Just over a year ago – September 1, 2009, to be exact – the New York legislature enacted legislation that substantially revised the statutory “short form” Power of Attorney (“POA”). Perhaps the most significant change was the requirement that the “principal” executing the POA execute a separate Statutory Major Gifts Rider (“SMGR”) if the principal wished to allow the agent to make “major gifts” of the principal’s assets. This statutory revision was predicated on the widespread belief that, under the prior POA form, it was too easy for senior citizens to unwittingly authorize unscrupulous agents to make gifts of the principal’s assets – often to the agents themselves.
Immediately following enactment of the 2009 revisions, attorneys began inundating the New York State Bar Association with complaints about the new POA form. Many attorneys complained that the new form was too lengthy and difficult for many elderly clients to sign. Business attorneys complained that many routine transactions that did not involve any gifting still required the Principal to execute the SMGR. In response to those complaints, the Law Revision Commission went back to work in an attempt to further amend to law to make the POA form more “user friendly.”
In response to these concerns, New York enacted its latest revision to the statutory “short form” POA, which became effective September 13, 2010. The following are a few of the most significant changes to the 2009 POA form:
- A new section 5-1501C of the statute specifically excludes from coverage under the new short form POA a number of commercial and governmental transactions, such as the exercise of shareholder voting rights with respect to a corporation, or a power authorizing acceptance of service of process on behalf of the principal.
- Gifting authority within the main form POA is limited to an amount not to exceed $500 per year; any gifts by an agent in excess of that sum can only be made under the Statutory Gifts Rider.
- Under the 2009 statute, execution of a new POA would specifically revoke all prior POA’s executed by the principal unless the principal specified that one or more prior powers was not to be revoked. The 2010 statute specifically states that signing a new POA does not revoke prior powers of attorney; rather, the principal can provide for such revocation by including such a provision under the “Modification” section of the document.
- The new statute makes it easier for a principal to revoke an agent’s authority; now, delivering the revocation is effective by delivering notice to the agent in person, or by sending a signed and dated revocation by mail, courier, electronic transmission or fax to the agent’s last known address.
- The Statutory Major Gifts Rider has been renamed the Statutory Gifts Rider (“SGR”). The statute provides that the SGR is required to make “gifts or changes to interests in your property” (emphasis supplied). The SGR is not required to complete other non-gift transactions, which can be authorized in the Modifications section of the main form. However, there remains some ambiguity whether transactions affecting “interests in property” can actually be addressed within the main form; it is likely that an additional amendment to the POA statute will be required to eliminate this ambiguity.