Governor Cuomo has signed legislation that will significantly change New York legislation regarding powers of attorney. The legislation, Chapter 323 of the 2020 Session Laws, will be effective 180 days from yesterday, December 15. The signing was accompanied by an agreement to amend the legislation (principally, to require that two disinterested witnesses sign the power in addition to the notarization). It is anticipated that the amendment will be enacted prior to the effective date of Chapter 323.
In a change that will likely create some concern with third parties, a proceeding to enforce recognition of a power may now include the award of damages, including reasonable attorney’s fees and costs if the court finds that the third party acted unreasonably in refusing to honor the agent's authority. That said, the legislation includes a “safe harbor provision” that provides for reliance in good faith upon an acknowledged power of attorney and allows for requesting an agent's certification and opinion of counsel.
Below is a summary of the legislation:
- The legislation expands the grounds for reasonably refusing to honor a power of attorney. It now includes the refusal by the agent to provide a certification or opinion of counsel. A third-party is also now allowed to honor a power of attorney and rely on the agent’s authority if the third-party has a good faith belief that the power is valid, and no actual knowledge that either the power is invalid or the agent does not have the authority to perform the act requested.
- With respect to execution of a power, the legislation explicitly provides that a person who, in good faith, accepts an acknowledged power of attorney without actual knowledge that the signature is not genuine, may rely upon the presumption that the signature is genuine.
- The legislation specifies a timetable and process for a third party to accept or reject a power of attorney.
- The legislation relaxes the requirement that the “exact wording” of the “Caution to the Principal” and “Important Information for the Agent” sections, both of which current legislation and the new legislation require to be included in powers of attorney. A power will be acceptable if the language “substantially conforms” to the statutory language.
- In a change likely to please many, the statutory gifts rider is eliminated. Now, gifting authority beyond the “standard amount” is to be included in a modifications section in the power of attorney itself.
- Finally, authority to make gifts absent language in the modifications section has been increased from $500 to $5,000 in any calendar year.