Have you thought about planning for your future? Perhaps you are considering a will or a trust. However, a New York power of attorney is an estate planning tool you should have among your possibilities. In this article, we tell you everything you need to know about a power of attorney. From its functions and requirements to possible uses, read on!
At Ortiz & Ortiz we are lawyers for inheritance disputes and New York asset protection attorneys who have been serving the community for over 30 years. If you are looking for advice on planning for the future of your property and assets in the event that you are unable to do so, contact us and let us know your case.
Everything you need to know about a power of attorney in New York in 2021
As we said in the beginning, planning for the future is not just about wills and trusts. Proper estate planning can solve many problems in the future. And, for this, it is ideal to have a power of attorney and an agent who can, eventually, execute it. But don’t worry, as we will explain in detail what to do and how.
If you are reading this, it is because you can still take care of yourself and your affairs. But this may not always be the case and may change from one day to the next. An accident, illness or simply old age can render you unable to manage your accounts, property and other assets. In that sense, it becomes crucial to choose a person who in the face of authority can act in your place. And this can be done through a power of attorney.
What is a New York power of attorney?
The words “power of attorney” may sound familiar to you. You probably even know what they mean and have used a power of attorney at some point in your life. But do you know exactly what it’s for, what it’s used for and what you can do with a power of attorney in the United States? Here we tell you.
Power of attorney is outlined in the New York General Obligations Law, specifically in Article 5 of Title 15.
Characteristics of the New York Power of Attorney
- It is known by the abbreviation POA.
- It is a signed document through which you are going to allow another person to have power over a specific circumstance. This means that a person other than you will have the ability to act as if they were you.
- You are going to allow the designated person to make decisions or perform other actions that are entrusted to them in that document.
- The most common powers of attorney relate to medical, legal or tax matters.
- The subject of the POA, i.e., the one who issues it, is called the principal.
- The person who is being granted the authority is called the agent.
- It is important to note that the power of attorney granted by the principal to the agent or attorney-in-fact may be broad or specific. This will depend on the will of the principal.
- It is not a form that is completed and delivered. There are several types of powers of attorney. For example, there is the durable power of attorney, simple power of attorney, medical power of attorney, among others. Read on, below we detail each specific one.
- The power of attorney must be typed or printed clearly and legibly. The handwriting must be at least 12 points.
Types of powers of attorney
The power of attorney that the principal grants to the agent will depend specifically on the circumstances that the agent will be faced with. In the following lines we will review each of the powers of attorney and what each one implies.
- General power of attorney: this is a power of attorney that the principal gives to the agent so that the latter can perform all the acts that the former would do. Basically, for legal purposes, the agent becomes the principal. It serves to file tax returns, execute a contract, borrow money, among other things. This power of attorney becomes effective immediately upon its creation and its expiration date will be when the principal terminates or revokes it. It also becomes invalid if the principal becomes incapacitated or dies.
- Durable Power of Attorney: is very similar to the general power of attorney. The difference between the two documents is that the durable power of attorney survives in cases where the principal becomes incapacitated. This can be used to give the agent the power to make medical decisions about, for example, end-of-life care for the principal. It will also allow the agent to handle other financial matters, amongst other things.
- Limited power of attorney: this is a more restricted power of attorney than the previous two. The actions that the agent can perform with this document will depend exclusively on what is stipulated by the principal in the power of attorney. Another point to consider in this type of power of attorney is that it is used only once.
- Emerging Power of Attorney: This is a power of attorney that is created without the need to be used immediately. However, it becomes effective upon the occurrence of a triggering event that is determined in the power of attorney by the principal. It can be, for example, a mental or physical disability.
- Medical Power of Attorney: is when it is desired that another person take over the medical situation when the principal is unable to do so themselves. In that sense, the agent is stipulated to be able to decide for the principal in medical situations and give orders of what to do and what not to do.
What is a durable power of attorney and what is its importance?
If you are looking for a New York power of attorney, you should know that the durable power of attorney is the most complete of all. The principal, who grants the power of attorney to the agent, asks the agent to make all decisions for them, even when the principal is incapacitated by a medical situation or death.
Considering the above, the New York durable power of attorney may be the solution if you are looking to secure your estate plan through a will or trust. In that vein, it is important to have a mechanism in place to protect your assets and also ensure that your business, financial and personal affairs are in good hands. Basically, the durable power of attorney allows the person you designate to act on your behalf in front of the authority and in any procedure that needs to be done.
Note: If you are interested in going deeper into wills and trusts, read the difference between wills and trusts. Also, analyze what letters are testamentary. And if you are thinking about leaving a power of attorney because you have debts and do not want their relatives and third parties to inherit them, read our article on if someone dies, who pays their debts.
How is a New York power of attorney made?
- First, whoever wishes to grant the power of attorney must be clear about what power of attorney they wants to deliver through the document. That is to say, what actions they want to be performed with the document.
- Once this is clear, the document must be drafted. At this point it is advisable to be advised by a lawyer, who knows the types of powers of attorney and the scope that each one of them may have.
- When the document is perfectly drafted and reflects the will of the Principal, the latter will proceed to sign it before a notary.
- In order for the power of attorney to become active and effective, it is the agent who must sign and acknowledge that he/she has read the section entitled “Important Information for the Agent”. This section explains specifically what the agent’s role will be, what fiduciary duties they will have, and what are the limits of the decisions they may make. Also, the power of attorney may become effective upon a triggering event, which will be clearly stated in the document.
- It is not necessary for the parties, i.e. the principal and the agent, to sign at the same time.
When does the power of attorney end?
- When the expiration date set forth in the power of attorney, if any, is met.
- If the principal dies.
- When the Principal decides to revoke the POA. To do so, it must notify the Agent and, in addition, any institution where the Agent has used the POA. In that case if there is no co-agent or successor agent, the power of attorney becomes invalid.
- In the case of a non-durable or general power of attorney, the power of attorney becomes invalid immediately when the principal becomes incapacitated.
- In the situation of a durable power of attorney, the document survives the incapacity. Moreover, it is the agent who takes control over medical decisions.
- When the purpose of the power of attorney is fulfilled.
What is an agent when we talk about power of attorney?
As we said a few lines before, the agent is the person who will appoint the principal. The agent will make medical or other decisions, as well as carry out specific procedures or actions that will be stipulated in the power of attorney.
Qualifications to be an agent
- It can be any person in whom the principal trusts to manage their affairs, which can be commercial, financial, medical, among others.
- Generally the agent is a family member such as the spouse or any of the children. It is very common that the principal designates the spouse as agent but the children remain as successor agents. In other words, if something happens to the principal agent, the successors come into play.
- Appointing an agent should be a well thought out decision. Moreover, it should be someone you have complete confidence in. To whom you would pass your credit card or a blank check.
- One option to avoid having to appoint a single agent is for the principal to appoint co-trustees. This means that several agents will have to act together and get things done. This works when the principal does not want to give unlimited power to a single agent. However, it has one drawback and that is that it can in some cases slow down the proceedings, since several agents have to agree.
- There are some cases in which the principal requests that there be a supervisor of the agent. In that case it is advisable to appoint that supervisor as agent at once.
When can the agent begin to act?
The date or time when the agent’s powers will begin will depend on the power of attorney chosen. In general, when they are for specific actions or procedures, the effective date is specified in the contract itself. However, there are powers of attorney that can become effective immediately when there is an incapacity of the principal. In any case, in order to prove that there is an incapacity there must be a document from the principal’s attending physician stating what the situation is.
What can’t the agent do with the power of attorney?
- Nothing that the principal has not specifically authorized in the notarized document.
- Act in their own best interests. This means that the agent or attorney-in-fact must always act in the best interest of the principal.
- The agent to whom the principal conferred the power of attorney to perform specific actions or make specific decisions cannot grant that power of attorney to a third party. It is only the designated agent who can make use of the power of attorney.
What to do if the agent is not acting in the interests of the principal?
The agent that the principal designates in the power of attorney has a fiduciary duty to act in accordance with the principal’s wishes. What happens if your agent does not fulfill the fiduciary duty? The principal can sue and seek damages. The court can also revoke a New York power of attorney if it determines that there has been a breach of fiduciary duty.
What is breach of fiduciary duty?
Breach of fiduciary duty occurs when a fiduciary acts in their own best interests rather than in the best interests of the principal. In this case, the agent is acting in their own interest rather than in the interest of the principal.
It generally occurs when the principal’s funds are used for the agent’s benefit, when conflicts of interest are not disclosed, commingling of money, among others.
How do you ensure that the agent is looking out for the principal’s interests?
No doubt you are not the first to ask yourself this question. Trusting someone else with your finances, medical decisions and other matters can be difficult and give you some insecurity. As we said earlier, it is advisable that your agent be someone the principal trusts blindly, someone to whom he or she would pass a blank check.
If these insecurities arise along the way, a third party can be appointed to act as a supervisor. This is thanks to changes made to the law in 2009 that allow the supervisor to monitor the agent’s actions. Under the law, the supervisor will have the legal right to access the agent’s records and review them on behalf of the principal. Thus, through the supervisor, the principal will be able to ensure that the agent is acting under the interests vested in them.
Under this logic, the principal can:
- Appoint a supervisor to monitor the agent.
- Decide how often it wants the agent to report to the monitor.
Is the agent liable for the principal’s debts?
This is one of the most frequently asked questions by those being appointed as agent. While being appointed agent for a family member or friend may be a privilege, many fear it will become a headache. Don’t worry, it won’t. And here’s why.
- The agent will only be responsible for executing what the principal stipulates in the power of attorney. No more, no less, just that.
- If the principal has debts with creditors, relatives or whoever, the agent is not personally responsible for them. When a principal has given them the authority to pay their debts through a power of attorney, they are not giving permission to pay the debts out of the agent’s own pocket, but rather directs the agent to pay them out of assets or property held by the principal.
Note: If you are thinking about leaving a New York power of attorney we recommend that you check to see if you have debts in the United States. And if so, look at some options such as consolidating the debt or filing for bankruptcy. Remember that there are 6 types of bankruptcy and the process for filing bankruptcy in New York is more viable if you contact our New York bankruptcy lawyers and debt collection attorneys for advice.
Is a power of attorney the same as a guardianship?
A power of attorney is a signed document in which a person, the principal, grants power of attorney to a designated agent for the purpose of performing an action or making certain decisions. You should know that a power of attorney is not the same as a guardianship.
What is guardianship?
- It is a proceeding that is initiated in the Supreme Court.
- Its purpose is to appoint a guardian for an incapacitated adult.
- A guardian can still be appointed for someone who is capable, but does not have the powers to make certain specific decisions.
- The powers of the guardian are set forth in the order and in the judgment entered by the court. Guardianship is governed by Sections 81 and 83 of the New York Mental Hygiene Law.
Similarities of power of attorney and guardianship:
- Both the power of attorney agent and the court-appointed guardian can be given similar powers to write checks, pay bills, enter into contracts, among other things.
- In both guardianship and power of attorney, the signing attorney-in-fact must act in the interests of the principal or incapacitated person.
Does guardianship override power of attorney?
Yes, sometimes. When the Court’s judgment appoints a guardian of the property, it immediately voids the power of attorney. However, when a guardian of a person is appointed, the power of attorney is not voided. This is because the guardian of a person will only be able to make decisions about their personal affairs. That is, the guardian will not be able to handle financial matters.
Why hire our New York power of attorney experts?
As the saying goes, it is better to be safe than sorry. A properly drafted and executed power of attorney can be the solution to many current and future problems. First of all, it can give you peace of mind as to what will happen to your property and assets if something happens to you or you become incapacitated. And it can not only help you with financial matters, but also with other decisions such as medical or property management.
Contact our estate planning attorneys today and let them know about your case.
Our attorneys can help you with:
- Identifying what use you want to make of a power of attorney. And, along those lines, choose the one that best suits your needs.
- Drafting the power of attorney with all the requirements that the law demands.
- Advise you in the whole process, from the appointment of one or more agents, a supervisor, etc.
- Understanding how a power of attorney works in all areas. What is the relationship to guardianship, when does it expire, when does it take effect and most importantly, what happens if the agent is not doing things right.
Please contact us as soon as possible by mail or phone, we look forward to hearing from you!