As I have written on these pages before, a power of attorney is arguably the most important document in your estate plan - other than your will or trust. I frequently have clients come to me with issues related to powers of attorney, so I thought it would be useful to provide a series of questions and answers that cover the key points regarding this important document.
CAN I DO A POWER OF ATTORNEY MYSELF USING A FORM I CAN GET ON-LINE?
Yes, but it is inadvisable to do so for two reasons. First, the New York statutory power of attorney form has changed three times over the last fifteen years. If you use a form that is not the most current form, then it’s possible that the power of attorney will be invalid. Unfortunately, this problem may not be apparent until many years later when your agent attempts to use the form. If you cannot sign a new form at that time, then you would be left without a legally proper power of attorney.
The second reason is that the current power of attorney form is a lengthy and somewhat complicated document. It is eight pages long and requires the principal to initial in various places and sign before two witnesses and a Notary Public. In addition, the agents also have to sign the document before a Notary Public. As a result, there are multiple chances to not initial or sign properly – all of which could cause the power of attorney to be either invalid, or at a minimum, not consistent with the best interests of the principal.
WHO IS THE “PRINCIPAL” AND WHO IS THE “AGENT”?
The principal is the person who is naming people to act on his or her behalf regarding financial matters. The agent is the person designated to act on behalf of the principal.
CAN I HAVE MORE THAN ONE AGENT?
Yes, and it is preferable that you do. People generally pick one agent and then have a successor agent named as a back-up. In addition, you can name more than one agent to act at one time. In that case, you are naming “co-agents”. You can also choose whether those co-agents must act together or have the ability to act independently.
ARE THERE ANY OTHER PEOPLE I NEED TO CHOOSE TO ACT?
You can choose a “monitor” for your agent. The monitor does not act as an agent themselves but has the ability to monitor the activities of the agent. For example, if they have reason to believe that the agent is acting inappropriately, they can request financial information, i.e. bank statements, from the agent to review. If their review leads them to believe that the agent has acted in violation of their fiduciary duty, then the monitor can take legal action to potentially revoke the agent’s authority.
WHO SHOULD I CHOOSE AS MY AGENT?
You should choose someone that you trust implicitly to handle your financial affairs for you. You should remember that, unless you direct otherwise in writing, the power of attorney will continue to be effective if you lose your mental capacity. As a result, you need to choose someone who can be trusted at a time when you no longer have the ability to evaluate the propriety of their actions.
CAN I REVOKE MY POWER OF ATTORNEY?
Yes. You can revoke your power of attorney at any time. It is advisable that after revoking your power of attorney that you deliver a copy of the revocation to your agent, so you can ensure that they know they can no longer act on your behalf. In addition, if your power of attorney was recorded at the County Clerk’s office, you should record the revocation there as well.
DO I NEED TO RECORD MY POWER OF ATTORNEY?
Generally, no. The only time you need to record the power of attorney is if it was utilized in connection with the signing of a deed. I generally do not recommend the recording of a power of attorney otherwise, because once you record it the document becomes a public record – available for anyone to see.
CAN A POWER OF ATTORNEY BE UTILIZED TO MAKE GIFTS OF MY ASSETS?
Yes – depending on what you authorize in the power of attorney document. The statutory form includes a list of powers that runs from item “A” to “P”. Item “I”, if you select it, allows your agent to make gifts you customarily have made to people or entities up to $5,000 per beneficiary each year.
CAN MY AGENT MAKE GIFTS IN EXCESS OF $5,000 PER BENEFICIARY EACH YEAR?
Yes – if you separately authorize the agent to do so. Section “g” of the power of attorney form allows you to indicate that you authorize the agent to engage in additional gifting. The parameters of that gifting are then described in writing in section “h” of the document titled “Modifications”.
IS SUCH ENHANCED GIFTING AUTHORITY APPROPRIATE?
It depends on your overall estate planning goals, whether such enhanced gifting is appropriate. For example, some people want the authority in place to allow asset transfers that may allow them to qualify for Medicaid coverage to pay for nursing home care. Other people may not be comfortable in granting such authority and choose to opt out of such planning.
As you can see from the above questions and answers, there is a certain degree of complexity in the planning, drafting, and execution of a power of attorney. To ensure your power of attorney is properly done, it would be wise to consult with an estate planning professional.
Matthew J. Dorsey, Esq. is a Partner with O’Connell and Aronowitz, 1 Court Street, Saratoga Springs, NY. Over his twenty-six years of practice, he has focused in the areas of elder law, estate planning, and estate administration. Mr. Dorsey can be reached at (518)584-5205, This email address is being protected from spambots. You need JavaScript enabled to view it. and www.oalaw.com.
