Laws intended to address problems in one, often obscure, area occasionally have unintended adverse consequences in an entirely unrelated field. That is what has happened as a result of the adoption of several recent amendments to New York General Obligations Law §§1501, et seq., which codifies New York’s power of attorney statute. Although the amendments were enacted to curb power of attorney abuses in financial matters relating to elder care, the language of the statute as amended is not limited to non-business matters. It thus may apply to commercial transactions and may invalidate the powers of attorney found in many existing business documents. Because New York law is widely used in financing and secured transactions, we address today several concerns the statute now raises in such arrangements.
Background
Powers of attorney have been perceived to facilitate exploitation of individuals in the areas of financial, tax and estate planning, especially among the elderly. In 2000, the New York State Legislature directed the New York State Law Revision Commission to review the existing state of the law governing powers of attorney and to make proposals to limit their misuse. In 2008, the commission submitted its findings and proposals,1 which were then enacted into law largely intact via amendments to the statute that became effective on Sept. 1, 2009.2
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