I have a soft spot for anniversaries. The passage of time offers its own peculiar form of judgment. One year ago, a new Power of Attorney law went into effect in New York. Legal practitioners were cautiously optimistic that the new form would correct some long-standing issues. For starters, executing the old power of attorney forms, which were divided into two parts requiring multiple notarized signatures and several initials, was a pain. The other major issue was that some banks and financial institutions treated the old power of attorney form with disdain. On both fronts, the new law has had a positive impact.
In Estate Planning discussions, Wills and Trusts receive the most publicity while Powers of Attorney occupy a second tier. This delineation has always bothered me. While a Will resides quietly in a folder for decades, a Power of Attorney is being exercised constantly. It allows an agent to conduct financial transactions, buy and sell real estate, add or remove beneficiaries and create trusts. It is the instrument that is utilized to help a loved one become eligible for Medicaid and prevent certain resources from becoming probate assets. A power of attorney form that is easy to set-up and use regularly is an invaluable tool.
Ease of execution is an underrated concept in estate planning. Aging adults, many coping with illness, are the demographic that undertakes the creation of power of attorney forms more frequently. The simple act of signing one’s name or placing initials within a prescribed area on a page can be daunting for a person dealing with physical limitations. The new Power of Attorney form allows a creator to direct another to execute the form on their behalf. Individuals who may have shied away from setting up a Power of Attorney because of health problems now have an opportunity to take advantage of the new law’s inclusiveness coupled with the virtual execution options approved by New York State. Technology through video conferencing removes logistical barriers for execution by bringing all parties together. The new form has also removed unnecessary signatures and initialing, shortening the form and reducing the effort required to execute.
After all the trouble that families went through to execute those old powers of attorney, imagine their surprise when the agent presented the form to the bank and received a hostile reception. Many banks and financial institutions, prior to last June, treated New York State Powers of Attorney as if they were ads found in the back of comic books. Agents were told to use the financial institution’s own power of attorney forms which in many cases would be unable to be executed, because their loved one no longer had capacity. The new law authorized legal remedies with damages and attorney fees should banks or other financial institutions refuse to accept a valid New York State Power of Attorney. Banks still have to review the Powers of Attorney and ascertain validity which means that friction will still remain during this process, but the situation has improved.
The Power of Attorney form released last June was a common-sense reaction to years of frustration. One year later, the results have been positive. Families can look forward to more flexible execution options and improved coordination with financial institutions with respect to Powers of Attorney. Please contact the professionals at Sloan and Feller today for more information.