In December 2020, by legislation, Governor Andrew Cuomo signed a bill representing the most significant change to the Powers of Attorney (POA) in almost a decade. Revisions to POA have been under consideration for the past several years, but over the last fourteen months due to the pandemic, it encouraged the legislature to finally update the form to make it more efficient to execute and use. Some of the changes within the form are:
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Law Substantial Conformity Standard: The new legislation alters the standard of strict adherence to substantial conformity. This means that insignificant errors will not invalidate an entire form and does not require the POA form to be identical to the bill. This allows forms to be validated even if the form has insignificant errors such as mistakes in spelling, punctuation, formatting, etc. This transition will help to rightfully validate forms, even when insignificant errors occur.
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Elimination of the Statutory Gift Rider: This change in the law allows a principal to authorize gifts in the POA form itself, eliminating the separate SGR. The new law enables a principal to modify the standard form to authorize the principal to make gifts over $5,000 in a single year. It also allows a principal to make gifts to himself or herself, or to make other gift transactions and changes to interests in the principal’s property.
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Penalties for Unreasonable Refusal to Accept a Valid Power Of Attorney: The new legislation creates a presumption that a POA form is valid and allows courts to award damages. Allowing damages will apply only to unreasonable denial to accept an agent’s authority under a statutory short form POA that substantially complies with the statute. This change will encourage third parties to accept valid POA forms, since there will be a consequence for unreasonable rejection.
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Safe Harbor for Third Parties Acting in Good Faith: If the recipient acts in good faith when accepting the POA, even if it is later deemed invalid, they are protected from liability. Two conditions must be established for protection:
- Acknowledged Signature: The POA must have a principal’s signature and verified by a notary public or an authorized person to take acknowledgments
- No Actual Knowledge of Errors: The recipient must not have “actual knowledge” that the principal’s signature is forged, that the POA is invalid, or that the agent is abusing their authority
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Witnesses: Two disinterested witnesses are now needed to sign the power of attorney. One of the witnesses can be the notary public. The witnesses also need to include the date each one signed as a witness and their address