|
|
New York State’s Power of Attorney
Gets a
New Look and Better Control
The Durable General Power of Attorney (known as the “POA”) is a vital tool for families
who are caring for an elderly or disabled relative, especially when cognitive impairment and
dementia is an issue. The Power of Attorney is a highly recommended tool which allows the
disabled individual to appoint a surrogate to make legal and financial decisions when then are
unable to do so themselves. The word “power” in the title of the document clearly indicates that
this is a legal tool to be taken very seriously. A Power of Attorney allows the appointed agent
to perform many legal and financial functions for the grantor, including such tasks as: banking,
insurance, real estate, taxes, business, stocks, bonds, safe deposit boxes, and retirement accounts.
The agent under a POA can handle and appoint a successor agent. This broad range of abilities
has led to abuse, putting the frailest and neediest at risk.
In order to reduce the incidence of fraud or misuse of the Power of Attorney, NY State
introduced a new Power of Attorney document effective September 1, 2009. The new law
provides new safeguards and options. Please note, anyone who has executed a Power of Attorney
using the prior NYS form does not have to be concerned that their existing Power of Attorney
will no longer be valid. All POA’s signed before September 1, 2009 will still be valid and
accepted. After September 1, 2009 the following new features must be included in the NYS
Power of Attorney in order to be accepted by financial institutions within the state. The changes
to be implemented are as outlined below:
-
A Power of Attorney may be executed by anyone over the age of 18 and will be
considered “durable” unless noted otherwise.
- In order for the POA to be valid, the grantor must sign the document before a
notary, and the appointed agents must also sign before a notary thus accepting the
position as the agent. The document is unusable until the agent signs to accept. A lapse
in time between the signing of both parties will not invalidate the power even if the grantor
becomes incapacitated before the agent signs the form. The logistics of getting all the required
signatures becomes very important.
- Gifting powers are separated in a special “gifting rider” in the new Power of
Attorney. In the prior document, the power to make gifts was one of the many listed powers.
The gift was limited to the amount exempt for federal gift tax purposes and the language limited
the gifts to a certain group including spouse, children and descendants. The prior form did not
include gifts to the appointed agent.
The new gift rider acknowledges that gifting could fundamentally change the grantor’s estate
plan and specifically outlines options for gifting. The rider notes that in granting these powers to
the agent it could “significantly reduce your property or change how your property is distributed
at death.” Because of the seriousness of this power it must not only be notarized but
also signed by two witnesses. This gives the Power of Attorney the same weight as a Will as
it would have the same ability to change one’s estate plan. The rider also expands the amount
of the gift to any amount and allows gifting to the agent with a caution that the agent must
act in the best interest of the grantor. The rider gives the grantor the opportunity to give
instructions about the gifts and their purpose.
- Special Powers are also included in the updated
form. Specific mention of health care and billing payment
has been added to records and reports, this allows access
to health records and complies with strict HIPAA
requirement. In addition to the powers found in the
prior form, insurance companies, family, government, civil
and military benefits are now mentioned and directed to
accept the Power of Attorney.
- Changes affecting the appointed agent include establishing compensation for the agent and the
introduction of a “Monitor.” For the first time the law
states that agents may be paid for the services provided
under the Power of Attorney. The payment is not fixed but
described as “reasonable reimbursement for expenses and
services rendered.” In drafting the Powers of Attorney, the
grantor now must decided whether to pay the agent and
at what rate. The agent must declare this compensation
as taxable income. This could have a Medicaid impact as compensation to an agent under a Power of Attorney
would not be considered a transfer.
- The grantor may appoint a Monitor to act as an
optional safeguard. The Monitor is an appointed individual
who would receive a copy of the Power of Attorney and
could request all records of transactions made using the
Power of Attorney. This should be carefully considered in
creating the new Power of Attorney, and may cause some
grantors to amend their present document to include this
option.
- Instructions to the Agent: The Power
of Attorney remains revocable and the new power
specifically outlines the following procedures: a written
format for revocation, the need to act according to the
grantor’s instructions, a caution to avoid conflicts of
interest, direction to keep good records of all transactions,
payments and receipts, instructions to clearly identify
yourself as an agent when signing, and finally a rule
stating a good fiduciary never commingles assets with the
grantor. The standard of care for the agent is the “prudent
person’s standard of care” and the agent may be liable for
any acts or omissions not in the grantor’s best interest.
This appointment is given seriousness and weight.
- Acceptance of the Power of Attorney:
Banks, financial institutions and other parties must accept
the Power of Attorney if the statutory form is used and
properly executed. This includes the Statutory Major
Gifts Rider. The new law specifically focuses on having
the New York State form be universally accepted by all
sources in order to eliminate the need to execute multiple
copies of the documents to satisfy the requirement of each
individual financial institution.
In general, the Power of Attorney is a vital tool in long
term care and financial planning. The September 1, 2009
revision both strengthen the appointed agent’s ability to
effectively use this document for the grantor’s needs, while
protecting their individual’s rights and financial well being.
Consult with your elder law attorney or financial advisor
before signing this most useful legal tool.
JUDITH D. GRIMALDI, CSW, J.D., CELA, partner in the law firm of Grimaldi & Yeung LLP, located in Brooklyn, New York. She represents the rights of
the elderly and disabled in Medicare, Medicaid and Trusts & Estates, with special focus on family caregivers and homecare. Ms. Grimaldi is a certified
Elder Law Attorney, Certified Social Worker, Chair of the Health Issues Committee of the NYS Bar Association’s Elder Law Section and a Board
Member of the N.Y. Chapter of NAELA. She has been AV rated by Martindale-Hubble, as well as being named one of New York’s Best Lawyers by
New York Magazine in 2008 & 2009.
|
Previous
