Broker Check

There's a New Power in Town

February 08, 2022

On December 15, 2020, New York’s Governor Cuomo signed into law new rules regarding Powers of Attorney created in New York. The effective date of these new rules is 180 days after the date it was signed into law – or June 13, 2021[i] . In addition, on March 24, 2021, the Governor signed an amendment to enhance the new rules[ii].

So that’s what happened and when. However, that by itself, does not tell us enough. Let’s take a step back and briefly consider some basic questions:

  • What is a power of attorney?
  • How might these new rules change what came before?
  • How might the passage of these new rules impact us?

What is a power of attorney?

A power of attorney permits a person (known as the Principal) to grant authority to another (known as the Agent) to act on behalf of the Principal. Previously in NY and possibly still in some other states, the Agent was often referred to as an “Attorney in Fact.”[iii] Note additionally, that the Principal by granting the power to act to an Agent, does not necessarily surrender to the Agent all power to act.

A power of attorney is generally a revocable document, revocable by the Principal at any time, as it exists only with the Principal’s continued assent. However, when the Principal is dead, assent is no longer possible, therefore a power of attorney doesn’t permit an Agent to act for a deceased Principal. Similarly, when the Principal is not legally competent, assent to an agent acting may also not exist. Therefore, if the power of attorney is not also a Durable Power of Attorney (see below), the Agent’s ability to act may be terminated upon the Principal’s incapacity.[iv]

Powers of attorney may be classified as follows:

  • General power of attorney may grant broad powers over assets to an Agent which is terminated on the Principal’s incapacity or death.[v]
  • Durable power of attorney maintains the Agent’s authority to act even if the Principal is incapacitated. [vi]
  • Springing power of attorney becomes effective (“springs” into effect) at a future time upon the occurrence of an event – such as the Principal’s incapacity, for example.[vii]

How have the rules changed?

The new rules made four (4) noteworthy changes. Following is a very short overview of these modifications. Awareness of these changes however, underscores some of the benefits and significance of the new rules. For example, the power of attorney may become more useful as it may be more likely to be accepted by financial institutions.

  1. Substantial Conformity Standard. The new rules do not require that the power of attorney form be identical to the statutory short form. Substantial conformance will do. Prior to these changes, insignificant errors could have caused significant adverse results[viii].  GOL 5-1503 contains some limits on modification of the NY statutory short form power of attorney. GOL §5-1513 contains the statutory short form power of attorney.
  2. Statutory Gift Rider. The sometimes confusing Statutory Gift Rider (SGR) does not exist in the new form under the new rules. Under the new rules, The Principal can modify the standard form to authorize gifts over $5000 a year.[ix]
  3. Penalties for Unreasonable Refusal to Accept a Valid Power of Attorney. What happens if you have a valid power of attorney and a bank refuses to honor it? The new rules will allow a claim for damages for an unreasonable refusal to honor a valid power of attorney. This is a change from the need to pursue a court order to force acceptance of the power of attorney as the sole means of relief.[x]
  4. Safe Harbor for Third Parties. If the statutory short form power of attorney document is properly executed and the third party recipient of the power of attorney has no “actual knowledge” that the Principal’s signature is forged or that the document is otherwise invalid, the third party is protected from liability when accepting the power of attorney in good faith.[xi]

What do these changes mean to us? Are there some actions to be considered?

Although the four issues discussed above are the main changes, there are many others. Just because they are not discussed here doesn’t mean they may not be important to you. Therefore, it may be wise to review your existing power of attorney with your advisors to make sure that it still reflects your desires and goals and that it still works well within your overall financial and legacy plan. 

Just because there are some new rules, you don’t necessarily need to scrap your pre-existing power of attorney. A valid power of attorney that predates the effective date of the changes may still be valid. However, a change in the rules is always a good trigger to re-evaluate. This trigger should also be connected to a review of all your legal documents such as wills, trusts, health care proxies, living wills, HIPAA releases, among others.

If you don’t have all these documents, or if you do but they are old and you believe some updating may be necessary, you should gather your thoughts and make an appointment with your attorney. To make your time with your attorney more effective and efficient (and maybe even less expensive), the thought gathering process becomes important. Before meeting with your attorney:

  • Prepare a list of your assets with information about ownership, valuation and type of asset;
  • Prepare a list of your meeting objectives including how you want your assets treated in the event of your demise or incapacity; what your goals are for your children, grandchildren or other family members; whether there are any special physical, mental or emotional conditions which require consideration;
  • Prepare a list of people that you trust to carry out your instructions in the event of your death or incapacity such as power of attorney and health care proxy agents, will executors, trustees and guardians for minors;
  • Finally, prepare a list of people or institutions that you already may have given a copy of your documents to. If you are making changes, there may be a need to notify those people or institutions.

I hope you found this article useful. Powers of attorney, advance health care directives and estate and legacy documents are complex and unfamiliar to many people. Please do not hesitate to contact us at the Family Wealth Decisions Group if you would like to discuss this subject further. Remember, we are here to help.




[i] Chapter 323 of the Laws of 2020

[ii] Chapter 84 of the Laws of 2021


[iv] . See also NY GOL §5-1511 





[ix] ibid

[x] ibid

[xi] ibid