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Kentucky’s Power of Attorney (“POA”) laws just received an update. Effective July 14, 2018, Kentucky adopted portions of the Uniform Power of Attorney Act (2006) drafted by the Uniform Law Commission (“ULC”). Even though Kentucky did not adopt Articles 2 or 3 of the uniform act (which address specific powers granted to the agent and a sample form), the new statutes will provide much needed clarity in replacing our previously sparse statutes.
Generally speaking, a POA is an instrument by which a person (called, the principal) designates another (called, the agent or attorney-in-fact) to deal with the principal’s property and act on the principal’s behalf, either out of necessity or mere convenience. Often, a POA will be designated as “durable,” meaning it remains in effect even after the principal loses the capacity to manage his or her property.
POAs are governed by state law, which can mean that a single instrument can be interpreted in very different ways from one state to the next. The ULC has promoted the adoption of a uniform law across the country in an effort to reduce these potential inconsistencies for principals who move from one state to another or own property in multiple states. According to the ULC, Kentucky will join 26 other states that have already adopted portions of the uniform law, meaning a POA drafted to comply with the new Kentucky law should be interpreted similarly in a majority of states.
Kentucky’s new statutes are located in Chapter 457 of the Kentucky Revised Statutes (the “KY UPOAA”) and they replace KRS 386.093. KRS 386.093 was a bare-bones statute that dealt with only three issues related to POAs: (i) durability, (ii) the default method of determining a principal’s incapacity, and (iii) when an agent is authorized to make gifts of the principal’s property.
On the whole, the new laws adopted in Kentucky will provide substantially more guidance on the drafting, interpretation, and use of POAs than did KRS 386.093. Below are some of the items addressed in the new statutes:
Any POA validly executed in Kentucky prior to July 14, 2018, will continue to be valid under the new law. However, the new act will apply a judicial proceeding concerning a POA commenced on or after July 14, 2018.
Contact a member of SKO’s Trust and Estates practice to discuss how best you can use this opportunity.