MORE ON POWERS OF ATTORNEYS

Before we discuss the new Power of Attorney rules which begin on September 1 of this year, let us discuss the general rules of what a Power of Attorney is. A Power of Attorney is an agreement between two parties: a principal and an attorney in fact. The attorney in fact need not be an attorney at law (a lawyer). A Power of Attorney gives the attorney in fact rights to act in the principal's place. They are, in effect, fiduciaries of their principals. Powers of Attorney may be general, limited, or special. They are usually written documents, and New York imposes special requirements on their form or substance. General Powers of Attorney allow agents to take any legal action their principals may take. For example, the agent could open or close bank accounts in the principal's name, invoke or waive the principal's contractual rights, or buy or sell stocks for the principal. In New York, even a general Power of Attorney is not unlimited due to statute or court precedent. A principal may grant a limited Power of Attorney by placing restrictions in the Power of Attorney. New York also allows special Powers of Attorney for certain situations. Most often, special Powers of Attorney are used to appoint people to make medical decisions on the principal's behalf when the principal is incapacitated - a health care proxy. New York also has the Standby Guardian Designation, discussed in an earlier blog. Normally, a Power of Attorney only remains effective as long as the principal is alive and competent to make decisions. Principals may, however, grant durable Powers of Attorney that persist after they are no longer able to make their own decisions.