Make sure your aging parent’s power of attorney is up to date.

If your parents’ POA predates 2010, it is time that they sign a new one!

A power of attorney (a “POA”) is widely used for financial and estate planning purposes and for avoiding the expense of guardianship in the event incapacity of the person granting the power (called a “principal”). The POA grants to another person (called an “agent”) broad authority to access the principal’s personal financial information; to sell or dispose of the principal’s property; to change ownership of the principal’s accounts and property; and to change beneficiary designations on life insurance and retirement accounts.

If your parents’ POA predates 2010, it is time that they sign a new one! In 2010, New York substantially modified the POA statute. Most importantly, it made major changes to the form of the POA. This is significant because the new law added additional steps which are required to allow agent to make gifts for the principal. In order for the agent: (i) to make gifts of the principal’s property; (ii) to change beneficiary designations on life insurance policies and retirement plans; or (iii) to change ownership of bank accounts and other property owned by the principal; the principal must execute a separate but supplemental document called a Statutory Gift’s Rider (the “SGR”). The SGR is new, and POA’s which predate 2010 will not be accompanied by one.

POA’s signed prior to 2010 are still valid; but stale. In practice, you may find it difficult to persuade a financial institution to allow you, as agent, to make a gift or to change beneficiary designations for your parents because the POA is “stale,” in that, it lacks a SGR. You will prevail with time and effort because a POA signed prior to 2010 is still legally valid; but who needs the hassle. Take the time now, while your parent is competent to “refresh” the POA and insure its acceptance in the future.

Download the Resource: Durable Power of Attorney and Statutory Gifts Rider (PDF)