BY RONALD FATOULLAH, Esq. and DEBBY ROSENFELD, Esq.
A new Statutory Short Form Power of Attorney became effective on September 1, 2009. At the time, many estate planning and elder law practitioners found much to criticize about the new law. Many complained that it was far too complicated, while others maintained that the form still did not provide adequate protection for the unwary power giver (the “principal”).
One of the first changes of the 2010 law that is noteworthy is that a new power of attorney will now no longer automatically revoke prior powers of attorney. The 2009 power of attorney form had a provision automatically revoking earlier powers of attorney executed by the principal.
This provision was problematic because many individuals gave powers of attorney for specific purposes to various people. For example, an individual who has a specific bank account in a certain location might have given power of attorney to a nearby relative to deal with that particular bank. Executing the 2009 power of attorney would have automatically revoked that earlier power which was probably not the intent of the principal.
The 2010 statute lists a whole slew of transactions that may have been inadvertently swept up in the 2009 legislation. The new legislation essentially clarifies that there are certain transactions to which the new power of attorney law does not apply. These exclusions generally pertain to certain commercial and governmental transactions. For example, powers of attorney given to secure stock transfers, powers given to asset managing institutions and powers given to a real estate broker in order to take action with respect to a real estate listing are some examples of powers that are not covered by the new law.
The 2010 statutory list of powers excluded from the new law does not specifically exempt real estate transactions. Accordingly, title companies will have to require the new format when accepting any powers of attorney executed after September 1, 2009.
Further, the statutory major gifts rider has been renamed as the Statutory Gifts Rider and must accompany any power of attorney where gift may be made. In the context of the transfer of real estate, if the title company feels that the property being sold is for less than the full fair market value, a statutory gift rider will be required, or the title company will have to do due diligence to ensure that the principal has approved the transaction.
Like the 2009 law, the 2010 legislation continues to require that the “exact” wording in the statute be used for a power of attorney to comply with the statutory form; however, the form will not be deemed non-statutory by reason of an error, such as spelling, punctuation or formatting or the use of bold or italic type.
The amendment also clarifies that the notary who acknowledges the principal’s signature on the statutory gift rider may also serve as one of the witnesses. This will alleviate the burden of having a third person witness the execution of the document.
It is important to note that the statutory form of the power of attorney alone will not be sufficient for individuals requiring estate planning or for the planning needs of seniors and the disabled. For these individuals, it is essential that the power of attorney as well as the statutory gifts rider be substantially modified to give the agent the ability to undertake any and all possible planning needs that may arise.
The above description summarizes some of the new changes to the form. While there are some improvements, there is also a provision requiring the New York State Law Revision Commission to study the new law and its implementation and report back to the legislature and the Governor on its findings. Hopefully, its recommendations will be constructive and helpful.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts and wills. The firm has offices in Forest Hills, Great Neck, Manhattan, Brooklyn and Cedarhurst, NY. Fatoullah is certified as an elder law attorney by the National Elder Law Foundation. He has been named a “fellow” of the National Academy of Elder Law Attorneys and is a former member of its Board of Directors. Fatoullah also served on the Executive Committee of the Elder Law Section of the New York State Bar Association. He chairs the Legal Committee of the Alzheimer’s Association, LI Chapter, and serves on its Board of Directors. Fatoullah is also a co-founder of the Senior Umbrella Network of Queens, and currently serves on its Board of Directors. This article was written with the assistance of Debby Rosenfeld, Esq., a senior staff attorney at the firm. The firm can be reached by calling 718-261-1700, 516-466-4422, 212-751-7600 or toll free at 1-877-ELDER-LAW or 1-877-ESTATES.