Kentucky's Law on Powers of Attorney Get a Major Update
While most of the news about the 2018 session of the Kentucky General Assembly concerned budget cuts, public school funding and pension reform, House Bill 11 was passed without much notice which made significant revisions to Kentucky Law regarding Powers of Attorney. A Power of Attorney is one of the most important estate planning documents and is perhaps more common that even a will. Because many people are now relying on pre-printed legal forms available at business supply stores or through on line retailers, many people will be caught by surprise should these forms not meet the requirements of Kentucky's new law. One of the principal reasons for adoption the Uniform Power of Attorney Act is that it clarifies the law so that banks and financial institutions are more willing to accept Powers of Attorney.Here are the most important aspects of the Uniform Power of Attorney Act:
The Uniform Power of Attorney Act requires powers of attorney executed on or after July 14, 2018 to be executed in a manner similar to a will. This means that for a power of attorney to be valid it must have been signed in the presence of two disinterested witnesses. While a notary is not strictly required, because the statute also provides that if the signatures are notarized that third parties are entitled to rely upon the signatures as authentic, so just like a will, it is also important that a notary be present and attest to the signatures as well. Otherwise, banks and other financial institutions may be reluctant to honor the power of attorney.
The Uniform Power of Attorney Act now explicitly allows a power of attorney to be become effective only when the person giving the power becomes incapacitated. While Kentucky law had previously been silent on this issue there has been some thought among estate planning attorneys that some states might not recognize a power of attorney that is only valid when the person granting the power is incapacitated. (We will talk more about how this work in a future article).
The Uniform Power of Attorney Act allows you to choose which state’s law to apply to the power of attorney.
Before the Uniform Power or Attorney Act, if there was a court appointed guardian, the Power of Attorney terminated. The new law allows a court in a guardianship proceeding to allow the power of attorney to continue in effect even if a guardian is appointed.
The statutory provisions explicitly imposes upon persons acting as an agent or an “attorney-in-fact” a fiduciary standard of conduct that specifically includes a requirement that attorneys in fact keep accurate financial records of the transactions he or she conducts on behalf of the person granting the power of attorney.
So the question you may have is “Do I have to make a new power of attorney to comply with the new law?” The answer is that if your power of attorney was valid under the previous law, it is still valid under the new law. As a practical matter, however, many banks and financial institutions may become reluctant to accept powers of attorney that do not comply with the new execution requirements because the new law provides protection for banks and financial institutions that accept powers of attorney that comply with the new statute. Because Powers of Attorney are usually one of the least expensive estate planning devices but one of the most powerful, it makes sense to talk with an attorney about making a new one that complies with the new law. If you have questions about powers of attorney, you should contact an attorney familiar with estate planning to assist you.