One of the most important and basic legal instruments everyone should have is a Power of Attorney. This is a legal tool that allows you to delegate legal authority to another person to make a wide variety of decisions for you (other than health care). As the principal, you give permission to someone (the agent) to make legal decisions for you related to your finances, property, and other matters. The power can be broad or limited and is used in the event you are incapacitated because of an illness or injury, or if you cannot be present to sign legal documents.
Powers of Attorney can be used if you become incapacitated, sick or disabled. They can be used for your convenience if you’re unable to conduct your affairs because of time, travel or any other reason.
Because of the broad range of powers granted to your agents, you need to select someone that you have the highest level of confidence and trust in. Oftentimes, this can be a spouse, a child, a close relative or a trusted friend or advisor.
Should you ever become disabled, incapacitated or ill for any reason, in the absence of a valid Power of Attorney, your affairs will be at a standstill. Your banking and financial needs may be unmet; payment of critical bills could be delayed; your business or company may need ongoing management. If you needed to sell a property, like your home, you’d be unable to do so. You might need to apply for Medicaid in order to pay for expensive nursing home care or home-care services. Without a Power of Attorney your family may not be able to meet your urgent needs.
In such situations, the law provides for the appointment of a legal guardian to conduct your affairs. Such proceedings can take a long time, be expensive and potentially contested. Additionally, unlike a Power of Attorney, there often will be requirements to account for your activities and subject transactions to judicial oversight.
Many families have situations where someone is disabled by dementia or Alzheimer’s disease or a chronic illness. Having a Power of Attorney as part of your “legal arsenal” will allow your family to properly continue and conduct your affairs and minimize the uncertainties that arise in these situations.
What Legal Authority is Granted by Power of Attorney?
Power of Attorney grants someone the authority to make important legal decisions on your behalf that might include:
- Managing property
- Buying or selling real estate
- Filing legal claims
- Conducting banking transactions
- Investing money
- Managing tax and retirement matters
- Making gifts on behalf of the principal
- Engaging in financial & estate planning
Keep in mind, Power of Attorney does not give an agent the authority to make medical decisions on your behalf. To appoint someone to this task, you’ll need to arrange a Healthcare Proxy. The person to whom you appoint Power of Attorney and Healthcare Proxy roles can be the same person, but he or she must be assigned through two separate procedures.
Protecting against Elder Financial Abuse
In 2009, New York amended its Power of Attorney laws to protect against elder abuse and then further amended the new law in 2010. According to The National Law Review, the 2010 Amendments clarify ambiguities in the 2009 Amendments and alleviate certain onerous provisions, including:
- “…amending the definition of “principal” so that it only applies to individuals “acting for himself or herself, and not as a fiduciary or as an official of any legal, governmental or commercial entity, who executes a power of attorney;
- …eliminating the provision of the 2009 Amendments that created a presumption that the execution of a power of attorney revokes any prior powers of attorney executed by the principal;
- …expressly providing that the execution of a power of attorney does not revoke any power of attorney previously executed by the principal;
- …adding a provision that a power of attorney that complies with NY-GOL 5-1501 and is executed in another state or jurisdiction by a domiciliary of the State of New York is valid in the State of New York, and a power of attorney executed in the State of New York by a domiciliary of another state or jurisdiction in compliance with the law of that state or jurisdiction or the laws of the State of New York is valid in the State of New York.”
If you set up Power of Attorney prior to 2009 and the enactment of the amended versions of the law, it’s important to review your arrangement with an attorney to make sure no updates are needed.
Choosing Your Agent
Choosing an agent for Power of Attorney is an important decision you must carefully consider. It’s best to choose a trusted family member or friend, but if you aren’t comfortable assigning the role to someone you know personally, you can choose a lawyer or other professional. Someone with Power of Attorney has control of your money and property, and can take advantage of the situation, which is why it is so important to appoint someone you trust. Your agent is a fiduciary who must conduct himself/herself with the highest degree of care and ethics to ensure that your your best interests are protected—and that the fiduciary doesn’t take advantage of you by using the Power of Attorney for his/her benefit. Violating this important duty will subject the agent to claims for breach of this fiduciary duty.
If you are ready to arrange power of attorney or you have questions about the process, contact us at the Law Offices of Elan Wurtzel at 516.822.7866.