want to rely on that.”
O’Reilly said the new provision now gives banks a safe harbor, saying as long as it’s substantially correct, it can be accepted.
“That’s really helpful for a power of attorney that might have some typos or things that are slightly off the formatting from the form,” she said. “It’s not going to cause the agent to not be able to use it right away.”
But the most notable change is the removal of the separate statutory gifts’ rider, which was a significant source of confusion, O’Reilly added.
“The power of attorney became the most complicated estate planning document to get in New York State, harder than a will,” she said. “So now you no longer have a separate gift rider, and any gifting that you want your power of attorney to have, you would simply put it in the modification section of the power of attorney.”
She added it no longer will need extra witnessing (previously two witnesses were required) and a notary. Now, it will just need a notary to properly execute a full power of attorney.
Marcus O’Toole-Gelo, a senior associate with Cona Elder Law, said the last update to the process was back in 2010.
“The attorneys have been trying in the estate planning and elder law area to make some improvements in the form over the past several years — especially in making it harder for banks to refuse or to require their own specific form.”
He said the changes loosen some of the technical requirements and will exempt third parties, like banks, as power of attorney.
“It’s making it more difficult for them to just arbitrarily refuse it,” he said. “It imposes some requirements on those third parties to be a little more reasonable about whether they’re accepting powers of attorney or not.”
O’Toole-Gelo added “the new law makes it so that they have to give you a reason why they’re rejecting something within 10 days of you submitting it, and there’s now increased damages. If they unreasonably refuse it…they might have to pay your attorney’s fees. So, I think the end result is going to be that banks are going to be much more forgiving. It’s better for consumers, for people, and for families.”
He said that the whole process is normally stressful, but the new legislation will make it a bit easier on loved ones.
While the legislation was initially proposed in 2019, O’Toole-Gelo said it is even more beneficial now due to the COVID-19 crisis.
“It’s more helpful because we’ve had clients who had difficulty using the power of attorney during the pandemic,” he said. With elderly clients who could not go to a financial institution like a bank or brokerage, this will alleviate some of that stress.
O’Reilly agreed, noting that her firm saw an increase early on in the pandemic of people young and old opting to get their affairs in order, just in case.
“During coronavirus, for the very first time, I did a bunch of these powers of attorneys for college students,” she said. “For the first time in my entire 18 years of practicing, I had all these college kids that parents wanted them to get a power of attorney or a healthcare proxy.”
Since it was approved in December, the new law will go into effect June 13. Both attorneys said this is the time to get it together.
“This certainly shows the importance of having these documents and making them easy to use,” O’Toole-Gelo said. “It’s a good opportunity to take a look. If you already have a power of attorney, it should be updated to the new form, or maybe you have changes…. But for those who don’t have a power of attorney, it really emphasizes the need for it, regardless of your age, or financial institution, to have that in place.”
O’Reilly said to take the time to research and ask plenty of questions.
“I would consult somebody who’s an expert in the area,” she said. “I think there’s a lot of misinformation out there. Speak to an expert to get recommendations. Other attorneys are great sources of recommendations and financial advisors, accountants, they know which attorneys know what they’re doing, and which attorneys don’t know what they’re doing.”
O’Toole added that the pandemic has made people realize that life is too short to not be prepared, and the new legislation can make it a little bit easier.
“Life can happen to anyone,” he said. “It’s better to be prepared, to be able to have a document that names who you want to make these decisions for you, rather than leaving it up to a court or someone else to decide… Accidents can happen, pandemics can happen, illnesses can happen regardless of your age. So, it’s better to have the plan in place that you want.”
Cona Elder Law is a full service law firm based in Melville, LI. Our firm concentrates in the areas of elder law, estate planning, estate administration and litigation, special needs planning and health care facility representation. We are proud to have been recognized for our innovative strategies, creative techniques and unparalleled negotiating skills unendingly driven toward our paramount objective - satisfying the needs of our clients.
Effective June 13, 2021, the Power of Attorney you sign must be this new legal document
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