On December 15, 2020, the State of New York amended Title 15 (“Abbreviated Form and Other Powers of Attorney for Financial and Estate Planning”) of Section 5 of the New York State General Liability Act. Chapter 323 of the Laws of 2020 is in effect on “the 180e day after it becomes law, provided that any statutory short power of attorney and all statutory gifts performed by a principal and valid at the time performed by that principal shall remain valid, as shall any revocation of any prior power of attorney attorney delivered to an agent prior to the effective date of this act.”According to the Memorandum of Support, this legislation was deemed necessary because “[t]the power of attorney form is too complex and prone to improper execution; [t]the current legal requirement for precise wording is unnecessarily burdensome and becomes a trap for unwary people; and [f]financial institutions or others who unreasonably refuse to accept a valid power of attorney are not currently in receipt of any damages.

Important changes include:

  1. The statutory abbreviated power of attorney has been revised. Legal poison riders have been eliminated, although poison riders performed in accordance with the previous law are grandfathered.
  2. The definition of “power of attorney” has been amended to include both a statutory short-term power of attorney and a non-statutory power of attorney.
  3. A power of attorney essentially satisfies the requirements for a statutory short power of attorney if there are minor errors in wording, spelling, punctuation, formatting, or the use of bold or italics, and the language used is substantially the same, but not identical, to that used in the legal form.
  4. An abbreviated or non-statutory power of attorney may be signed by any person in the presence of the principal and at the direction of the principal, although the executing person may not be the agent or successor on behalf of the principal. The recognized signature of the person must be done by writing or printing the name of the client and then printing and signing his or her own name.
  5. Unless limited or augmented by the principal in the “optional” “Changes” section of the statutory short form authority, an agent’s authority to make gifts on behalf of the principal is increased from $500 to $5,000.
  6. GOL Section 5-1502A (“Construction – Real Estate Transactions”) has been amended to allow an agent to establish, amend, or revoke a trust, even when it would be to effectuate a gift. This has required the execution of a legal gift driver. However, the legal short form authority, in GOL section 5-1513, specifies that the authority to bestow an “interest in your property” must be granted in the Changes of Jurisdiction section.
  7. A person who in good faith accepts a recognized power of attorney may invoke the power of attorney and, if requested by the third party, may rely on “(1) a statement from an agent under penalty of perjury of any matter of fact concerning the principal , agent or power of attorney; and (2) counsel from counsel on any matter of law relating to the power of attorney if the person making the request establishes in writing or otherwise the reason for the request.” Counsel’s advice must be “provided at the client’s expense, unless the request is made more than 10 business days after the power of attorney has been presented for acceptance.”
  8. A third party may not, without “reasonable reason”, refuse to honor a legal short form authority. Reasonable cause is defined as including, but not limited to, the reasons set forth in GOL section 5-1504(2)(a). Refusal to provide counsel on request is added as “reasonable reason”.
  9. New GOL Section 5-1504(3) describes procedures, including timelines and notification requirements, when a statutory short form authority is rejected by a third party.
  10. When a statutory short form authority is “reasonably accepted,” a third party executing a transaction under the authority is “released from liability for the transaction.”
  11. In a special proceeding initiated to compel a third party to comply with a statutory short form jurisdiction, “the court may award damages, including reasonable attorneys’ fees and costs, if the court finds that the third party has acted unreasonably in refuse to respect the agent’s authority…”

The legislation is available on the State Assembly website at:

https://www.nyassembly.gov/leg/?default_fld=&leg_video=&bn=A05630&term=2019&Text=Y.

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