| At first glance the one obvious difference between | | | | the agent to receive "reasonable compensation", he |
| the old durable power of attorney form and the new | | | | or she must initial the box in Part J of the form. If |
| form which became effective on September 1, 2009 | | | | the principal wishes to limit or define "reasonable |
| is the longer length of the new form. | | | | compensation" he or she also can do so in the Part G |
| Beyond this obvious difference, the major distinction, | | | | modification section of the POA form. |
| in my opinion, is that the new form poses significant | | | | As you can see, the number of times the principal is |
| execution problems, especially for seniors. Additionally, | | | | required to place his or her initials has significantly |
| the drafters appear to have had little concern for the | | | | increased from the old POA form. For many seniors |
| difficulties most small and solo practitioners have in | | | | this will be another hurdle to executing the new form. |
| obtaining witnesses for the execution of documents. | | | | (j) Part L of the form relates to the termination of |
| In their zeal to protect the elderly from financial | | | | the authority of the agent. Of course the POA |
| abuse, the drafters may have gone overboard and | | | | terminates when the principal dies or becomes |
| created a document that is so complicated and so | | | | incapacitated if the POA is not durable. See GOL |
| difficult to execute that it may end up being | | | | §5-1511. Under the new law as in the past, |
| underutilized. In fact, at a recent seminar a prominent | | | | delivery of a written instrument to both the agent(s) |
| attorney suggested that he is strongly considering | | | | and any third party who may have relied on the POA |
| recommending to his clients that they execute and | | | | as to the revocation of a POA is sufficient notice of |
| fund a revocable living trust to avoid the complexities | | | | revocation. See GOL §5-1511(3); |
| of the new form, as well as the persistent problems | | | | (k) The new POA form must be dated and signed |
| associated with recognition and acceptance of | | | | by the principal and acknowledged by the principal |
| powers of attorney by financial institutions and banks. | | | | before a notary public; |
| I will attempt to highlight for you what I believe are | | | | (l) Part N of the form provides the agent with a |
| some of the most important aspects/provisions of | | | | statement of his or her legal obligations, duties and |
| the new form which necessitate your attention: | | | | liabilities as an agent. It clearly places a significant |
| (a) The form must be in 12 point font; | | | | burden and responsibility upon the agent for record |
| (b) If more than one agent is designated they must | | | | keeping. In my opinion, the agent under the POA is |
| act together unless the principal initials the box | | | | now in a similar fiduciary position as the trustee of a |
| permitting the agents to act separately; | | | | trust. Part N of the form also places the attorney |
| (c) If successor agents are designated they must act | | | | representing the Principal in the unenviable position of |
| together unless the principal initials the box permitting | | | | having to advise the agent that there may exist a |
| the successor agents to act separately; | | | | potential conflict of interest, and that he or she may |
| (d) The execution of the new form automatically | | | | wish to seek separate legal counsel before executing |
| revokes any and all prior powers of attorney | | | | the POA in Part O of the form. If the Agent does |
| executed by the principal, unless otherwise stated in | | | | not obtain separate legal counsel, it may be |
| the "Modifications" section of the form. This would | | | | necessary to obtain from him or her some written |
| include any banking and financial institution powers of | | | | acknowledgement of the waiver of the potential |
| attorney ("POA") previously executed by the principal. | | | | conflict of interest and their decision not to retain |
| I would strongly recommend that you address this | | | | counsel. |
| issue with the principal, and provide for it in the | | | | I believe a number of nominated agent(s) will decide |
| "modifications" section of the form. It should be | | | | that they don't want the responsibility of being an |
| noted that there are several bills presently pending, | | | | agent once they have read the notice provisions of |
| A.8392 and S.5589 which propose technical | | | | the form and consulted with an attorney. |
| amendments to the new form with respect to the | | | | (m) In Part O of the form, the agent(s) must sign |
| revocation or termination of the POA. | | | | and have their signatures acknowledged before a |
| (e) Part F of the form, relevant to the "grant of | | | | notary public. Multiple agents do not need to sign at |
| authority" to the agent(s) with letters "A" through "P" | | | | the same time and do not need to sign at the same |
| having a separate matter assigned to each letter | | | | time as the principal. |
| listed, permits the principal to either initial each box he | | | | The new POA form is not valid until all of the agents |
| or she wants to grant the specific power/authority | | | | have signed and had their signatures acknowledged |
| or to initial letter "P" which lists the letters for the | | | | before a notary public. |
| matters, identified as "A" through "O" for which | | | | (n) The Statutory Major Gifts Rider (SMGR), see |
| authority is to be granted. | | | | GOL §5-1514, must be executed simultaneously |
| Letter "M" of the old form as you may recall | | | | with the POA form by the principal. When both |
| previously contained a gifting provision. No gifting | | | | documents have been fully executed, they will then |
| provisions are contained within letters "A" through "P" | | | | be read as one document. |
| of the form, with the exception that letter "I" | | | | Gifting under the SMGR will be authorized only if the |
| relevant to "personal and family maintenance" allows | | | | principal has initialed Part H of the POA form. Clearly, |
| the agent to continue making gifts the principal made | | | | the SMGR is intended to alert the principal of the |
| to individuals and charities prior to the POA being | | | | gravity and importance of granting gifting powers to |
| signed, in an amount not to exceed $500 per | | | | the agent(s), particularly if the agent(s) is to have |
| recipient in any one calendar year. | | | | the authority to gift to him or herself. However, |
| Letters "A" through "P" of the form should not be | | | | when one analyzes both the execution requirements |
| modified in any way, shape or form. I also do not | | | | of the SMGR and the legislative provisions relevant to |
| believe additional lettered matters should be added in | | | | the powers enumerated in #'s "1" through "9" of the |
| Part F beyond letter "P". For an explanation of each | | | | "modifications" section (Part B) of the SMGR, there |
| of the powers granted see General Obligations Law | | | | are enough ambiguities and contradictions to devote |
| §5-1502 A through General Obligations Law | | | | a full day seminar to. In spite of this I have been able |
| §5-1502 O. | | | | to gleam the following: |
| (f) Part G of the form is the section which permits | | | | 1. If the principal wishes to allow the agent to make |
| the principal to state any "modifications" to the | | | | gifts to others, including him or herself up to the |
| authority granted in letters "A" through "O" of part F | | | | federal annual gift tax exclusion ($13,000 for 2009) |
| of the form. However, it is important to note that | | | | he or she will need to initial the box in Part A of the |
| any "modifications" stated in part G of the form | | | | SMGR; |
| should not be provisions which allow the agent(s) to | | | | 2. Part B of the SMGR must contain any |
| make gifts of the principal's assets or change the | | | | "modifications" or expansion of the gifting powers |
| principal's interest in property. Any gifting other than | | | | the principal wishes to give to the agent(s), and the |
| the minimal gifting provided for in letter "I" of the | | | | box in Part B must be initialed by the principal. The |
| powers must be provided for in the Statutory Major | | | | Part B modifications relate to any expansion or |
| Gifts Rider ("SMGR"). For example, in the | | | | modification of the power of the agent to gift |
| modifications section you could provide that the | | | | beyond the annual exclusion amount ($13,000) to |
| execution of this POA does not revoke a prior | | | | third parties. The powers in Part B do not include the |
| banking or financial institution POA. You could also | | | | powers to the agent to gift to him or herself |
| define the "reasonable compensation" you would like | | | | (emphasis added). That authority must be provided in |
| the agent to receive or perhaps limit the powers of | | | | Part C of the SMGR. The gifting to third parties in |
| a "monitor". This is also the section where many elder | | | | Part B can be unlimited or gifts of a specific amount. |
| law planning techniques can be provided for, such as | | | | It appears sample modifications of the gifting powers |
| entering into a personal service contract. As long as | | | | that can be inserted in Part B can be found in |
| the modifications do not involve gifts of the principal's | | | | §5-1514(3) of the GOL. It does not appear that |
| assets or changes to his or her interest in property | | | | GOL §-1514(3) limits the modifications that can |
| they can be provided for in Part G of the form; | | | | be made, see GOL §5-1503. However, this is |
| (g) If the principal wishes to allow the agent to make | | | | one area of ambiguity. |
| gifts in excess of the $500 provided for in letter "I" | | | | 3. Part C of the SMGR has to be initialed by the |
| of the powers, he or she would need to both initial | | | | principal if he or she wishes to grant the agent(s) the |
| Part H of the form and complete and execute the | | | | authority to gift to him or herself with the extent to |
| SMGR; | | | | or limitations therein stated. |
| (h) Part I of the new POA allows the agent to | | | | This, it appears that the boxes in Part A, B and C of |
| appoint a "monitor". The monitor could demand | | | | the SMGR will have to be initialed by the principal if |
| accountings by the agent, records and documents. | | | | he wishes to grant expanded gifting powers to the |
| The appointment of a monitor in the POA form | | | | agent(s) with respect to third parties and him or |
| would allow the monitor to obtain documents from | | | | herself, and that the modifications of said powers |
| third parties. If the principal appoints one family | | | | need to be clearly delineated therein. |
| member as agent(s) and then appoints other family | | | | 4. The SMGR must be dated and signed by the |
| members as monitors, we may be leading our clients | | | | principal with his or her signature acknowledged |
| down a slippery slope that may detrimentally impact | | | | before a notary public (Part E of the SMGR); |
| the agent's ability to act under the POA. It may be | | | | 5. The SMGR must be witnessed by two people who |
| wise to specifically delineate the monitor's authority | | | | are not potential recipients of gifts under the SMGR. |
| and the extent that he or she can seek and demand | | | | The witness' statement must indicate that they |
| records. For example, you may wish to consider | | | | observed the principal sign the SMGR in their |
| limiting the demand for records to once or twice per | | | | presence (Part F of SMGR); and |
| year. | | | | 6. Part 6 of the SMGR must state the name and |
| The monitor(s) are also permitted to commence a | | | | address of the SMGR's preparer. |
| lawsuit against the agent(s). See General Obligation | | | | As can be seen from the above, the new POA form |
| Law §5-1509; | | | | and SMGR have many complexities which must be |
| (i) Part J of the form provides that the agent(s) may | | | | carefully studied and analyzed. I wish you and your |
| be reimbursed for reasonable expenses incurred on | | | | clients the best of luck in doing so. |
| the principal's behalf. If the principal wishes to allow | | | | |