William (Bill) P. Davies is an attorney at Davies Law Firm, P.C., in Syracuse. He received his JD from Albany Law School, and his LLM in Estate Planning from the University of Miami School of Law. He is a co-author of the McKinney’s Practice Commentary on New York Power of Attorney Law and his practice focuses on estate planning and estate administration. In the article below, Bill explores how the New York Statutory Power of Attorney affects charitable giving. Thanks, Bill!
The job of a professional advisor requires that we support our client’s goals. If the client wants something done that is ill advised or otherwise not allowed, we need to explain why it should not or cannot be done. If your client’s child calls and asks if they may continue making charitable donations using a disabled parent’s individually owned funds, the answer lies in the language of the Power of Attorney signed by the parent (the principal) appointing the child as his or her agent.
In New York we have a “Statutory” Power of Attorney (POA), set out at §5-1513 of the New York General Obligations Law (NY GOL). This is a form document that may be signed without modification and allows someone else (the agent) to manage your financial affairs. However, under NY GOL §5-1502I, the personal and family maintenance provision, the unmodified POA only allows an agent to make gifts of $5,000 total per year, and the gifts must continue the principal’s previously established pattern of gifting. To provide greater gifting powers, the POA must specifically grant the agent additional authority beyond the $5,000 limit and allow gifts beyond a previously established pattern of gifting.
If executed between September 1, 2009, and
June 12, 2021:
- The Principal’s Initials in Section (h): CERTAIN GIFT TRANSACTIONS: STATUTORY GIFTS RIDER
- A fully executed Statutory Gifts Rider – a separate document from the POA – with language allowing the agent to make charitable gifts under section (b): MODIFICATIONS
If executed on or after June 13, 2021:
- The Principal’s Initial in Section (g): CERTAIN GIFT TRANSACTIONS
- Language in Section (h): MODIFICATIONS (directly below Section (g)), that allows the agent to make charitable gifts.
If the POA was signed in 2012, and the agent attempts to exercise authority as an agent in 2022, the POA must follow the form in effect between 2009 and 2021. In other words, the POA is valid if it conforms to laws in effect at the time of execution, not at the time of use.
NOW THAT WE KNOW THE FORM, WHAT LANGUAGE SHOULD BE IN THE MODIFICATIONS SECTION?
How Much – The POA (or Statutory Gifts Rider) should specifically allow the agent to make unlimited gifts, or gifts of at least the amount the agent wants to make. If there is no specific authority to make gifts greater than $5,000, the agent would exceed his or her authority by gifting greater than the amount allowed by the unmodified POA.
To Whom – The POA (or Statutory Gifts Rider) should grant the agent authority to make gifts to nonprofit or charitable organizations.
For What Purpose – The purpose of the charitable gifting should be included in the grant of authority to allow the agent to justify his or her actions where specific instructions were not provided. The principal should specify for what purpose he or she wishes gifts to be made in the modifications section of the POA or Statutory Gifts Rider. This might mean the principal lists the types of organizations he or she wishes to support or states that he or she wishes to support a specific purpose, like animal rescue or food banks.
THE LANGUAGE CAN PUT THESE THREE REQUIREMENTS TOGETHER OR DEAL WITH THEM SEPARATELY.
A narrow and specific provision: “I grant my agent the authority to make gifts of up to $20,000.00 each month to the Central New York Community Foundation Madison County Rural Poverty Fund to be used for the general charitable purposes of the Fund.”
A broad grant of authority: “I grant my agent the authority to make gifts of any amount my agent determines, to any Central New York charitable organization or nonprofit, for any charitable purpose, in my agent’s sole and absolute discretion.”
If an agent has a non-statutory POA or the POA does not fit one or more of the above requirements, it may still allow the agent to make charitable gifts, but it is recommended that an attorney review the document.
For more information about the 2021 Power of Attorney in general, please see my article “The 2021 New York Statutory Power of Attorney” available at davieslawfirm.com.