Despite my age, part of my job description is to review and critique Wills and ancillary documents that clients provide the financial planners. You would be shocked how many are tax inefficient or worse do not even follow the testamentary intent of the client. Notwithstanding the ineptness of some attorneys who are drafting Wills, there should be some knowledge by everyone as to the ancillary documents that accompany your Will.
I will discuss each one in future posts, but today I wanted to focus on the Power of Attorney, since there has been groundbreaking changes for my New York readers.
What is a Power of Attorney?
The Power of Attorney, often referred simply as POA, is a very powerful document, whose power is often glossed over. If I am going to take a definition from anywhere, why not the American Bar Association! The ABA defines Power of Attorney as,
one or more persons the power to act on your behalf. The power may be limited to a particular activity (e.g., closing the sale of your home) or general in its application, empowering one or more persons to act on your behalf in a variety of situations. It may take effective immediately or only upon the occurrence of a future event (e.g., a determination that you are unable to act for yourself). The latter are “springing” powers of attorney. It may give temporary or continuous, permanent authority to act on your behalf. A power of attorney may be revoked, but most states require written notice of revocation to the person named to act for you.
As stated, you should know whether you are signing a general power of attorney, i.e. basically where your agent (the person acting on your behalf) can do almost anything without asking you or a limited power of attorney. Almost everyone, at one time or another, as signed a limited power of attorney. You might have done so, when closing on your home, you might have done so when you signed up for an investment account, and you almost definitely did one if you incorporated a business (almost every state forces you to sign a limited POA so that the Secretary of State can accept service for you).
Besides limited and general, you have another choice to make – Springing or Durable Power of Attorney. Durable means that your agent can act in your stead from day 1, while a Springing Power of Attorney needs some event to happen. While a Springing Power of Attorney seems to make more sense, it may create a difficult hurdle that most Attorneys try to avoid. For example, your spouse whom you have a Power of Attorney just had a stroke, and now you have to act in his or her stead, but first you have to go to court to prove sh!t hit the fan! As such, I have never seen nor drafted a Springing Power of Attorney.
While many States have civil and criminal repercussions if you mess with the purpose of the POA (e.g. Fraud) one can always find some news story about a attorney-in-fact (another word for an agent and not to be confused with attorney at law) doing the wrong thing and hurting someone through fraud.
New York has Updated the Statutory Short Form for Power of Attorney
The reason I was inspired to write this post, was because New York recently changed its Statutory Short Form. Your first reaction should be something along the lines of, “Statumucholic what?” Considering the magnitude of the document, many state legislatures provide a form to be filled in. That being said, I still urge people to see an attorney when drafting one, just like I think those electronic will options are garbage.
Regardless of how many New York Attorneys are checking out my site, every resident of New York should know that New York has adopted a new Power of Attorney. The changes and a new form can be found at the New York State Bar Associate website. If you are meeting with your New York attorney, because you finally believe me that everyone needs a will make sure he or she knows the new rules! and if you are meeting your Attorney outside New York have a complete discussion about your options concerning a Power of Attorney.