New Page 1

On January 27, 2009, Governor Paterson signed Chapter 644 of the Laws of 2008, which amended the General Obligations Law in relation to Powers of Attorney. The intention was to address a number of abuses and omissions in the old law. The new law will be effective as of September 1, 2009 and will provide a new Statutory Short Form Power of Attorney.

Under the present law an agent could easily misuse the broad powers granted to him by the principal to his own financial gain if the principal became incapacitated. In a recent Court of Appeals case, in a three week period before the principal died, an attorney-in-fact who was given broad powers to make unlimited gifts to himself transferred over $800,000 to himself to the detriment of the principal’s heirs.

The recent statutory amendments are designed to provide greater notice to the principal of the significance of the document and emphasize the agent’s responsibilities and obligations relative thereto.

The new statutory short form Power of Attorney contains a specific “Caution” message to the principal expressly describing the significance of the document as well as the agent’s rights and obligations. It also includes “Important Information for the Agent” (e.g. the document creates a special legal relationship between the agent and the principal until terminated or revoked requiring the agent to act in accordance with any instructions from the principal; avoid conflicts that would impair the agent’s ability to act in the principal’s best interest; keep the assets of the principal distinct and separate from the agent’s, etc.) and requires the agent to countersign the form, which is not effective unless and until the agent so countersigns.

Further, to protect against financial exploitation if the principal becomes incapacitated or is otherwise unable to personally monitor the agent’s actions, he can designate a third-party to monitor the Agent’s actions. The monitor can request and compel the agent to provide copies of all transactions entered into or by the agent on behalf of the principal to ensure that he is acting within the principal’s interests.

The new law expands the definition of parties who are bound to honor a Power of Attorney. It also sets forth specific circumstances under which a party can refuse to honor a Power of Attorney and the consequences for improperly refusing to do so.

The firm is preparing to implement the new Statutory Short Form Power of Attorney under the Fund’s legal services plan of benefits pursuant to the September 1, 2009 effective date for the same. In light of the foregoing, if you have an interest in, or wish to revise an existing Power of Attorney, you may make an appointment in the usual manner to meet with a Legal Plan attorney.