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By John M. Bigler This month we're going to revisit the fascinating world of the power of attorney. The New York State Legislature has proposed several changes in the law so as to make the power of attorney document both more effective and more understandable. The proposed statutory changes are an attempt to bolster the effectiveness of the document as an estate planning tool and to decrease the potential for financial exploitation of vulnerable adults.
The New York State Law Review Commission has also proposed changes in the law. These changes to the General Obligation Law include an effort to simplify the caution notice by using more common language. Obviously, we all know that for a group of lawyers to come up with more common knowledge is going to be more difficult than it sounds. There is also a proposal for adding language so that the attorney in fact or agent understands that they have a duty to act in the best interest of the principle who has appointed them as their agent. The new law would also add a provision explaining the duties of the attorney-in-fact, such as the duty to act in the best interests of the principle, keep the principal's funds separate from his own, and keep good records. The attorney-in-fact would also be expected to wisely to invest the assets of the principle. The new law would also allow for possible fees for the attorney-in-fact.
The proposed changes will spell out when a third party may refuse to honor power of attorney. It will be necessary to establish reasonable cause, such as where the third party filing, or having knowledge of filing, of a report of abuse by the attorney-in-fact. However, it is reiterated that a third party may not refuse to honor the power because it is not on the third party's own form. There will also be a new special proceeding that will force a third party to accept a power of attorney. If such a proceeding is necessary, the person who brings the action can be entitled to attorney's fees from the third party if it is established that the refusal was without reasonable cause. The legislature also recommends that there be an actual revocation form to revoke the authority in the power of attorney. The revocation would have to honored by a financial institution once the actual written notice was received. There is also a recommendation that the standard short form power be revised to include obtaining health care billing and payment information.
All in all, the legislature has attempted to address serious concerns that have plagued to the use of powers of attorney. These appear to be well-thought out changes and hopefully they'll become effective shortly and make the use of power of attorney more understandable and more effective.
Reprinted with permission of the Suffolk Times © 2005 [ Contact Us ] [ Guestbook ] [ Email ]  The Law Offices of John M. Bigler, Attorney At Law 1421 Wantagh Avenue, Wantagh, New York 11793-2206 1-888-ELDER-LAW · 516-409-6565 · Fax: 516-409-6522 E-Mail: info@biglerlaw.com · Web Site: www.biglerlaw.com |
The proposed changes include adding sections to the banking law that are already found in the General Obligations Law. The sections that would be added would require banking institutions in New York to honor the statutory power of attorney. The law would also provide that no employee of a banking institution would be found liable in any way for accepting the statutory power of attorney form. It should be noted that that banking law does not pertain to stock brokers. The banking law would also indicate that subsequent disability or incompetence of the principle would not revoke or terminate the authority of the attorney-in-fact (the person to whom powers are granted by the principal). Currently this must be specified in writing and the document is a "durable" power of attorney. I have said many times that the only power of attorney that I've ever prepared for anyone is a durable power of attorney. Otherwise the document serves very little purpose.