To create a power of attorney, the principal must prepare a written document. The document must clearly assign to the agent the authority to act on behalf of the person who grants the authority or power of attorney, the principal. An agent may exercise all privileges and authorities given to the agent in the power of attorney document. An agent may not act beyond the scope of the authorization granted to them.
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 include:
- The principal’s acknowledgment of 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 Is a Power of Attorney?
A power of attorney is a legal document that gives one person the authority to act on behalf of another person. The person who is assigned the authority to act for the other is the agent. The agent may be referred to as an “attorney-in-fact,” but this person does not need to be an actual attorney. The person on whose behalf the agent may act is referred to as the “principal.”
What Is Required to Establish a Valid Power of Attorney?
There are certain legal requirements for establishing a valid power of attorney in New York. The principal must be at least 18 years old and have the required mental capacity. This means that the principal must have the mental capacity to fully understand the power of attorney and its consequences.
The agent must also be at least 18 years of age and have the necessary mental capacity.
Not only must a power of attorney be in written form, but it must also be legible or readable, and if typed, in a font that is not smaller than 12 point.
There must be 2 witnesses to the signing of a financial power of attorney. It must also be notarized, and the notary may serve as 1 of the 2 required witnesses.
A health care proxy, which is a power of attorney for medical decisions in New York, needs 2 witnesses but does not have to be notarized.
Witnesses cannot be the named agent and should not be a person who would benefit from the estate of the principal. While the agent must sign the power of attorney, the agent does not have to sign at the same time and place as the principal.
Finally, a power of attorney must contain certain language required by statute in New York. New York recently adopted laws requiring that the language in a power of attorney “substantially conform” to specific language in its “Statutory Short Form Power of Attorney” rules. This means that minor typographical or spelling errors can no longer invalidate a power of attorney if the language substantially conforms as required.
A person would want to refer to the state’s so-called “statutory short form power of attorney” to help them write a valid legal power-of-attorney document.
How Much Does a Power of Attorney Cost?
It is difficult to name a price for a power of attorney. Powers of attorney are used in a multitude of situations, and the price to have an attorney draft one would depend on the situation and the nature of the power of attorney that a person wants. Roughly, however, it might cost between $100 and $500 to obtain a valid legal power of attorney.
What Kinds of Powers of Attorneys Are Available?
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 principal’s death or the principal’s incapacitation. This power of attorney typically stays valid until the agent obtains the notice of death or disability. Or a principal may cancel a power of attorney if their need for it has passed. In addition, a non-durable power of attorney might be effective for a limited period of time per the document that creates it.
A durable power of attorney extends beyond the principal’s becoming incapacitated and contains specific language. For instance, “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 used for a variety of 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 for transactions;
- Pay bills;
- Make all decisions concerning the principal’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.
A business may want to use a power of attorney in certain situations, and powers of attorney may be part of a comprehensive estate plan.
What Are Two Common Scenarios In Which Powers of Attorney Are Used?
One standard type of durable power of attorney is a health care proxy or living will. In a healthcare proxy, the principal appoints an agent to make healthcare decisions on behalf of the principal. A healthcare proxy does not become effective until a principal becomes incapacitated, and the proxy remains in effect despite the incapacity.
A healthcare proxy takes effect when the attending physician of the principal determines that the principal lacks the mental capacity to make health care decisions.
Typically, a health care proxy must be in writing and signed by the principal to be valid. The proxy must also contain a provision stating that the principal appeared to execute the proxy while free of any duress.
As noted above, 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 principal’s estate when the principal passes away.
For example, a principal may own a 401(k) account. A principal who has made a power of attorney may become incapacitated. In that case, the agent may validly make investment decisions regarding the 401(k) until the time at which the principal passes away.
What Does “Durable Power of Attorney” Mean?
Many different types of powers of attorney are possible. The “durable power of attorney” is a specific type and typically grants the most extensive decision-making powers. For example, most powers of attorney automatically lose effectiveness when the principal passes away or becomes incapacitated.
- Nevertheless, a durable power of attorney continues to have an effect even if the principal becomes incapacitated. Typically, a person is deemed to be “incapacitated” when they are unable to make their own decisions due to illness, age, or injury.
The principal can generally revoke power of attorney at any given time. Since an incapacitated person cannot choose to revoke it, the law assumes that they would revoke it in such a case if they could.
May a Power Attorney Grant Authority for Medical Decisions in New York?
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 in New York.
If an agent is to have decision-making authority with respect to medical decisions in New York, the principal must complete a “health care proxy document,” as noted above.
Do You Need the Help of an Attorney for My Power of Attorney Issue?
If you believe that you need a power of attorney or have one and are not sure it meets your needs or is valid, you want to consult a local New York estate attorney. As can be seen from the information provided, New York law contains a number of technical requirements for powers of attorney.
LegalMatch.com can connect you to an attorney who can draft a power of attorney that is sure to be legally valid and fulfill your purpose. Or, if you have a power of attorney, your attorney can review it and suggest any revisions that it may need.
It is better not to guess whether your power of attorney is legally adequate and will achieve what you need. Better to have a local New York lawyer review it and ensure that it is what it needs to be.