Yes, within limits. A New York agent acting under a power of attorney can sell the principal's property if the document grants authority over that type of property. Giving property away is a different matter. Deeding a house to a child, adding a name to an account, changing a beneficiary, or moving assets into a trust each needs separate, express gifting authority. Every transfer, whether a sale or a gift, is also bound by the agent's fiduciary duties under General Obligations Law (GOL) § 5-1505.
Which rules apply depends on the date the power of attorney was signed. New York changed its power of attorney law effective June 13, 2021, and many families hold documents signed under the earlier rules.
Written and reviewed by Albert Goodwin, Esq., New York estate attorney. This page reflects GOL Article 5, Title 15, as amended effective June 13, 2021. It is general information, not legal advice for your situation.
How the Form Grants Authority
The statutory short form in GOL § 5-1513 lists categories of authority, such as real estate, banking, securities, retirement benefits and tax matters. The principal grants each category by initialing it. GOL §§ 5-1502A through 5-1502N define what each category covers. The real estate category, for example, lets the agent buy, sell, mortgage and manage the principal's real property.
The Modifications section is where the principal narrows or expands those grants. In practice, the Modifications section decides most ownership questions, because broad gifting power must be written there and cannot be granted by initialing a line.
The Limit on Every Transfer: Fiduciary Duty
Initialing the real estate line does not give the agent unlimited power over the principal's home. GOL § 5-1505 requires the agent to:
- act according to the principal's reasonable expectations, to the extent the agent actually knows them, and otherwise in the principal's best interest
- act in good faith and avoid conflicts of interest
- keep the principal's property separate from the agent's own
- keep records of all receipts, payments and transactions, and produce them when the principal or certain other persons request them
A sale that has legal authority behind it can still be a breach of duty. A house sold below market to a friend of the agent is one example. Proceeds deposited into the agent's own account are another.
Sale or Gift: The Distinction That Decides Most Cases
New York law treats two kinds of ownership change differently.
- A sale or exchange for fair value: The principal receives roughly what the property is worth. The ordinary category authority covers this, such as line (A) for real estate or the securities line for brokerage assets. The question becomes whether the price and terms served the principal.
- A gift or gift-like transfer: The principal gives up value and receives little or nothing back. This requires gifting authority. A transfer to a relative for less than market value counts as a gift to the extent of the discount.
Many disputes start because someone treats a gift as if it were a sale. An agent who deeds a parent's house to a sibling for $1 is making a gift. The real estate line alone does not authorize it.
Gifting Authority: Check the Date on Your Document
Powers of attorney signed on or after June 13, 2021
Line (I) of the form, personal and family maintenance, allows the agent to continue gifts the principal customarily made to individuals, including the agent, and to charities. Those gifts cannot exceed $5,000 in total per calendar year. This is the only gifting the form allows without more.
Any gift beyond that allowance needs express authority in the Modifications section, under GOL § 5-1514. The 2021 law eliminated the separate Statutory Gifts Rider. The Modifications section should say who may receive gifts, whether the agent may be a recipient, and any dollar or asset limits. The $5,000 figure applies only to the personal and family maintenance allowance. It is not a default limit on gifts authorized in Modifications.
Post-2021 documents must be signed by the principal before a notary and before two witnesses. The notary may serve as one witness. The agent must also sign and have the signature acknowledged before acting.
Powers of attorney signed September 1, 2009 through June 12, 2021
These documents remain valid. Under them, the personal and family maintenance allowance was capped at $500 per year. Larger gifts, and other gift transactions, required a Statutory Gifts Rider. The rider had to be signed by the principal before a notary and two witnesses, at the same time as the power of attorney. If no valid rider exists, the agent's gifting power stops at $500 per year of customary gifts.
Powers of attorney signed before September 1, 2009
Older documents also remain valid and are interpreted under the law in effect when they were signed. Their gifting language varies. Have one reviewed before relying on it for a transfer.
| Date signed | Annual maintenance gift cap | Larger gifts require |
|---|---|---|
| On or after June 13, 2021 | $5,000 | Express authority in the Modifications section (GOL § 5-1514) |
| Sept. 1, 2009 to June 12, 2021 | $500 | A properly executed Statutory Gifts Rider |
| Before Sept. 1, 2009 | Depends on the document | Review of the document's own language |
Ownership Changes That Count as Gift Transactions
Several common transfers are not outright gifts but still shift who will own the property. New York treats them as gift transactions, and they need the same express authority described above.
- Adding the agent or anyone else to a deed: Putting a child's name on the principal's house gives that child an ownership share. Without gifting authority, a title company should decline to insure the deed, and the transfer is open to challenge. See our page on houses held in two names.
- Creating joint accounts with survivorship rights: An agent can manage the principal's bank accounts under banking authority. Retitling an account so the agent or a relative takes it at death is a gift transaction. Our page on joint bank accounts covers how those accounts pass.
- Changing beneficiary designations: Changing who receives a life insurance policy, IRA, 401(k) or payable-on-death account redirects property at death. This needs express authority. Banks and plan administrators often refuse beneficiary changes by an agent unless the document clearly grants that power.
- Creating or funding a trust: Creating, amending or revoking a trust for the principal, or transferring assets into one, requires express authority. That includes deeding a home into a revocable trust as part of a plan to avoid probate. For which assets can go into a trust, see assets that can and cannot go into revocable trusts.
Transfers to the Agent
Transfers from principal to agent draw the closest scrutiny, because the agent stands on both sides of the deal. Sales and gifts are judged differently.
A sale to the agent
An agent who buys the principal's property is dealing with himself or herself, which GOL § 5-1505 treats as a conflict of interest. The best protection is express authority in the Modifications section to purchase from the principal. Beyond that, the price must reflect fair market value, ideally supported by an independent appraisal. The terms must be ones an unrelated buyer would accept, and the proceeds must go to the principal. Courts look at whether the sale was fair and in good faith.
A gift to the agent
A gift to the agent is by definition not at fair value, so price is not the test. The questions are whether the document expressly authorizes gifts to the agent, whether the gift is consistent with the principal's known wishes and best interest, and whether it resulted from undue influence. In Matter of Ferrara, 7 N.Y.3d 244 (2006), the Court of Appeals held that gifts under a power of attorney must be in the principal's best interest, even where the document permits gifts. The Legislature tightened the gifting rules in 2009 partly in response.
If you suspect an agent has moved property improperly, our page on abuse of a power of attorney explains how to demand an accounting and recover assets. For litigation over agent misconduct, see our breach of fiduciary duty practice.
Medicaid Planning Transfers
Families often ask an agent to move assets so a parent can qualify for Medicaid nursing home coverage. Nursing home Medicaid reviews transfers made within 60 months of the application. A transfer for less than fair value can trigger a period of ineligibility. Federal law exempts certain transfers, including:
- transfers to a spouse
- transfers to a blind or disabled child, or to a trust for that child
- transfer of the home to a child who lived there and provided care for at least two years before the parent entered a facility
- transfer of the home to a sibling with an equity interest who lived there for at least one year before admission
An agent cannot make any of these transfers without gifting authority, because each moves value away from the principal. Many New York estate plans grant Medicaid-planning gift authority in the Modifications section for this reason. New York has also enacted a look-back for community-based (home care) Medicaid, but implementation has been delayed more than once. Confirm current rules before any transfer.
Real Estate Transfers in New York: The Mechanics
- Recording the power of attorney: Real Property Law § 294 requires a power of attorney used to convey real property to be recorded in the county where the property sits. In the five boroughs, this is done through the City Register's ACRIS system. Elsewhere, it goes to the County Clerk. It is usually recorded together with the deed.
- Signing the deed: The deed names the principal as grantor, and the agent signs on the principal's behalf, for example "Jane Doe, by John Doe, her attorney-in-fact."
- Title insurance requirements: Title underwriters commonly ask for the original power of attorney or a certified copy, the agent's photo identification, and an affidavit from the agent that the principal is alive and the power has not been revoked. Some ask for a recent letter or phone confirmation from the principal. If the transfer is a gift, they will also look for gifting authority.
- Transfer tax returns: New York State real estate transfer tax returns (Form TP-584) and, in New York City, the Real Property Transfer Tax return must be filed for most transfers. A gift with no consideration often owes little or no tax, but the returns are still required.
- Existing mortgage: In a sale, the mortgage is usually paid off from the proceeds at closing. In a gift or a deed into trust, the mortgage stays on the property. Most mortgages contain a due-on-sale clause, though federal law bars lenders from enforcing it for certain transfers, such as a transfer into a revocable trust where the borrower remains a beneficiary and occupant. Review the loan documents first.
- Tax reporting: A sale is reported on IRS Form 1099-S under the principal's taxpayer information. A gift may require a federal gift tax return (Form 709) if it exceeds the annual exclusion. Gifted property also carries the principal's tax basis, while property inherited at death generally receives a stepped-up basis. That difference can make a lifetime gift of a long-held house expensive in capital gains tax for the recipient.
When a Bank or Title Company Refuses the Power of Attorney
The 2021 amendments set a timetable under GOL § 5-1504. Within 10 business days after a properly executed power of attorney is presented, the bank, brokerage or other third party must accept it, reject it in writing with its reasons, or request specific additional documents. Permitted requests include an agent's certification, an opinion of counsel, or a translation. Once it receives those documents, it has another 10 business days to accept or reject.
Some grounds for refusal are reasonable. Examples include actual knowledge that the principal has died or revoked the power, or a pending report to adult protective services. The 2021 law also provides that a document that substantially conforms to the statutory form is not invalid because of minor wording differences. If a third party refuses without reasonable cause, the agent or principal can bring a special proceeding under GOL § 5-1510 to compel acceptance. The court can award damages, including reasonable attorney's fees and costs.
Common refusal reasons we see include an out-of-date in-house bank form, a document the institution considers "stale" because it was signed years ago, and a request to make a beneficiary or ownership change the document does not expressly authorize. Only the last of these is a legitimate basis for refusal under the statute.
Capacity, Incapacity and Death
- The principal lacked capacity when signing: A principal must understand the nature and effect of the document when signing it. If capacity was lacking, the power of attorney is void, and transfers made under it can be set aside.
- The principal is already incapacitated and has no power of attorney: It is then too late to sign one. The family's option is usually a guardianship proceeding under Article 81 of the Mental Hygiene Law. Under Mental Hygiene Law § 81.21, a court may authorize the guardian to sell property, make gifts, or carry out Medicaid planning. Our page on advance directives covers planning ahead to avoid this.
- The principal has died: A power of attorney ends at death (GOL § 5-1511). The agent can no longer sign deeds, write checks or close accounts. Authority passes to an executor appointed through letters testamentary or, if there is no will, an administrator appointed through letters of administration. Accounts with no named beneficiary are covered on our page about bank accounts at death with no beneficiary.
The statutory form is durable by default, so it continues in effect if the principal later loses capacity, unless the Modifications section says otherwise.
Drafting Authority for One Property
A principal who wants the agent to transfer one property, and nothing else, can say so in the Modifications section. For example: "I authorize my agent to execute a deed conveying my interest in [property address] to [named recipient], and I do not authorize my agent to make any other gift of real property." Narrow language like this gives the agent what the principal intends. It also gives the title company a clear basis to insure the transfer and gives family members less to dispute later.
Language drawn this narrowly also limits misuse. Some principals add other safeguards in the Modifications section. Common examples are a monitor under GOL § 5-1509 who can request the agent's records, or a requirement that the agent report transfers to another relative.
Talk to Us
We draft New York powers of attorney with gifting and transfer language that matches what the principal wants. We also review existing documents before a sale, deed or Medicaid transfer, and we represent families when an agent's transfers are questioned. Call us at 212-233-1233 or email [email protected]. You can also read more about our trust and living trust work.
This page provides general information about New York law and is not legal advice. Reading it does not create an attorney-client relationship. The right answer for a specific transfer depends on the exact language and date of the power of attorney and the facts involved.
