The new year is traditionally a time for reflection, thinking back on the past 12 months and making resolutions for the future.
The coronavirus pandemic has made this undertaking weightier than usual. In the face of the fast-moving and deadly virus, many realized that they did not have their affairs in order in the event that they were incapacitated and unable to make significant legal decisions.
On December 15th, Governor Andrew Cuomo signed legislation that makes New York’s Power of Attorney far more consumer friendly and easier to attain. This was both a timely and long-awaited move by the governor, and one which the New York State Bar Association had advocated for some time.
A Power of Attorney enables a “principal” to appoint someone else to act as an “agent” on his or her behalf and take control of important life decisions. In most instances, these documents are used for specific and limited purposes, but there are also some that provide a much broader scope of authority.
The ability to grant a trusted agent a Power of Attorney is supposed to bring individuals solace and confidence that their wellbeing and their assets will be in good hands in the event that they are unable to make potentially life-changing decisions for themselves. But changes made to New York’s Power of Attorney law in 2009 were of deep concern to the Bar Association, particularly members of its Elder Law and Trusts and Estates sections, who felt the process was unnecessarily difficult and also did not provide sufficient protection for their clients.
Thanks to the bill passed earlier this year by the state Legislature and signed by the governor, the Power of Attorney in New York is not only far more user friendly, but also has additional teeth in the event that it is not accepted, as required by law.
One of the most significant changes is that substantial rather than strict compliance will be the standard. In other words, minor mistakes on a Power of Attorney form will no longer render it invalid. In the past, the most trivial errors – from spelling and punctuation to formatting or inexact wording – was enough to allow the form’s rejection. This will no longer be the case. In addition, if the rejection of a Power of Attorney form – say, by a bank or other entity – is deemed by a court to be unreasonable, then both attorney’s fees and damages may be awarded.
We hope that the threat of being forced to pay fees and damages will be sufficient to reduce the number of Power of Attorney rejections. Until now, many institutions automatically rejected Power of Attorney forms, as there was no mechanism in place to truly compel them to follow the law. Hopefully, this new approach will serve as an incentive for the creation of procedures that make Power of Attorney acceptance the rule rather than the exception.
Other changes include amendment of the Power of Attorney signing requirements, which will enable someone who is unable to make a mark on their own behalf to have someone else sign for them; the requiring of two witnesses – one of whom can be a notary – and the expansion of allowable aggregate gifts and family maintenance from $500 to $5,000 a year.
Also, a bank or other institution now has just ten days to honor or reject a Power of Attorney form, and the rejection must be done in writing. The rejection can be appealed, and after receiving a response, the institution in question has just seven days to render a final decision.
This change is necessary because in many cases, individuals who are hospitalized or living in nursing homes are forced to pay late fees because the very institutions that would be receiving payment if they accepted Power of Attorney forms from residents or patients were rejecting them outright. This is both unfair and unacceptable.
These changes were negotiated not only with the governor’s office and the main sponsors of the Power of Attorney bill – Senator Brad Hoylman and Assemblywoman Helene Weinstein – but also with representatives of the New York Bankers Association. The Bar Association is grateful we were able to reach a compromise that works for everyone, but, most importantly, protects some of our most vulnerable New Yorkers.
At a time when so much is uncertain, it is gratifying to finally realize our long-sought goal of improving New York’s Power of Attorney law. We hope these changes, which take effect in June, give New Yorkers some measure of comfort in 2021.
Scott M. Karson is president of the New York State Bar Association.
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