The Facts: The NYS legislature created a new power of attorney form that became effective on September 1, 2009.
The Questions: How does the new form differ from the old one? Is the power of attorney I signed last year still valid?
The Answer: To understand how the new power of attorney (“POA”) differs from the old version, you must understand how a POA works. With a POA, the person signing the POA, (the “Principal”), grants another person, (the “Agent”), authority to carry out certain types of transactions on the Principal’s behalf. An Agent is obligated to act in the best interests of the Principal.
To address the fact that Principals sometimes suffered financial ruin at the hands of Agents who did not act in the Principal’s best interests, the new POA includes a number of safeguards to protect the Principal. For example, the new POA warns Principals about abuse by Agents. In the new form, Principals are not only given the option to name an individual to monitor the activity of the Agent but, they are required to sign a POA rider in the presence of two witnesses and a notary public if they want to give their Agent the authority to make gifts in excess of $500. In addition, the new POA provides Agents with information about the duty of care they owe the Principal and requires that the Agent sign the POA before acting on the Principal’s behalf. Since the changes made to the POA make the document much more complex than the old POA, people are urged to consult an attorney before signing a new POA.
As for the POA you signed last year, provided it was properly drafted and executed, it is still valid and will remain so until you revoke it by signing a new POA. That being said, it is a good idea to review your POA and to advise your Agent of your wishes as well as his/her duty to act in your best interest.
This article first appeared in the September 24, 2009 issue of the Times Beacon Newspapers.
Linda M. Toga of The Law Offices of Linda M. Toga, P.C. is an East Setauket,New York attorney with a general law practice focusing on estate planning, real estate, marital planning, small business services and litigation.