Introduction

In conjunction with the amendments to the New York Power of Attorney, effective as of September 1st 2009, previously discussed in detail here, the New York State government enacted a mechanism for a principal to grant an agent the power to transfer gifts to a beneficiary. The New Power of Attorney controls the handling of the principal’s general affairs, while the Statutory Major Gifts Rider (SMGR) will govern the agent’s ability to gift the principal’s assets during the principal’s lifetime. The provisions governing the SMGR are set forth in NY G.O.L. §5-1514.     

Summary of the SMGR Provisions

The SMGR requires a principal to execute a separate addendum to the New York Power or Attorney, permitting an agent to transfer major gifts to spouses, children, distant descendants or gifts to other beneficiaries.  In addition to the power to make gifts, the SMGR may also empower an agent to change or create rights of survivorship or add a beneficiary designation.  Lastly, the principal is also able to give the agent the power to grant a gift to himself/herself. 

Divorce and the SMGR

If two people divorce, the marriage is annulled, dissolved or otherwise invalidated, the agent loses the ability to make a gift to a former spouse under the SMGR.  However, if the principal decides to remarry a former spouse, the agent will be re-empowered to make a major gift to the spouse.

Conclusion

The SMGR must be signed, notarized and witnessed by two disinterested people (those that do not stand to benefit from a principal’s gift).  The principal must execute the SMGR and the New Power of Attorney simultaneously.   The method of execution for a SMGR is similar to that of executing a will.  Should you require any further information about the new Power of Attorney or the Statutory Major Gifts Rider, please contact us.