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Legal Update: Durable Powers of Attorney: The Not So Merry-Go-Round 2020 Version

Estate Planning

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As of this writing, the New York State legislature has passed a bill to revise the statutory short form power of attorney yet again.  It only awaits the governor’s signature to become law.

The last major revision to General Obligations Law Sections 5-1501 – 1514 occurred in 2009 and mandated that the prior statutory short form power of attorney (“POA”) would no longer be valid for forms signed after September 1, 2009.  Among the key changes at that time were the reversal of the way POA’s were signed under prior law:  instead of initialing what powers were NOT granted, the 2009 law provided that the principal (i.e. person granting the power of attorney to the attorney-in-fact or agent) had to initial the powers that WOULD BE granted.

Two other major changes were the requirement that the attorney-in-fact also had to sign the POA for it to be valid rather than requiring only the signature of the principal, and the creation of a Statutory Gift Rider to enable the agent to make “major gifts” on behalf of the principal.

Clarifications were enacted soon after in 2010 but the resulting confusion was inevitable.

Now we have a new update pending.  This time Albany has proposed deleting the gift rider, expanding the amount that can be given as a gift on behalf of the principal from $500.00 to $5,000.00 dollars, and softening the strict wording requirements of the statutory short form POA.

Among the reasons given for these changes is that the current form “is too complex and prone to improper execution” according to the bill.  Also the current forms “are full of traps for the unwary, which have significant and severe repercussions if defect(s) in the forms’ preparation or signing are not discovered until after the principal suffers incapacity.”

It remains to be seen if these changes to the statutory short form POA meet these goals or just send us round and round some more.

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