Clients often ask why they need to have power of attorney forms drafted for them. The simple answer is that in the event one becomes disabled and is unable, physically or mentally, to manage their own finances, pay bills, etc., the power of attorney is the easiest way to enable someone you have chosen to act on your behalf. If someone becomes disabled and has not executed a power of attorney, then that persons family or friends must petition the court to have the person declared incompetent. It is a rather lengthy and expensive process, for one. Additionally, it means that the person who has become disabled has no right to choose who the agent will be. On the contrary, with a power of attorney, a person decides in advance who will have the power to handle his/her finances, write checks, etc. With a guardianship, the court decides who has the power, and someone or some people need to petition the court to obtain that status. In some instances, the courts have appointed an outsider to manage the affairs of the incapacitated, which results in a great deal more expensive and bureaucracy. In a guardianship proceeding, even if a family member is appointed, the court requires continuous reporting by that individual, resulting in an additional burden placed on the family member.
A properly prepared and executed power of attorney form gives the person who you select–your agent-to transact matters on one’s behalf. Unfortunately, it does take effect the moment it is signed by the person giving the power to the agent. Essentially, the agent can act even when one is not incapacitated. However, the way to avoid this result is for the person making the power of attorney to not give the form to the agent unless and until the person becomes incapacitated or feels that he/she will become unable in the not-to-distant future.
In December, 2020, Governor Cuomo signed into law a new power of attorney statute, proposed by the New York State Bar Association, which statute is designed to simplify the form and penalize institutions who refuse to accept the form. The latter has been an ongoing problem. The new law permits a court to assess penalties against an institution for failure to accept the form. This new law goes into effect within 180 days and is expected to make things easier for people in terms of their estate plan. The new form is not yet out; however, the older versions are still acceptable.
* * * * * *