Sometimes, if it ain’t broke, don’t fix it should play loud on the ears of legislators. There was nothing wrong with New York State’s statutory Power of Attorney form prior to lawmakers messing about with the statute. They have now successfully complicated the matter so much that the effective date of the new form was pushed back from March 1, 2009 until September 1, 2009, as if the delay will make it any less confusing.
Prior to the change taking effect, New Yorkers could appoint an agent to do their bidding on all manner of things from real estate closings to gifting to selling property. The Power of Attorney form (POA) was and still is an effective estate and financial planning tool and was quite user friendly. People could find the forms at office supply stores or download them online. The POA was all made possible by someone naming an agent on the so-called Statutory Short Form. It was a powerful form but the principal or designator could choose from a laundry list what powers to grant or not and required the principal’s signature to be notarized in order for the power to be effective.
Under the new law, the form has been revised and the designator now must name an agent and that power will not become effective until the agent’s signature is also notarized. It is supposed to focus both the individual and his or her designated agent on the gravity of the power he or she has now been granted, perhaps to keep “Junior” from running off and raiding his father’s brokerage account.
One of the major changes concerns gift-giving. Since the POA is an effective estate planning device, should an incapacitated principal’s agent need to make gifts, the lawmakers have now made it a bit more difficult for the agent o transfer assets. Prior to the change, the statutory form allowed the agent to gift away up to the amount of the federal gift tax exclusion (in 2009 that is $13,000) unless there was an added clause that allowed gifting in excess of the exclusionary amount and allowed gifting to the agent himself. The new form now requires that a grant of authority to make major gifts and other asset transfers must be set out in a major gifts rider to a statutory power of attorney, which contains the signature of the principal duly notarized and which is witnessed by two persons who are not named in the instrument as permissible recipients of gifts or other transfers, in the same manner as a will.
Another key change concerns the payment of medical bills. There had been some confusion with regard to access of medical records by the agent. The old bill did not clearly allow an agent access to medical invoices in order to pay them and HIPPA seemed to limit such access. The new POA now allows the agent to access medical invoices; however, an individual must still execute a separate Health Care Proxy in order to permit someone else to make health care decisions on their behalf.
As to what happens to all of those POAs executed prior to March 1, 2009, they’re still effective provided they were properly executed originally.
For a detailed explanation, this month’s Journal of the New York State Bar Association has a more detailed outline.