To: New Jersey Law Revision Commission
From: Staff
Re: Proposed Changes to Final Report on Durable Power of Attorney Revision
Date: September 7, 2010
MEMORANDUM
Further technical amendments to New York’s power of attorney law were just signed into law and will become effective on September 13, 2010 (retroactive to September 1, 2009). The New York State Bar characterized these technical amendments as a “ measure that corrects unintended problems created by New York’s Power of Attorney (POA) Statute that went into effect on September 1, 2009.” Because of concerns raised informally with Staff before the technical amendments became law, Staff has reviewed the technical amendments in their entirety. As will be discussed below, for reasons suggested by these amendments and in an effort to accommodate commenters’ concerns, Staff recommends modifications to five sections of the Final Report on the General Durable Power of Attorney Act. Revised copies of these sections are attached to this memorandum.
Proposed changes to Final Report
1. 46:2B-20.4. Applicability
Staff has added one narrow category, two broad categories and a fourth “catchall” category of documents that are to be excluded from the applicability of the act. These categories were created to address the concern that the current applicability provision did not sufficiently exclude certain documents granting authority or “power” for business and commercial purposes that are customarily not governed by power of attorney law and not intended to be covered by the act. This concern had been an impetus for changing New York’s law.
Rather than enumerate narrowly worded and specific “powers” that should be excluded, as New York has done in its amended section 5-1501C, Staff created, for the most part, broader categories of powers to be excluded, consistent with the approach of the Uniform Power of Attorney Act (UPOAA). In this way, if a particular type of “power” is not enumerated, the broad category, including the new catch-all category at subsection a.(10), nonetheless should cover the type of “power” to be excluded.
Commenters also disputed whether all the “powers” now excluded by New York’s recent amendment should be excluded in New Jersey law. For example, a power authorizing a financial institution to take action relating to an account in which the financial institution holds cash, securities or financial assets on behalf of the person giving the power is now specifically excluded from the applicability of New York’s law. Commenters reported to us that the meaning of this “power” is unclear and such a power could very well be part of the grant of authority that the principal intended to give an agent in a durable power of attorney. There are other examples of powers, specifically excluded from New York’s law, which Staff was advised should not be excluded from 46:2B-20.4 for the same (or similar) reasons. Staff agrees with the analyses and, hence, does not recommend adoption of all of the exclusions enumerated in the New York law, even in a broader category form.
New subsection b. enables a principle to direct that the act will govern the power, regardless of whether the act otherwise would be applicable.
2. 46:2B-10.10. Acceptance and good faith reliance by third party
In light of the language used in sections 20.16 and 20.17, Staff added the word “or termination” after the word “revocation” in subsection b. of this section.
3. 46:2B-10.12. Affidavit of non-revocation or non-termination of power of attorney; language and model form
For the purposes of clarity, plain language, and consistency with sections 20.10 (c) and 20.17, the model form of affidavit has been revised.
4.46:2B-20.16. Agent’s act without knowledge or notice of principal’s death or incapacity
Staff revised this section to make it more consistent with sections 20.10, 20.12 and 20.17(e), all of which refer to reliance upon or action based on a power of attorney until notice or knowledge of the principal’s revocation of the power or of the termination of the power for a specified reason. The revision is also consistent with the source statute N.J.S. 46:2B-8.6. The proposed change will further clarify that an agent who acts in good faith without the knowledge of the principal’s revocation of the power of attorney, or without the knowledge of the termination of the power for any reason, binds a principal just as an agent acting without the knowledge of the principal’s death would bind a principal.
5. 46:2B:20.17. Revocation and termination of power of attorney
The Final Report makes a distinction between revocation of unrecorded and recorded powers of attorney. The New York amendment makes a similar distinction but requires that the recording of a revocation be made in the same office where the original power of attorney was recorded.
Rather than recommending modification of the Final Report to add the words, “in the same office”, after the words, “records” in subsection 46:2B:20.17b., which could be read to make the revocation invalid if not recorded or if not recorded in that office, Staff proposes language that makes an unrecorded revocation ineffective as to a third party or agent who acts in reliance on the recorded power of attorney without notice or knowledge of the revocation of that power.
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