Durable Power of Attorney

A Durable Power of Attorney is a document wherein you, as the "Principal," authorize your Agent, or "Attorney-In-Fact," to perform various, specifically-delegated functions on your behalf.

The term "Durable" simply describes a Power of Attorney created in accordance with specific New York statutory provisions that allow the Power of Attorney to remain effective even in the event the Principal shall become incompetent. A "traditional" Power of Attorney would cease to be effective if the Principal became incompetent – precisely the eventuality in which it would have been most useful.

Typically, A Durable Power of Attorney gives your Agent broad powers to handle your property during your lifetime, which may include powers to mortgage, sell, or otherwise dispose of any real or personal property without advance notice to you or approval by you – however, your agent is legally required to always act in accordance with your best interests. A Power of Attorney, regardless of the form, ceases to be effective upon the death of the Principal.

Furthermore, Durable Powers of Attorney can be of two distinct varieties. Most people choose to execute a Durable Power of Attorney that takes effect immediately, allowing the Agent to exercise the granted-authority immediately upon receipt of the Power of Attorney.

However, many opt for the second variety, commonly referred to as a "springing" Durable Power of Attorney. This becomes effective only upon the happening of an event specified by the Principal in the document, such as when there has been a certification that the Principal has become disabled, incapacitated, or incompetent. Essentially, the Power of Attorney "springs" into effect only upon the occurrence of the specified event. This form of Durable Power of Attorney is most suitable for individuals who wish to retain sole and complete control over their financial affairs for as long as they are able, but want the assurance that a trusted family member or friend will be able to assume control in the event of incompetence, without the necessity of a guardianship proceeding.

As a result of sweeping legislative changes effective September 1, 2009, the "Statutory Short Form Power of Attorney" changed from a simple "dime store form" to large and extensive legal document with numerous additional requirements and safeguards to protect the Principal's interests.

For example, the Agent now has a codified fiduciary duty to the Principal, and the Agent must sign a notarized statement that he or she will "act according to any instructions from the principal, or … in the principal's best interest," will avoid conflicts of interest, keep the principal's property separate from his or her own, and keep records of all transactions conducted for the principal. Additionally, the agent must acknowledge that he or she may be liable for any actions outside the law, or outside the authority granted under the Power of Attorney.

The new statute also provides many new definitions, for example, previously only traditional "financial institutions" such as banks had to honor Powers of Attorney, but now securities brokers fall into that category as well.

Significantly, the Principal can now appoint a "monitor," an individual of the Principal's choosing with authority to inspect all records relevant to the actions of the Agent in handling the Principal's assets. This, of course, may give great comfort to a Principal with diminishing capacity, who wishes to appoint someone "to keep the agent honest."

Finally, another major change worth mentioning is the new "statutory gift rider," wherein the Principal must provide explicit instructions if he or she wishes to allow the Agent to make gifts to anyone (including the Principal's spouse and children, or the Agent), or any organization. Also, the Agent is prohibited from naming him or herself as a joint account holder or beneficiary of any of the Principal's assets, unless such authority is specifically granted under the statutory major gift rider.

While Powers of Attorney executed before September 1, 2009 continue to be effective, you should consider executing a new Powers of Attorney to take advantage of the additional protections now available under the law.

Fees:  The cost of a Durable Power of Attorney is included in our Will and Trust packages, but if you choose not to get a complete package, we can prepare just a Durable Power of Attorney for $100, and if you have a spouse or partner we will prepare a Durable Power of Attorney for that person as well for an additional fee of just $50.

Please call the Law Offices of Todd Gustafson, Esq., at 585-230-6298 with any questions, or to schedule a free initial consultation. Just ask for Todd.