NY’s POA Changes Have Taken Effect: Now What?

June 15, 2021 at 9:18 am Leave a comment

The changes to New York’s Power Of Attorney laws officially took effect on June 13th marking one of the most important operational changes that NY credit unions have seen in a number of years. In my previous blogs on the subject I have emphasized the fact that the changes are designed to encourage acceptance of POAs. This goal is accomplished by mandating that institutions accept POAs that “substantially conform” to New York State Law and allowing courts to award attorney fees to individuals who have to go to court to prove that a POA is valid. In this blog yours truly wants to point out that there are still steps you can take to protect both the credit union and your members.

Under the old Power Of Attorney, certain banking transactions could only be carried out by an agent if a POA was accompanied by a Statutory Gift Rider. Remember that this rule still applies to POAs created before June 13th. The amendments eliminate the requirement that POAs contain a separate SGR form. But, when it comes to making changes to existing accounts such as changing the title on the account or adding a new joint tenant, the authority to makes these changes has to be included in the modifications section of the new form. In other words, the modification requirements are being used in much the same way as the SGR requirement previously was (NY general obligation law section 5-1502D).

Let’s say a relative of one of your members comes in with a POA they pulled off the internet. Under the new law a person that is asked to accept an acknowledged Power Of Attorney may request “an opinion of counsel as to any matter of law concerning the power of attorney if the person making the request provides in a writing or other record the reason for the request.”

And remember, even with these changes there are still grounds for denying a POA. A list of examples in New York State Law where such reasonable grounds would exist includes the refusal to provide the credit union with an original Power Of Attorney document or certified document and a good faith referral of the principal and the agent to the local adult protective services unit [New York general obligation law 5-1504(2)].

The bottom line is that your credit union still has the ability to assure itself that a POA is a valid document. That being said, given the changes to the law and the increased risk of noncompliance, decisions on whether or not to accept POAs should not be made by frontline staff.  They should instead reflect a uniform application of your updated Policies and Procedures.

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

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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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