CLEAR MY TITLE Powers of Attorney & Revoking Trusts

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1 SNEERINGER MONAHAN PROVOST REDGRAVE TITLE AGENCY, INC. CLEAR MY TITLE Powers of Attorney & Revoking Trusts Presented By: Nicholas M. Ihnatolya, Esq. SMPR Title Agency, Inc. 50 Chapel Street Albany, New York Phone: Fax: July 2016 Albany: Saratoga: Hudson: 50 Chapel Street 36 Remsen Street 420 Warren Street Albany, NY Ballston Spa, NY Hudson, NY P (518) P (518) P (518) F (518) F (518) F (518)

2 Provisions in a Trust Permitting an Amendment: THE REVOCABLE IRREVOCABLE TRUST & AMENDMENTS THERETO After an irrevocable trust is created and funded, most likely there may be a time when it no longer serves the purpose for which it was originally created. Thus, the question arises How do you amend or, better yet, revoke an irrevocable trust? In this section, we will focus our review on the provisions of the trust agreement and New York EPTL Before resorting to EPTL 7-1.9, it is important that the parties review and understand the trust agreement in place to see if such agreement has taken into consideration provisions allowing for its amendment. Does it include a provision giving an optional power to amend the Trust? Provisions to look out for:

3 If the document does not have amendment powers to make the contemplated change, then you must look to state law. EPTL 7-1.9: EPTL reads as follows: (a) Upon the written consent, acknowledged or proved in the manner required by the laws of this state for the recording of a conveyance of real property, of all the persons beneficially interested in a trust of property, heretofore or hereafter created, the creator of such trust may revoke or amend the whole or any part thereof by an instrument in writing acknowledged or proved in like manner, and thereupon the estate of the trustees ceases with respect to any part of such trust property, the disposition of which has been revoked. If the conveyance or other instrument creating a trust of property was recorded in the office of the clerk or register of any county of this state, the instrument revoking or amending such trust, together with the consents thereto, shall be recorded in the same office of every county in which the conveyance or other instrument creating such trust was recorded. (b) For the purposes of this section, a disposition, contained in a trust created on or after September first, nineteen hundred fifty-one, in favor of a class of persons described only as the heirs, next of kin or distributees (or by any term of like import) of the creator of the trust does not create a beneficial interest in such persons. (c) A testamentary or lifetime trust wholly benefitting one or more charitable beneficiaries may be terminated as provided for by subparagraph two of paragraph (c) of section of this chapter. In general, under EPTL a living Grantor can terminate or amend an Irrevocable Trust provided that those with a beneficial interest under the Trust consent in writing. Three Requirements: 1. LIFE - The Grantor must be alive to terminate or amend the Trust. 2. CONSENT - All parties that have a beneficial interest in the trust must be in agreement. a) Consent cannot be obtained if there are living and identifiable beneficiaries who are not able to consent (e.g. disabled or minor beneficiaries). However, there are cases that render the consent of a minor or disabled beneficiary unnecessary if the Grantor can demonstrate that the modification is favorable to such beneficiary. b) Consent of unborn beneficiaries is not required. c) The Attorney General may consent on behalf of charitable beneficiaries and a case has held that an attorney-in-fact could revoke or amend a trust for the Grantor under this section (Perosi v. LiGreci, 98 A.D.3d 230, N.YS.2d 629 (2d Dep t 2012). 3. FORM written consent, acknowledged or proved in the manner required by the laws of this state for the recording of a conveyance of real property. The Consent must be in writing, executed and acknowledged by the consenting parties.

4 SIX YEARS LATER CAUTIONARY TALES OF THE NEW YORK STATUTORY FORM OF POWER OF ATTORNEY DESIGNATION OF AGENTS: In preparing a Power of Attorney it is important for the Principal to understand the scope, extent, and powers granted under the Statutory Form of Power of Attorney. One item of particular importance is when the Principal appoints more than one agent, but does not provide for the Agents to act separately under Section (b) of the Power of Attorney. It is important when reviewing a Power of Attorney to confirm the Agents ability to act so that proper planning can happen. GIFT GIVING: It is very important to discuss with the Principal whether the Principal intends for the Agent to have the authority to make gifts, including self-gift. It is important to understand what assets the Principal owns and whether the Principal foresees any gifting because in the event the Power of Attorney is used in a real estate transaction in which the Agent executes a deed for no consideration (as listed on the TP-584) and the Power of Attorney does not provide for such gifting, that transaction will be called into question and additional proof or parties may be required to remedy this matter (which could happen years after the initial deed is recorded). If the Principal intends to allow the Agent to self-gift, then only such is permitted if Section (c) of the Statutory Gifts Rider is completed and initialed. It is important that the Principal understands this provision and its possibilities as again it can have consequences if the Agent self-gifts without have the power and such is not discovered years after the deed has been recorded. DELEGATION: Though the Statutory Form Power of Attorney contains a Letter O permitting the delegation of the Agents Authority, there is no statutory section or subsection authorizing the delegation of authority held by an agent to another agent. Nonetheless it is important for the Principal to understand this possible power and it is important for the attorney to thoroughly review a Power of Attorney to make sure such power is granted before delegating or having an Agent resign. ADDITIONAL MODIFICATIONS: In preparing a Power of Attorney, Section (g) addressing Modifications can be useful, but also problematic. Modifications can range from adding additional language for the Agent to conduct insurance transaction or access a safe deposit box to having the ability to make decisions regarding long term care, residency, maintain/change place of abode. However, what happens when a Power of Attorney specifically has a provision that reads as follows It is my intent to reside in my home for the rest of my life and I direct that my agents utilize this power of attorney accordingly? With this provision how does an Agent sell the Principal s home using the Power of Attorney?

5 USING A POWER OF ATTORNEY: Once you triumph over the logistics, the powers, modifications, gifting abilities, and the proper execution of a Power of Attorney, it may be determined that the Power of Attorney cannot actually be used in the contemplated transaction. Under Freddie Mac guidelines, Freddie Mac will permit the Note, the Security Instrument and other closing documents to be executed by a person acting as attorney-in-fact pursuant to authority granted by a Borrower under a power of attorney (POA) in the following circumstances: In a hardship or emergency situation; and When a Seller determines that applicable law requires use of a POA. In addition, the guidelines provide that a person acting as attorney-in-fact should have a familial, personal or fiduciary relationship with the Borrower, and should not be employed by or affiliated with any party to the loan transaction other than the Borrower. If the Seller has determined use of a POA is required by applicable law, the Seller must include a written statement that explains the circumstances in the Mortgage file and deliver the statement to the Document Custodian with the Note. THE INFORMATION CONTAINED HEREIN IS FOR INFROMATIONAL PURPOSES ONLY AND IS A BRIEF OVERVIEW OF THE TOPICS DISCUSSED.