SENIOR MOMENTS:
POWERS OF ATTORNEY
By
Stephen G. Levy
Attorney at Law
A Power of Attorney (POA) is one of the simplest legal forms and yet it is one of the most important. A POA allows you (the “principal”) to appoint another person (your “attorney in fact” or “agent”) to act on your behalf in regard to a wide variety of legal and financial matters. It cannot be used to make medical decisions for you. This article briefly describes how a power of attorney works and your options regarding when and how your agent can act on your behalf.
Governing Statute
Statutory authority for the POA form can be found in Article 5, Title 15 of New York’s General Obligations Law. Section 5-1501 spells out the options available in setting up a power of attorney and spells out the language which is required by law to be included on the form. Sections 5-1502A through Section 5-1502O explain in detail the types of activities included under each category on the form.
When POA Goes into Effect
Granting someone a power of attorney expands the authority to handle your business affairs to include your agent or agents. It never reduces your own ability to act on your behalf.
Choosing your Agent
Anyone you choose can serve as your POA. It does not have to be an attorney at law. You can name more than one person to serve as your POA. If you name more than one person, you can choose whether they have equal authority so that either one of the persons named can act on your behalf, or you can require that they must always act jointly. It is also possible to name one person as your primary agent and name someone else as a backup. The greatest flexibility is achieved when you name two people as your agents and allow them to act separately. This gives you the greatest likelihood that there will always be someone available to act on your behalf and they will not have to provide any additional documentation such as providing a doctor’s certification or proof that a prior agent is not available before they can act on your behalf.
Who you name and when the POA is to go into effect depends on your comfort level with the people you plan to name. If you have absolute confidence in your agents’ judgment and integrity, then you can grant the agents broad powers effective immediately and exercisable by either agent. If you feel the people would work better together than either one separately, then the form can be prepared so that they are always required to act jointly. If joint action is required and one agent cannot act, the other agent cannot act on their own. Alternatively, if you have an agent you trust, you can name them alone to serve as your POA initially and name a second person to serve only if the first person is incapable. In that case, the back-up can act only if they can first prove the primary agent is unavailable.
Revoking your POA
You may revoke a POA at any time. To revoke a POA, there are three important steps. First, you should physically destroy the form you wish to revoke. Secondly, you must give notice to the agents who had been named on the form that you have revoked that authority. Finally, you must notify any institution which may be holding a copy of the power of attorney you have chosen to revoke. For example, if you have presented a copy of the power of attorney to your bank, and then choose to revoke that power, the revocation is not effective in regard to the bank until you have sent the bank notice of the revocation. The power of attorney statute provides that if an institution can not be held liable for honoring a revoked power of attorney if they have not been given notice of the revocation.
By law, § 5-1504 of the General Obligations Law, a bank is not allowed to refuse a properly executed power of attorney. Often when dealing with a bank, they will require the use of their own form. This causes several problems. First, the bank’s power of attorney only applies to accounts at that bank. It would not apply to assets held by other institutions. Secondly, the principal may not be able to execute the bank’s form. The failure of a bank to honor a properly executed power of attorney form is unlawful.
Conclusion
A POA ensures that the person you have chosen can take care of matters for you if you cannot. Without a POA, your family may have to go through a lengthy and expensive court proceeding to have the same authority you can grant using the POA. A POA, along with a Health Care Proxy & Living Will for health care decisions, are essential elements of everyone’s estate plan, regardless of age or financial circumstance.
Stephen G. Levy is a member of the Elder Law Section of the New York State Bar Association and the National Academy of Elder Law Attorneys. His office is located at 21 Everett Road Ext. Albany, NY 12205 (518) 489-1098.