New York Makes Big Changes to Power of Attorney Law

December 16, 2020 at 9:54 am 2 comments

Governor Cuomo signed a bill yesterday that makes major changes to New York’s Power of Attorney laws. The changes will have a direct impact on whether or not your credit union decides to honor a power of attorney (POA). A.5630-A/S.3923-A was a product of the frustration of lawyers with New York’s POA laws. Specifically, they complained that third parties were too hesitant to accept POAs which didn’t include the exact language contained in New York law.

I know from my compliance days that credit unions are asked on a daily basis to take actions based on POAs. Under existing New York law (General Obligations Law 5-1501), a power of attorney must contain the “exact wording” of New York’s POA law in order to be valid. In addition, there is no penalty that can be imposed against third parties that refuse to accept POAs. Under this new law, a POA will be valid so long as it “substantially conforms” to the relevant statutory language. When a financial institution refuses to accept a POA in the future, they can be brought to court and be made to cover damages for their “unreasonable” rejection of a valid POA. Additionally, your credit union will now have 10 days to accept a POA or explain in writing its reasons for not doing so. The good news is that the new law also stipulates that a person who is asked to accept an acknowledged POA may request “and rely upon without further investigation” an agent’s certification that a POA is valid. There are also several substantive changes to the POA forms. With regard to statutory gift riders, the new law will “expand an agent’s power to make gifts in the aggregate in a calendar year from the current $500 limit to $5,000 without requiring a modification to the form.”

The law takes effect in early June of 2021, and POAs valid before that date will remain effective. If I helped run your credit union’s compliance department, I wouldn’t let too much time pass before looking at this bill and updating your policies and procedures, and making sure the relevant staff knows of these changes. 

On that note, enjoy your day. I didn’t get to address the two other major headlines – that the Northeast gets big snowstorms in December, and that the Electoral College reflects the will of the voters – what a concept. 

Entry filed under: Compliance, New York State. Tags: , , .

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2 Comments Add your own

  • 1. Anonymous  |  December 16, 2020 at 10:49 am

    What if the CU gets an out of state POA and it does not contain a hold harmless clause? Also, what if the POA is not on a NYS statutory short form? How would the CU handle these circumstances?

    Reply
  • […] question is at best “not quite” and at worst “what changes?” This is concerning because big changes are coming.  For purposes of this blog, I am assuming that your credit union is being presented with a […]

    Reply

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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