A power of attorney (POA) allows an individual (called the principal) to appoint another individual (called the agent or attorney-in-fact) to transact business in the principal’s name. A power of attorney gives the agent the authority to make banking, real estate and all other financial transactions on the principal’s behalf.
On December 15, 2020, Governor Cuomo signed Assembly Bill A5630A to change the format and processes associated with the New York State Power of Attorney form. These provisions went into effect on June 13, 2021. The changes help simplify the POA document and the process of validation, as many aspects of the previous POA forms were complex and held to rigid requirements. The bill does not invalidate existing POA forms that comply with the new provisions. The major changes to the form are as follows:
Firstly, the new law establishes the Substantial Conformity Standard, which ensures that insignificant errors do not invalidate the entire POA document. Previously, POA forms had to adhere strictly to the established statute, therefore many documents were invalidated for insignificant errors such as spelling or formatting. The new law establishes that POA forms must “substantially” comply with the statute, which allows for more flexibility in order to minimize the amount of invalidated forms.
Next, the new law eliminates the separate Statutory Gift Rider (SGR) form, an optional form used to authorize the gifting of the principal’s assets. Under the new provisions, the authorization of gifts is included in the POA form and agents are allowed to gift up to $5,000 per year on the principal’s behalf. These changes simplify the process of authorizing agents to gift the principal’s assets.
In addition, the new law imposes penalties for unreasonable refusal of a POA form. Prior to the new provisions, the countermeasures for failing to accept a valid POA form were largely inadequate. The new law establishes the presumption that POA forms are valid and allows courts to award damages for unreasonable rejection. These provisions help encourage institutions to validate POA forms in order to avoid penalties for unreasonable rejection.
The fourth major provision of the new law protects the recipient of the POA document from liabilities. It establishes that recipients are shielded from liability if they have an acknowledged signature and no knowledge of errors on the document. Also, the law enables the authorization of a third party to sign on behalf of the recipient in the case that they are unable to physically sign for themselves.
Overall, these changes have simplified the New York State POA forms and validation processes. If you have any further questions about the changes or how it may affect you, please feel free to let us know.
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