- September 04, 1996
- All New York Office Counsel, Managers and Agents
- Further amendments to the General Obligations Law relating to Powers of Attorney
In October, 1994, the New York State Legislature approved several changes to the General Obligations Law (Ch. 694 of the Laws of 1994). The most significant one required that a principal, in giving a statutory short form Power of Attorney to his agent, take the affirmative step of placing his initials in the box or space to the right of each of the powers he or she wished to delegate to the agent, particularly with respect to Subdivision (N) which provided that the subsequent disability or incompetence of the principal would not affect the power.
Pursuant to Chapter 499 of the Laws of 1996, which becomes effective January 1, 1997, Sec. 5-1501 of the General Obligations Law has been further amended to provide for a separate form of short form Durable Power of Attorney which survives the subsequent disability or incompetence of the principal as well as a form Non-Durable Power which does not. With respect to the Durable Power, the following changes have been made:
(1) The requirement that box (N) be initialed by the principal to allow the power to survive his later disability or incompetence has been eliminated and replaced with a clear statement in the Durable Form of Power which says "This Durable Power of Attorney shall not be affected by any subsequent disability or incompetence". It does not have to be initialed, as it is part of the text of the new form.
(2) Where the principal names more than one agent to act as his attorney-in-fact, he must now affirmatively choose between one of two options which have been added to the text of the Power, either authorizing each agent to act separately or requiring them to act jointly, by placing his initials in the box or space to the left of one of the two options.
(3) The principal must now either place his initials in the box or space to the left (instead of to the right as required previously) of each power which he wishes to give to his agent, or, alternatively, place his initials in the box or space to the left of a new Subdivision Q which requires the principal to write the letter of each power he wishes to delegate to his agent (A through P) in the blank space provided in Subdivision Q.
(4) The new form of power adds the following transactions to those which can be delegated to an attorney-in-fact:
(L) Retirement Benefit Transactions;
(M) Making Gifts to Spouse, Children and more Remote Descendants, and Parents, not to exceed, in the aggregate, $10,000 to each of such persons in any year;
(N) Tax Matters;
(O) All other matters.
(5) The new form of power contains a paragraph which allows the principal to appoint a successor agent if the primary agent is unwilling or unable to serve.
The recent legislation also establishes a new form of Non-Durable Power of Attorney. The changes to the power of Durable Power of Attorney enumerated in Items 2, 3, 4 and 5 listed above, are applicable to the Non-Durable Power of Attorney, as well. However, the Non-Durable Power contains an express statement that it will terminate if the principal becomes incompetent or disabled. Consequently, the attorney-in-fact appointed under a Non-Durable Power has no authority to act once the principal has become disabled or incompetent. For future title underwriting purposes, if a Non-Durable Power is to be used at a closing, affidavits from the attorney-in-fact will have to include representations that the principal is alive, competent and not under any disability, and has not revoked the power, and that said power is still in full force and effect.
Items 2, 3, 4 and 5 are also applicable to Powers of Attorney to be Effective at a Future Time, and will be incorporated into the text of such Powers.
The legislation redesignates existing General Obligations Law Section 5-1502L as Section 5-1502O and adds 3 new sections, 5-1502L, 5-1502M and 5-1502N, which define, in detail, the type of transactions which constitute Retirement Benefit Transactions, Gift Transactions and Tax Matters, as these terms a re used in the new forms of Statutory Short Form Power of Attorney. In addition, Section 5-1504 was amended to include a definition of the term Financial Institution, which includes a list of the entities which would be considered Financial Institutions, for purposes of the statutes dealing with short form Powers of Attorney.
As mentioned earlier, the effective date of the new legislation is January 1, 1997. All statutory short form powers executed on or after that date will be governed by the new statute. However, powers which were executed prior to October 1, 1994, (which was the effective date of the amendments contained in Chapter 694 of the Laws of 1994), will continue to remain effective after January 1, 1997, and be governed by the law in effect prior to October 1, 1994. In addition, those powers executed on or after October 1, 1994 and before January 1, 1997, will continue to be effective on and after January 1, 1997 and be governed by Chapter 694 of the Laws of 1994.
A copy of the amendatory legislation is available from the New York office. Please refer to Bulletin NY000058 for prior information.
New Forms of each of the statutory short form powers referred to in this bulletin will be printed and distributed to all offices and agents prior to the effective date of the amendments.
Should you have any questions regarding this bulletin, please contact Company Counsel.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- NY000058 Powers of Attorney- Major Changes in the General Obligations Law Which Becomes Effective 10/1/94
- Underwriting Manual:
- Exceptions Manual: