Would you take the risk?

Author: | Published: 1 Dec 2009

Effective September 1 2009, New York State amended its General Obligations Law to impose burdensome requirements for a power of attorney signed by an individual in that state to be valid. Although not intended, the New York statute threatens to invalidate a wide variety of commercial documents, possibly including proxies by which shareholders located in New York vote at shareholder meetings.

The amended statutory provision (Title 15 of Article 5 of the General Obligations Law) is titled Statutory Short Form and Other Powers of Attorney for Financial Estate Planning. It was intended to address concerns of estate planning lawyers that people were signing broad powers of attorney that enabled other persons to dispose of the signers' assets without realising the potential consequences. But the amended statute goes far beyond its intended purpose.

The amendment was to a New York statute that simply created a form of general power of attorney...