A power of attorney is a legal document that gives one individual the authority to act on behalf of another. The individual assigned the authority to act is the agent (who is occasionally referred to as the “attorney-in-fact”).
The individual on whose behalf the agent may act is referred to as the principal. The attorney-in-fact need not be an actual lawyer.
Power of Attorney in New York
You might also consider granting a loved one or friend power of attorney over specific parts of your life as you handle other estate planning matters. In New York, there are a few essential things to consider before signing your power of attorney forms.
What Is Required to Make a Valid Power of Attorney?
A power of attorney is an authorization that must be in writing and permits the agent to act on behalf of the grantor of the power (the principal). An agent may exercise all privileges and authorities given to the agent under a power of attorney but may not act beyond the scope of the authorization granted to the agent.
Generally, a power of attorney must be signed and dated by the principal. The principal must have the adequate mental capacity to enter into a power of attorney. Other requirements for a proper power of attorney creation may include:
- The principal’s acknowledging the power of attorney document before a notary public;
- The agent’s signing and dating the power of attorney document before a notary public.
What Kinds of Powers of Attorneys Exist?
The length of time for which a power of attorney may last depends upon whether a power of attorney is a durable power of attorney or a non-durable power of attorney.
A non-durable power of attorney is a power of attorney that is withdrawn by operation of law by either the grantor’s death or the grantor’s becoming incapacitated. This power of attorney typically stays valid until the agent obtains the notice of death or disability.
A durable power of attorney extends beyond the grantor’s incapacity and contains specific language, such as “This power of attorney shall not be affected by my subsequent disability or incompetence.” Durable powers of attorney may be general or limited in scope. Durable powers of attorney are restricted in one significant aspect, in that they do not extend beyond the principal’s death.
What Types of Decisions May a Power of Attorney be Used For?
Powers of attorney can be utilized for both general and specific objectives.
A general power of attorney is comprehensive in scope. This document typically gives the agent all of the powers and rights that the principal has. For instance, a general power of attorney may allow the attorney-in-fact to:
- Sign documents;
- Pay bills; and
- Make all decisions concerning the grantor’s real and personal property.
General powers of attorney can be used regardless of whether the principal is incapacitated. A general power of attorney ends upon the grantor’s death or incapacitation unless the grantor retracts it earlier.
A power of attorney may authorize the agent to make decisions concerning something more specific, such as a transaction respecting a single piece of property. A power of attorney authorizing an agent to act on behalf of a principal concerning one particular, single transaction is a limited, or specific, power of attorney.
What Are Two Common Scenarios Where Powers of Attorneys are Used?
One standard type of durable power of attorney is a health care proxy. In a healthcare proxy, the principal appoints an agent to make health care conclusions on behalf of the grantor. A health care proxy does not become effective until a grantor becomes incapacitated, and the proxy stays effective despite the incapacity.
Typically, a health care proxy must be in writing and signed by the grantor to be valid. The proxy must also contain a provision stating that the grantor appeared to execute the proxy free of duress.
A second purpose for which powers of attorney are also frequently used is for estate planning purposes. A power of attorney may grant an agent the right to manage assets that may become the property of the grantor’s estate when the grantor dies. For instance, a grantor may own a 401(k) account. Suppose a grantor who has made a power of attorney becomes incapacitated. In that circumstance, the agent may provide a power of attorney that validly allows them to make investment decisions regarding the 401(k) until the point the grantor dies.
What Does “Durable Power of Attorney” Mean?
There are many different types of power of attorney arrangements available. “Durable power of attorney” is a specific type and typically grants the most extensive decision-making powers. For instance, most power of attorney arrangements automatically lapses when the principal dies or becomes incapacitated. The “principal” is the individual who is granted the power first, while the individual who receives the authority to make decisions is called the “agent.”
Nevertheless, durable power of attorney will continue even if the principal becomes incapacitated. The principal has to make it obvious that this is the arrangement they want.
Typically, a person is deemed to be “incapacitated” when they are unable to make their own decisions due to:
- Age; or
The principal can generally revoke power of attorney at any given time. Since an incapacitated individual cannot choose to revoke it, the law assumes that they would revoke it in such a case if they could.
Also, incapacity can lead to circumstances involving a more involved form of care and control over the incapacitated individual, such as guardian advocacy or guardianship. As mentioned, a durable power of attorney will not expire in the event of the principal’s incapacitation.
In Which Situations Are Durable Power of Attorney Most Useful?
If your wishes are not in writing, your decisions will ultimately fall onto your next of kin, who may or may not honor them. To avoid this situation, you can grant a durable power of attorney to a trusted friend or family member who you know will respect your requests.
They will then have the legal authority to ensure that your specific preferences and instructions are carried out if you become unable to express your wishes.
Power Attorney Not Available for Medical Decisions
The main distinction between New York’s power of attorney and a power of attorney offered in other states is that one cannot grant a power of attorney over medical decisions. To have decision-making responsibility for another, New York requires the agent to use a “health care proxy document.”
How to Grant Power of Attorney in New York
To grant power of attorney to your agent, you must follow a few simple steps:
- You need to appoint an agent whom you trust: This individual will be making significant financial and life decisions on your behalf.
- You must obtain a power of attorney form: These can usually be found online or through your lawyer.
- You and your agent must sign the document and have it notarized by a notary public: Most banks employ a public notary and usually offer the service.
Do You Need an Attorney to Assist in the Process?
It is possible to grant power of attorney without actually using a lawyer; however, given the gravity of the responsibility you are entrusting to another person, it is advisable to seek the advice of an experienced estate attorney in New York. They can direct you through the process, help you get the proper forms, and ensure that your goals are met.