What Does a Power of Attorney Allow Me to Do?

A power of attorney is a legal document allowing a person (called an agent) to act on behalf of and in the name of the principal. This power of attorney can be durable, which allows the agent to act on behalf of the principal, even if the principal loses capacity, or it could be springing, which allows the agent to act on behalf of the principal only in the event that the principal loses capacity.

What are the Acts that I Can Authorize My Agent to Do?

Under the New York statutory form for the power of attorney, you can authorize your agent to do any or all of the following:

• real estate transactions;
• chattel and goods transactions;
• bond, share, and commodity transactions;
• banking transactions;
• business operating transactions;
• insurance transactions;
• estate transactions;
• claims and litigation;
• personal and family maintenance;
• benefits from governmental programs or civil or military service;
• health care billing and payment matters;  records, reports, and statements;
• retirement benefit transactions;
• tax matters;
• all other matters;
• full and unqualified authority to the agent(s) to delegate any or all of the foregoing powers to any person or persons whom the agent(s) select;
• all of the above.

In the modifications section, you could also authorize your agent to make gifts, either to themselves or to third persons, up to a certain amount. In the absence of any express authorization, your agent can gift up to $5000 per year on behalf of the principal.

Legal Requirements of a Power of Attorney

In order to be effective, a power of attorney in New York must be:

• signed and dated by the principal with capacity;
• acknowledged before a notary public;
• accepted, signed and dated by the agent before a notary public;
• typed or printed using legible letters of at least 12 point in size or reasonable equivalent (if in writing);
• includes “Caution to the Principal” and “Important Information for the Agent” sections.

Acting Under a Power of Attorney

When an agent acts on behalf of a principal, the third party affected by the transaction (such as a financial institution for banking transactions or a buyer for real estate transactions) usually require the presentation of the power of attorney.

For this reason, to revoke a power of attorney, you must not only provide written notice of the revocation to your agent but also to third parties who may have acted upon in, including financial institutions where your accounts are located. Without such written notice of revocation to third parties, they may not be held liable for acting under the power of attorney you initially issued, presented, and confirmed.

A power of attorney grants an agent considerable power, which can be abused if it remains unchecked. We have handled many cases where agents have acted in conflict with their fiduciary duties to the principal, to the detriment of the principal’s children/heirs. For this reason, you need to seek the counsel of an experienced lawyer before signing any power of attorney to ensure that checks or monitors on your agent may be made under the modifications section and to fully understand and comprehend the consequences of signing a power of attorney.

If you need assistance in drafting a power of attorney, we, at the Law Offices of Albert Goodwin, are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].

The Detail of Each Transaction Category

Each of the transaction categories listed in the statutory form covers a broad range of specific activities. Understanding what each category authorizes helps the principal decide which to grant.

Real estate transactions. The agent can buy, sell, mortgage, lease, exchange, and otherwise deal with real property in the principal's name. The agent can sign deeds, mortgages, leases, easements, and other recordable documents. The agent can pay property taxes, insurance, and maintenance costs. The agent can hire contractors and pay for repairs.

Chattel and goods transactions. The agent can buy, sell, lease, mortgage, and otherwise deal with personal property. This includes vehicles, equipment, furniture, household goods, and other tangible items.

Bond, share, and commodity transactions. The agent can buy, sell, exchange, and manage investment securities. The agent can open and close brokerage accounts, place buy and sell orders, and direct portfolio management.

Banking transactions. The agent can open and close bank accounts, write checks, make deposits and withdrawals, transfer funds between accounts, obtain certified checks, access safe deposit boxes, and conduct other banking activities.

Business operating transactions. The agent can conduct the principal's business activities, including contracting, hiring and firing employees, paying business expenses, and making business decisions.

Insurance transactions. The agent can buy, modify, surrender, and collect on insurance policies. The agent can pay premiums and file claims.

Estate transactions. The agent can deal with the principal's interest in any estate or trust in which the principal is a beneficiary, including signing waivers, consents, and other documents.

Claims and litigation. The agent can pursue or defend lawsuits on behalf of the principal, sign settlement agreements, and otherwise handle legal matters.

Personal and family maintenance. The agent can pay for the principal's living expenses and customary obligations to family members.

Government benefits. The agent can apply for and manage Social Security, Medicare, Medicaid, veterans benefits, and other government programs.

Health care billing. The agent can pay medical bills and deal with health insurance, though this does not authorize medical decisions (which require a separate health care proxy).

Retirement benefit transactions. The agent can manage retirement accounts, including taking distributions, making rollover decisions, and changing beneficiary designations if specifically authorized.

Tax matters. The agent can sign tax returns, deal with tax authorities, and represent the principal in tax disputes.

The Gifting Authority Question

Gifting authority is one of the most consequential aspects of a power of attorney. Without explicit gifting authority, the agent cannot make gifts of the principal's assets. With gifting authority, the agent can move significant amounts of money.

The 2021 New York revision integrated gifting authority into the main statutory form. The default gifting authority is now $5,000 in aggregate per year unless the principal authorizes more. The principal can:

• Accept the default $5,000 limit.
• Increase the limit to any amount.
• Authorize specific types of gifts (to family members, to charities).
• Authorize gifts only for specific purposes (Medicaid planning, for example).
• Eliminate gifting authority entirely.

For Medicaid planning, substantial gifting authority is often needed. Without it, the agent cannot implement the asset transfers that Medicaid planning typically requires.

Revoking a Power of Attorney

The principal can revoke a power of attorney at any time while competent. The revocation should:

• Be in writing.
• Identify the prior power of attorney.
• State the revocation clearly.
• Be delivered to the agent.
• Be delivered to any third party who has been relying on the power (banks, brokers, etc.).

Until the revocation is delivered to a third party, that party may still rely on the prior power in good faith. The agent could still bind the principal in transactions with parties who do not know about the revocation. For this reason, prompt and thorough notice of revocation is essential.

Choosing the Right Agent

The choice of agent is one of the most consequential decisions in executing a power of attorney. The agent will have substantial control over the principal's assets and affairs. Considerations:

• Trust. The agent must be someone the principal can trust completely with money and decisions.
• Financial competence. The agent should be capable of handling financial matters responsibly.
• Geographic proximity. An agent who lives nearby can handle matters more easily than one at a distance.
• Availability. The agent should be able to take phone calls, sign documents, and otherwise act when needed.
• Family dynamics. Naming one family member as agent over others can create resentment. The choice should be considered in light of the broader family situation.
• Successors. Naming alternate agents provides backup if the primary agent cannot serve.