The New Power Of Attorney - Issues Related to the Timing of the Agent’s Signature

By:  David R. Schoenhaar, Esq.*

New York significantly revised the statutory power of attorney in 2009 primarily to discourage fraud and other perceived abuses in elder care and estate planning.  Unfortunately, many unintended consequences emerged from these sweeping changes.  The fallout created such confusion and criticism in the legal community that technical corrections and revisions to the law were quickly implemented in 2010.  Despite the 2010 amendments, issues related to the inconsistent practices in timing the agent's signature still remain.

Unlike the old power of attorney, which only required the principal's signature, a new power of attorney must also be signed by the agent and the agent's signature must be acknowledged before a notary public.1  The power of attorney becomes effective for a given agent only after that agent signs the power of attorney and his or her signature is acknowledged.2

This flexible approach accommodates the common scenario where an agent is not present when the principal is executing his or her power of attorney and other estate planning documents.  The agent and principal do not have to execute the power of attorney on the same day and a lapse in time between their signatures will not render the power of attorney invalid.3  In fact, there is no deadline for the agent's signature and the agent can even sign after the principal becomes incapacitated.4   

Unfortunately, this flexibility creates inconsistencies in determining exactly when the agent should execute the power of attorney.  For example, if the agent is the principal's daughter, should she be present to sign the power of attorney at the same time as the principal?  Does this determination change based on whether the power of attorney is broadly drafted for estate planning purposes or whether the drafting attorney will retain the power of attorney for safekeeping?  Should the recent Estate of Schneider v. Finmann5 decision and the renewed awareness regarding continuous representation affect the timing of the agent's signature?  Depending on who you consult with, different practitioners have different opinions and procedures.

For attorneys who hold the executed power of attorney on behalf of the principal, it would appear to not make a difference when the agent's signature is obtained.  However, by waiting to obtain the agent's signature and thereby delaying the effectiveness of the power of attorney, an argument could be made that the practitioner's representation continues until the power of attorney is signed by an agent.  In addition to the obvious exposure from continuous representation, a significant issue could develop if the appointed agent(s) ultimately refuses to accept the appointment. 

Turning to attorneys who do not retain the power of attorney, another problem arises if the power of attorney does not contain the agent's signature.  Under this scenario, the responsibility for making the power of attorney effective and physically obtaining the agent's signature lies with the principal.  Given that the principal may be elderly, subsequently become incapacitated, or unable to appreciate this technical procedure, can further complicate the utilization of the power of attorney in practice. 

The benefits of requiring the agent's signature must be balanced with the risks in delaying the timing of the agent's signature.  If possible, it is suggested that the agent's signature occur at the same time, or relatively close in time, as the principal's signature.  Moreover, for practitioners who release, or hold, the power of attorney without the agent's signature, such practice should include a written disclosure to the principal regarding the effectiveness of the power of attorney and the need to obtain the agent's signature in the future.

*David R. Schoenhaar, Esq., is an associate at Ruskin Moscou Faltischek, P.C. and is a member of the firm's Trust and Estates Planning and Litigation Department.

 


[1] See GOL § 5-1501B(1)(c).

[2] See GOL § 5-1501B(3)(a).

[3] See GOL § 5-1501B(1)(c).

[4] See GOL § 5-1501B(1)(c).

[5] Estate of Schneider v. Finmann, 60 A.D.3d 892, 876 N.Y.S.2d 121 (2d Dep't 2009),  rev'd, 15 N.Y.3d 306, 907 N.Y.S.2d 119, 933 N.E.2d 718 (2010).

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