Securing a Power of Attorney in New York

A power of attorney is something most people never think about because they don’t anticipate becoming incapacitated or unable to handle their own financial affairs.

However, a car accident, sudden illness, or other emergency could leave you unable to manage your finances and make medical decisions. A durable power of attorney can make sure you are provided for and give you peace of mind.

The legal process for designating a power of attorney varies by state. For more information about getting a power of attorney, talk to a local elder law attorney.

Example Showing the Need for a Power of Attorney

The following story is true, but the name has been changed.

After John Smith began suffering from dementia, he needed nursing home care at a cost of $160,000 per year. His bank accounts and other liquid assets amounted to approximately $500,000. However, because his family members didn’t have a durable power of attorney, they had no way to access any of it.

It took several months before the court appointed the children as guardians. This delayed their ability to do Medicaid planning. This cost their father four additional months of private nursing home care — more than $50,000. They also had to pay for the cost of a guardianship proceeding and ask the court for approval to implement Medicaid planning. This added more than $10,000 in court costs and legal fees.

Elder law attorney Vincent J. Russo, managing partner at Russo Law Group in Garden City, calls this situation “a disaster.” This is also preventable with a power of attorney (POA).

Understanding a Power of Attorney

A power of attorney grants another person legal authority to make important decisions, such as managing your financial affairs.

The person who makes the power of attorney document is the principal. The designated individual who can manage your financial matters is the agent or the attorney-in-fact. The power of attorney agent has a fiduciary duty to act in the principal’s best interests.

Selecting a New York Power of Attorney

It’s critically important to choose the right person to serve in the agent role when you create a power of attorney. Most people choose a spouse or child, says elder law attorney Michael J. Amoruso of Amoruso & Amoruso in Rye Brook. However, choosing one child over the others, or over the spouse, may cause tension within the family. 

“The primary factor should be: Who has strengths in property and financial management?” Amoruso says. “You want someone who will never see your assets as theirs, and will do what you give them authority to do in your best interest. There are a lot of headlines out there where we see elder financial abuse. More often than not, a parent puts a child on an account, and the child starts to feel entitled and says, ‘Mom would want me to have some of the assets.'”

You should also designate a backup successor agent if the designated agent cannot carry out your needs.

The decision-making doesn’t end with who your agent should be. “Not all POAs are created equal,” says Nancy Burner of Burner Prudenti Law in East Setauket. Understand the different types of powers of attorney to make sure you cover all your financial and healthcare needs.

Types of Power of Attorney

There are essentially two types of POAs, says Russo: Durable and nondurable. As the names imply, a durable power of attorney is valid for the principal’s lifetime. A nondurable POA ends when the principal becomes incapacitated.

“It is important to sign a durable POA, because you want your agent to step in when you become incapacitated,” Russo says. 

A principal can also choose to give an agent broad or limited authority. New York State has adopted a statutory power of attorney form with detailed requirements.

“If these specifications are not followed exactly, the court can reject the document for not complying with the statutory form,” Burner says. New York power of attorney laws allow for granting general authority for routine financial tasks (including banking and handling mail) if the principal initials the general categories.

If you want to designate specific tasks, you can specify every individual act. Elder law attorneys often add a list of powers to the “modifications” section in the power of attorney document that may be necessary to assist with long-term care planning and the Medicaid application process. Modifications can include creating, funding, amending, or terminating trusts or gifts to the principal’s loved ones.

Mistakes in Financial Power of Attorney Planning

According to Amoruso, the primary mistake most people make is trying to cut costs by using inadequate legal documents, which can lead to more expenses down the road. “Downloading the state’s statutory document off the internet is cheap, but when a crisis hits, it may not be adequate,” he says.

But worse is not having the legal document in place at all. “If you don’t have a POA, no one, even if you have been married 50 years, has a legal right to make financial decisions for you,” Russo says.

“Your spouse would have to go to the guardianship court. You want to avoid it. In my practice, we see what can happen because of some event — a car accident, dementia — and a POA is so important. It’s like that old American Express commercial — don’t leave home without it.”

Legal Help With a Power of Attorney and Estate Planning

A local elder law attorney understands the legal requirements to get a power of attorney and can help you identify the best person to carry out your wishes. In addition to a POA, you should consider a living will and designate a healthcare proxy (or medical power of attorney) to make your healthcare decisions in the event of incapacity.

The process for designating a power of attorney varies by state law. For legal advice about a power of attorney, talk to a New York elder law attorney.