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Upcoming Changes to Power of Attorney Documents

July 31, 2009

A Power of Attorney is an important document that allows you (“the principal”) to appoint an agent to make decisions concerning your legal and financial matters in the event you are unable to do so for yourself. If you have not executed a Power of Attorney document and you become incapacitated, a guardianship court proceeding will be required to authorize someone to make legal decisions on your behalf. A guardianship proceeding can take several months and cost several thousand dollars to complete. The good news is that creation of a valid Power of Attorney can avoid the necessity of a guardianship proceeding. As such, the execution of a Power of Attorney document is a very important estate planning tool.

On January 27, 2009, Governor David Paterson signed Chapter 644 of the Laws of 2008, amending the General Obligations Law to provide significant reforms to the use of Powers of Attorney in New York. The new law becomes effective on September 1, 2009 and all Power of Attorney documents executed after that date must comply with the new law and statutory format. This article will summarize some of the changes in the law.

The format of the new Power of Attorney statutory form is more complex and cumbersome than the old format; however, the powers you may grant are essentially the same. As such, if you are considering any changes to your existing Power of Attorney document, you may wish to complete the revision before this change in the law.

Under the new rules, there have been numerous revisions to the law regarding the rights and responsibilities of agents and principals. Under the new statute, the agent must sign the Power of Attorney as an acknowledgment of their obligations. Also, agents will be required to disclose their relationship with the principal when a handwritten signature is required. The new statutory Power of Attorney form also contains an explanation of the agent’s role, including obligations and legal limitations of the agent’s authority.

The legislature argued that while, a Power of Attorney document should remain flexible enough to allow an agent to carry out the principal’s purpose, the old statutory provisions did not require acknowledgment regarding several serious matters of authority, specifically, the authority to transfer assets. Accordingly, the new statute now requires a specific grant of authority to make major gifts and other asset transfers.

The new law requires that a separate major gift rider be executed by the principal before the agent has any authority to make gifts. The major gift rider allows the principal to make informed decisions as to whether the agent may make gifts or other transfers. The agent must act in accordance with specific instructions of the principal or principal’s best interest.

There have also been revisions in the statutory form to allow for the Health Insurance Portability and Accountability Act of 1996 (a/k/a HIPAA). The new Power of Attorney form may permit an agent to examine, question and pay medical bills, if the principal grants the agent that power. Confidential health information related to billing and payments may be available if the agent can be characterized as a “personal representative.” These provisions allow an agent to access information; however, a Power of Attorney agent cannot make health care decisions. That must be accomplished via a Health Care Proxy document.

The new Power of Attorney law contains several other revisions in addition to the ones summarized above. If you would like more information or have any questions on the above information, please contact attorney Linda Stravalaci Grear at 716-636-7600. HoganWillig is located at One John James Audubon Parkway in Amherst, New York 14228, with additional offices in Lockport and Buffalo.