After much outcry from the Bar, the New York legislature passed, and, on August 15, 2010 Governor Patterson signed, amendments to the New York Power of Attorney Law in which a new statutory form and framework were implemented effective September 1, 2009.
The motive for the 2009 change was the perceived abuse of powers of attorney by the appointed agents. However, the cure for that concern carried with it a new set of problems. Among other things, the 2009 law required that all powers of attorney executed in New York include a verbatim recitation of a cautionary statement and an agent notice related to the powers given to, and responsibilities of, appointed agents. The law also provided that any existing power of attorney automatically would be revoked by the execution of a new power of attorney.
What engendered opposition to the 2009 law was the extraordinarily broad range of instruments that fell under its rubric. In particular, the definition of a power of attorney subject to the 2009 law includes any written instrument signed in New York in which someone appoints an agent to act on his or her behalf. Thus, before the 2010 amendments, common commercial and business documents in which an individual grants an agent the power to act on his or her behalf, such as stock powers, voting proxies and limited liability company agreements, were not be valid if they are not in compliance with the 2009 law.
The 2010 amendments, which will become effective on September 13, 2010 and apply retroactively to powers of attorney executed on or after September 1, 2009, narrow the definition of a power of attorney by specifying that the law will not apply to:
- 1. a power of attorney given primarily for a business or commercial purpose, including without limitation:
(a) a power to the extent it is coupled with an interest in the subject of the power;
(b) a power given to or for the benefit of a creditor in connection with a loan or other credit transaction;
(c) a power given to facilitate transfer or disposition of one or more specific stocks, bonds or other assets, whether real, personal, tangible or intangible;
- 2. a proxy or other delegation to exercise voting rights or management rights with respect to an entity;
- 3. a power created on a form prescribed by a government or governmental subdivision, agency or instrumentality for a governmental purpose;
- 4. a power authorizing a third party to prepare, execute, deliver, submit and/or file a document or instrument with a government or governmental subdivision, agency or instrumentality or other third party;
- 5. a power authorizing a financial institution or employee of a financial institution to take action relating to an account in which the financial institution holds cash, securities, commodities or other financial assets on behalf of the person giving the power;
- 6. a power given by an individual who is or is seeking to become a director, officer, shareholder, employee, partner, limited partner, member, unit owner or manager of a corporation, partnership, limited liability company, condominium or other legal or commercial entity in his or her capacity as such;
- 7. a power contained in a partnership agreement, limited liability company operating agreement, declaration of trust, declaration of condominium, condominium bylaws, condominium offering plan or other agreement or instrument governing the internal affairs of an entity authorizing a director, officer, shareholder, employee, partner, limited partner, member, unit owner, manager or other person to take lawful action relating to such entity;
- 8. a power given to a condominium managing agent to take action in connection with the use, management and operation of a condominium unit;
- 9. a power given to a licensed real estate broker to take action in connection with a listing of real property, mortgage loan, lease or management agreement;
- 10. a power authorizing acceptance of service of process on behalf of the principal; and
- 11. a power created pursuant to authorization provided by a federal or state statute, other than this title, that specifically contemplates creation of the power, including without limitation a power to make health care decisions or decisions involving the disposition of remains.”
In addition, previously executed powers of attorney will no longer automatically be deemed to have been revoked by the execution of new ones. New powers of attorney must explicitly state that the principal intends to revoke pre-existing powers of attorney.
The 2009 law also introduced a new Statutory Major Gifts Rider that principals must sign if they want to grant their agents the power to make gifts in excess of $500 per year. The Bar has voiced many objections to that rider (now renamed the Statutory Gifts Rider) as well. The Law Review Commission is reviewing the related issues and will be issuing preliminary and final reports of its findings on September 1, 2010 and January 1, 2012, respectively.
Finally, under the 2009 law, there existed some uncertainty as to whether a power of attorney executed in another jurisdiction in compliance with that jurisdiction’s law would be deemed valid. The 2010 amendments make it clear that it will be, as will a foreign power of attorney executed in New York in accordance with the foreign jurisidiction’s law.