A power of attorney is a legal agreement that is often included as part of a comprehensive estate plan. When properly drafted a power of attorney can be a useful legal tool; however, a power of attorney can also be used to gain control over the assets of an unwitting victim by unscrupulous individuals who prey on the elderly and/or disabled. Conversely, a power of attorney can be useless for the purpose intended if it fails to include the language needed to confer the authority you want it to confer on your Agent. For this reason it is crucial that you understand the authority you are conferring when you execute a power of attorney. For example, under a power of attorney can an Agent make a gift in your name in New York?
A power of attorney, or POA, is a legal agreement that allows you (the “Principal”) to grant authority to another party (the “Agent”) to represent you in legal matters. In essence, an Agent with your POA stands in your shoes. A POA can be general or limited. A limited POA, as the name implies, only grants your Agent the authority specifically enumerated in the POA document. With a general POA your Agent has almost unlimited authority to act on your behalf and may be able to do things such as sell your assets, open accounts in your name, and even enter into contract negotiations in your name. The law in the State of New York, however, puts restrictions on certain types of authority regardless of the type of POA you execute. The authority to make gifts in your name is an example of an authority that is restricted by law.
New York Code, Section 5-1514 addresses the ability of a Principal to grant an Agent the authority to make gifts under a POA. The law requires a Principal to specifically grant the authority to make gifts in a POA by including a “Statutory Major Gifts Rider”, or SMGR, to the POA document. A SMGR spells out in detail the authority you give your Agent to make gifts on your behalf. For example, if you want your Agent to have the ability to make gifts equal in value to the yearly exclusion amount for gift and estate tax purposes you must specifically include that in your SMGR which you will execute when you execute your POA. Furthermore, you must specify to whom the gifts may be made.
If you have additional questions or concerns about creating and/or executing a power of attorney or about estate planning in general, contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.