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September 03, 2010

Power of Attorney revised

New York State has revised the statutory form Power of Attorney, once again. The Power of Attorney, which is an agency document enabling a "Principal" to appoint an "Agent" for the transaction of business on behalf of the Principal, was revised in September of 2009. At that time, the previous version was strengthened by adding language to require that "major" gifting of the Principal's assets would have to be authorized on a separate rider to be witnessed by two disinterested parties. Since a will also requires two witnesses, the formality of testamentary execution was brought to the Power of Attorney form when gifting was to be authorized. Now, effective August 13, 2010, the Legislature and the Governor have made corrective changes to the form Power of Attorney. The 2009 version referred to "major gifts", those that needed the separate authorization with two witnesses. That version did not define what a major gift was, instead, referring the reader to the statutory law found elsewhere or to guess. The 2010 version deletes the word "major" from the gifts rider and also explicitly instructs the Principal to use the gift rider only if he/she intends that the Agent be allowed to make gifts to himself or to make gifts to others in an amount in excess of $500.00. Thus, the effect is the same as in 2009 when major gifts were defined by law to be those in excess of $500.00, but now, the reader need not reference said law in order to understand the document. About the only substantive change in the document from the 2009 version is that unless modified, the Power of Attorney does NOT revoke any prior power of attorney appointments. Last year's version gave an automatic revocation, unless modified. Since many people may have other power of attorney forms used to appoint agents to act, for example, in selling securities, appearing before legal agencies, etc., then these appointments remain effective and the new power of attorney appointment would be additional to those other designations and uses. Nevertheless, it is a good practice point to question the client about any agency agreements in effect prior to drafting the new Power of Attorney, as the Principal may wish to revise or terminate some of those arrangements through the modification portion of the document.