I have a New York Power of Attorney. It states that my “Agent” can have reasonable compensation. What does this mean?
Miss C –
In New York, an agent appointed in a Power of Attorney is entitled to reimbursement for reasonable expenses incurred on the principal’s behalf (you are the “principal”, Miss C). If a principal wants to compensate his or her agent for services rendered, the principal must indicate that in the Power of Attorney itself. See N.Y. G.O.L. Section 5-1506. In either case, reimbursement and/or compensation is made from the principal’s assets.
As the principal, you have some options with regard to agent compensation. Your attorney can help draft the Power of Attorney to according to your preference. For example, you could define what “reasonable compensation” means to you, which you can do in the modifications section (g) on the New York Power of Attorney Short Form. Additionally, you may indicate a precise amount you would like the Agent to receive, the timing of when the Agent should receive it, and/or the method for calculating compensation.
One important factor to keep in mind is that compensation to Agents is taxable income. You should contact an estate planning and tax specialist to discuss ways to limit tax liability, if that is your goal.
Rincker Law, PLLC can help draft Power of Attorneys for individuals. It is recommended that everyone have a Power of Attorney.
"This blog is for informational purposes only and is not intended to create an attorney-client relationship. It is recommended that you speak to an attorney licensed in your jurisdiction before relying on the information in this blog."