The following overview and information sheet is provided for informational purposes. It is not intended as a “do it yourself guide” or templated. Drafting a Power of Attorney document, because it can gives someone almost unfetted power to act as if they were another person, is a serious undertaking that should only be done in consultation with an attorney.
POWER OF ATTORNEY: GENERALLY
A POWER OF ATTORNEY is a legal document that gives one person – known as the “AGENT ” – the authority to act for another person – known as the “PRINCIPAL “.
In New York they are most often created for use in two settings;
- First to make health care decisions, (A MEDICAL POWER OF ATTORNEY or HEALTH CARE PROXY);
- Second for use in handling financial affairs. (A DURABLE or FINANCIAL POWER OF ATTORNEY ).
“Durable” means the POWER OF ATTORNEY remains effective even when the PRINCIPAL becomes incapacitated. If you want your POWER OF ATTORNEY to be Non Durable it is important to specify that fact.
A POWER OF ATTORNEY usually becomes effective immediately upon being properly signed by the PRINCIPAL . A POWER OF ATTORNEY that does not become effective unless and until the PRINCIPAL becomes incapacitated is known as a “springing” POWER OF ATTORNEY .
Creating a POWER OF ATTORNEY in New York by using the official form (both financial and medical) will increase the chances that it will be readily accepted by those with whom your AGENT will need to conduct business.
Creation and use of the POWER OF ATTORNEY should always be read in conjunction with the Statutory forms that will be used to create a POWER OF ATTORNEY. One of the advantages of using the Statutory New York forms is that they include a good deal of information that is helpful in understanding what kind of power a PRINCIPAL is granting to an agent, as well as providing information that will help you decide what powers to grant or withhold.
MEDICAL POWER OF ATTORNEY
The New York legislature has created a medical or healthcare POWER OF ATTORNEY form. This is titled HEALTH CARE PROXY and may be found in the New York Consolidated Laws, Public Health Law, Section 2981 and at https://www.nysenate.gov/legislation/laws/PBH/A29-C.
This will give the AGENT the right to make Health Care Decisions for the PRINCIPAL , like whether to have a certain procedure or receive certain medicines if they are unconscious, incapacitate or no longer mentally able to make good decisions on their own.
A HEALTH CARE PROXY must be signed and dated by the PRINCIPAL , and must be signed by two adult witnesses who witnessed the PRINCIPAL sign.
It is good practice to keep an original HEALTH CARE PROXY directive on one’s person, with one’s physician and to give one to the “AGENT ”. If we create a Medical POWER OF ATTORNEY or “HEALTH CARE PROXY ” we will keep a copy too.
DURABLE (FINANCIAL) POWER OF ATTORNEY
Another and futher reaching Power of Attorney, a DURABLE (FINANCIAL) POWER OF ATTORNEY is typically set up for two different reasons. First if the PRINCIPAL can’t be present to take care of one or more financial matters, (for example you are buying a house in another State jointly with your spouse and they can’t be at the closing) or if a person wants and needs someone to be able to take their finances due to age or incapacity.
Powers of attorney must be signed not only by the PRINCIPAL (the person granting the power) but also by the AGENT a reminder of his or her obligation to put the PRINCIPAL ’s welfare first. In addition, if the POWER OF ATTORNEY includes the authority to make total annual gifts of more than $500 to one person or charity, that power must be included in a separate rider that, like a will, must be signed in the presence of two witnesses. The New York Statutory form contains such a rider.
Many people feel the best person to put in charge, is a close family member preferably one who lives nearby. Most financial advisers do not want this responsibility, nor is it cost effective to pay their hourly fee to handle routine tasks like paying bills.
In New York, naming co-AGENT s is one way to provide checks and balances and unless the PRINCIPAL provides otherwise in the POWER OF ATTORNEY , the co-AGENT s must act jointly. Also, unless the PRINCIPAL provides otherwise in the POWER OF ATTORNEY , a successor AGENT has the same authority as that granted to an initial AGENT . Some people choose to appoint another person, like an attorney, an accountant or a family friend, to supervise the arrangement.
Before appointing an AGENT , it is important to determine whether that person is willing to take on the duties. If you’re nervous about giving the signed document to your designated AGENT right away, you could leave it with your lawyer with instructions on when to turn it over. In that case, remember to tell your AGENT whom to contact.
When authorizing an AGENT it is common, but not mandatory, to authorize them to take any financial action you could take yourself. This could include estate-planning strategies like financing college savings plans for children or grandchildren, prepaying charitable bequests and converting traditional I.R.A.’s to Roth I.R.A.’s.
If you have set up a living trust you should carefully distinguish between the responsibilities of the trustee and those of the AGENT , you should indicate whether the AGENT may take money out of the trust, and that you give the AGENT the authority to transfer assets into it if you become incompetent. Even if most assets are ultimately held by the trust, you still need the AGENT to perform quasi-personal functions like signing a nursing home contract or tax return and accessing a safe-deposit box.
You can choose to make a POWER OF ATTORNEY effective from the moment you sign it, or specify that it be activated by a specific event, for instance, if you become incompetent.
The problem with the second approach, known as a springing power, is that someone must decide when you have reached that state. Traditionally, this has required a medical opinion and can lead to disputes.
If you plan to have the POWER OF ATTORNEY be effective overseas to buy or sell real estate, conduct business or open a bank account there, you need to find out what the law in that country requires, Very few countries will honor durable powers of attorney from other jurisdictions.
While some countries have an equivalent form, others permit the arrangements only under court supervision. In Britain, for example, you must use a POWER OF ATTORNEY that is 25 pages long and preparing a British POWER OF ATTORNEY can cost several thousand dollars.