Adjustments to the New York Legal professionals Act have come into impact
On June 13, 2021, changes to the New York Authority rule for personal affairs came into effect. Title 15 of Article 5 of the New York Code of Obligations sets out a “shortened statutory power of attorney” by which a “principal” means an “agent” acting on behalf of the principal in a variety of personal and financial matters a notary and two witnesses executes and recognizes the prescribed legal form. The revisions take up criticisms of the previous law, in particular the complexity of the previous legal form and the gift rider as well as the procedure for acceptance and rejection of the form by third parties.
Substantial conformity instead of exact formulation
According to previous law, the legal short form had to contain the exact wording of the form according to § 5-1513 of the General Obligations Act. The new law replaces the exact wording requirement with an essential conformity standard and provides that a power of attorney essentially corresponds to the form specified in § 5-1513, even if there are minor errors in wording, spelling, punctuation or formatting, or language that is essentially is identical with the legal form, but not identical. In addition, the lack of language that is irrelevant to a particular circumstance does not in itself mean that the power of attorney does not essentially meet the requirements. Essential compliance does not depend on the presence or absence of a particular clause.
The new law allows a person other than the principal to sign the power of attorney on behalf of the principal in the presence and on the instructions of the principal, provided that the person signing cannot be designated as an authorized representative or a successor authorized representative of the principal. This is a useful change for people with disabilities who may not be able to complete the form themselves.
The new law also requires the power of attorney to be signed, initialed and dated, with the signature of the person signing recognized as being necessary for the transfer of real estate and by two altruistic persons (one of whom is the notary and neither of whom is appointed as a proxy may or may be an authorized recipient of gifts) with the same formalities as a will (i.e. the power of attorney must either be signed in the presence of the witnesses or recognized as granted to each witness) by the client or on the instructions of the client). The legal short form contains a testimony that expressly acknowledges that these enforcement regulations have been complied with.
Although powers of attorney duly executed under the law in force at the time of enforcement will continue to be in effect, powers of attorney in the form of the earlier law that will take effect after the date the new law takes effect (i.e., after the 12th, 2021) will only take effect if the implementation requirements of the new law are met. As a practical matter, a replaced form created after June 12, 2021 is unlikely to meet the new regulatory requirements, as the replaced form does not contain spaces for the signature of two witnesses, nor does it contain the testimony of witnesses who expressly acknowledge that the regulatory requirements have been observed.
No separate legal gift driver
The revisions eliminated the separate legal gift tab. Under the new law, the amount of gifts an agent is entitled to in relation to personal and family support increases from $ 500 to $ 5,000 per calendar year, and the Chief Executive can approve gifts in excess of that amount in the “Changes” . Section of the new authorization form.
Procedure for accepting and rejecting powers of attorney by third parties; Protection for the reliance on powers of attorney
The new law clarifies the previous section 5-1504 and sets standards and adds protection for third parties who rely on a power of attorney without knowledge of a deficiency. The third party can refer to the certificate of a proxy or a legal opinion on all legal matters relating to the power of attorney if the third party justifies the application in writing. As soon as a third party reasonably accepts a power of attorney, the third party is released from liability for a transaction carried out in reliance on the form.
The new law sets a deadline of ten working days from the submission of an original or a certified copy of the duly issued power of attorney for third parties to either accept the form, reject the form in writing that sets out the reasons for rejection, or require the authorized representative to take a recognized affidavit Issues a declaration from which it can be seen that the power of attorney is fully valid. If the third party then receives a written response to the reasons for rejection, they have seven working days after receiving the letter to either respect the form or to reject the form definitively in writing, stating the reasons for rejection. These time requirements are not imposed on government departments of public health and public health, public pension systems, and social service districts that administer Medicaid and other public health insurance programs.
Powers of attorney and legal donations that have been properly executed in accordance with the law in force at the time of enforcement remain in effect. Any third party resident or doing business in New York State may not refuse to comply with a properly issued, abbreviated legal power of attorney under the law in force at the time of enforcement unless there is valid reason to do so. The revised law allows the court to award damages, including reasonable attorney fees and expenses, if the court determines that the third party has improperly refused to recognize a power of attorney. The new law compensates for the exemption of third parties from liability for reasonable reliance on the legal form and the possible consequences of damage, fees and costs for the unreasonable rejection of the form.
The new law should address the concerns expressed by critics of the current law as it simplifies the form and execution process, sets clear standards and procedures for third party trust and rejection of the form, and adds consequences for third parties who act inappropriately if they fail refuse to exercise the power of attorney in accordance with the legal form.