Unpacking Your Estate Plan: NY Durable Power of Attorney
What is a Power of Attorney?
A Power of Attorney (POA) is a legal instrument that gives an individual, often referred to as the “Principal”, the power to authorize another individual, often referred to as the “Agent” or the “Attorney-in-Fact”, to make financial, business, and certain personal decisions on the Principal’s behalf. In New York, a POA is only for financial management and is not used to authorize health care decisions. The power granted by a POA can be for a wide range of matters or can be narrowly tailored, depending on what may be needed.
What is a Durable Power of Attorney?
A Durable Power of Attorney is a Power of Attorney that remains in effect even if the Principal becomes incapacitated. Therefore, it is an important financial management tool and is an integral part of a comprehensive estate plan as an advanced plan for a Principal’s declining mental or physical health. A Durable Power of Attorney can be used for comprehensive financial management and gifting. It is effective once all parties sign and remains effective during the Principal’s lifetime, unless otherwise revoked.
Choose Your Agent Wisely:
Although the Durable Power of Attorney can be as limited or expansive as necessary, in general, a Principal should carefully consider who they appoint as Agent because the Agent will have comprehensive power and broad discretion to manage the Principals’ assets. A good rule of thumb is to appoint an Agent who embodies the three R’s: Reasonable, Responsible, and Respectful. An Agent should be Reasonable. The Agent should be someone who can work with financial institutions, accountants, lawyers, and reasonably act on a Principal’s behalf. An Agent should be Responsible. The Agent should be someone who can responsibly manage finances, including their own. An Agent should be Respectful. The agent should be someone who respects both the law as well as the Principal’s wishes.
Meticulous planning is necessary when implementing a Durable Power of Attorney. The following is a list of helpful suggestions as you move forward.
- Store Your POA Appropriately: Keep a record of the original POAs that are executed and where the documents are stored. Original POAs should be stored in a safe and accessible place. A Durable Power of Attorney should not be stored in a safe deposit box because it should be accessible by the Agent when needed. It is better to keep this important document in a waterproof, fireproof box that is accessible 24 hours a day, seven days a week. Don’t forget to give a copy of the Durable Power of Attorney to the Agent and be sure the Agent is ready, willing, and able to take on this very important responsibility.
- Communicate with Your Agent: An Agent should understand the scope of the Principal’s wishes, the Principal’s general estate planning intentions, and the Principal’s life choices as it pertains to the Principal’s own finances. These decisions are often personal, so it is important that an Agent understands a Principal’s wishes, goals, and desires.
- Plan with Your Financial Institutions: It’s a good idea to discuss the Durable Power of Attorney with interested third-parties such as banks, investment firms, stockbrokers, and insurance companies that regularly do business with the Principal. Financial institutions have their own internal rules and are reluctant to enforce Power of Attorney Documents. It may also be necessary to execute another document for some institutions. Always remember to keep records to prove forms were completed and to be able to change existing documents to reflect any new desires.
- Act Fast with Brokerage Firms: Brokerage firms often require receipt of a Power of Attorney within 3 to 6 months of the document’s execution. They may also require an affidavit that the Durable Power of Attorney document is still in full force and effect has not been revoked or altered.
- Financial Matters Outside of NY: Remember, if there are financial issues outside of NY State, then a Principal may need to execute a Durable Power of Attorney for that particular State. Each State has its own version of the Durable Power of Attorney. It is advisable to execute a Durable Power of Attorney that adheres to the specific requirements of the State where the property or the actual transaction is taking place.
- State Specific Documents: If the Agent/Principal moves out of NY State, then he/she may need to execute a Durable Power of Attorney in the new State. If property is maintained in New York, then a NY Durable Power of Attorney will still be required.
- Review Periodically: A Principal should review the Durable Power of Attorney periodically to be sure the document reflects the Principal’s current wishes and circumstances and to be sure that the document is up to date with current law.
- We’re Here for You! D’Angelo Law Associates, PC is happy to discuss your personal needs or any questions you may have regarding the proper execution and implementation of a Durable Power of Attorney, as well as questions regarding other kinds of POA documents.
Feel free to contact D’Angelo Law Associates, PC for further guidance on all your Estate Planning needs.