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Uniform Power of Attorney Act Becomes Law in Kentucky

  • July 10, 2018

Based on recently revised provisions of Kentucky law applicable to Powers of Attorney, we are encouraging that clients immediately have their existing Powers of Attorney reviewed and most likely revised.

The Kentucky legislature has adopted legislation based on the Uniform Power of Attorney Act (2006), which will govern most powers of attorney granted under Kentucky law beginning on July 14, 2018[1], even if the document was executed prior to the date that the law goes into effect. The new law, codified primarily under KRS Chapter 457, establishes provisions governing the relationship between an individual granting legal authority to an agent to act on the individual’s behalf (“Principal”) and that individual’s agent, including the following:

1. The Principal’s signature on a power of attorney document must be witnessed by two (2) disinterested witnesses, in addition to a notary public or other individual authorized to take acknowledgments, in order to create a valid power of attorney.

2. A power of attorney is considered unaffected by the Principal’s incapacity, or “durable,” by default, unless the document contains specific language stating that it shall be terminated by the Principal’s incapacity.

3. A power of attorney shall terminate automatically upon the occurrence of one of following:

a. Death of the Principal,
b. Principal becomes incapacitated,
c. A fiduciary is appointed by court order to manage the Principal’s property,
d. The Principal revokes the power of attorney,
e. The power of attorney states that it terminates at a specific time or upon the occurrence of a stated event,
f. The power of attorney was created for a specific purpose only, and the purpose has been accomplished, or
g. The Principal revokes the agent’s authority, or the agent dies, becomes incapacitated, or resigns.

4. Agents shall be bound by duties of good faith and loyalty to their Principals.

5. Agents are entitled reasonable compensation under the circumstances unless a power of attorney provides otherwise.

6. Third parties have seven (7) days upon receipt of a power of attorney to determine whether to accept the document and shall not be liable for good faith reliance on a valid power of attorney. Even if the power of attorney has been properly acknowledged, acceptance is not required if the third party has reason to believe that the power is invalid or that the agent does not have the authority to perform the act requested, or the third party makes or has knowledge of reports of abuse of the Principal by the agent.

7. Third parties who do not accept a valid power of attorney without a proper basis for refusal in violation of KRS Chapter 457 may be subject to a court order mandating acceptance and assessment of attorneys’ fees and costs incurred.

8. The new legislation applies to powers of attorney executed prior to July 14, 2018, except that the validity of the document’s execution is determined under prior law, and acts done by the agent prior to July 14, 2018 pursuant to an existing power of attorney are not affected.

The new statutes present notable departures from prior Kentucky law, which was based on common law principles. Numerous default provisions now provide additional protections to Principals from overreach, fraud, or abuse by agents, including the right to a statutory cause of action where an agent has violated KRS Chapter 457, and a fee-shifting provision permitting an award of attorneys’ fees and costs incurred by the Principal in prosecuting the violation.

If you have any questions please contact Rachel Shelton at (859) 219-0066

[1] Exceptions to the applicability of the Uniform Power of Attorney Act are listed in KRS 457.030.