On July 14, 2018, Kentucky's new Power of Attorney law took effect. The series of new statutes in Chapter 457 are based on the Uniform Power of Attorney Act as drafted by the Uniform Law Commission. The ULA is a group of lawyers that crafts generic laws that an individual state may enact as its own, often with legislative modifications to meet the unique needs of that jurisdiction.
A power of attorney is the authority a person (called the principal) grants to another (called the agent or attorney-in-fact) when the principal signs a power of attorney document. The authority or power given to the agent is to conduct business or personal transactions on behalf of the principal.
Most people sign powers of attorney to name someone to handle the principal's affairs should they become temporarily or permanently incapacitated. Other situations may call for a power of attorney. For example, a business executive may travel internationally on a regular basis and require an agent to conduct business or handle personal affairs for the principal when he or she is abroad.
Seek legal counsel regarding power of attorney issues
Many of the clients whom we serve at Gerner & Kearns Co., L.P.A., like lenders, businesses, parties to real estate transactions, and individuals engaging in estate planning will likely find it important to understand the new Kentucky power of attorney law. It is very complex, however, so legal advice in any given situation in which the issue comes up can be crucial.
Provisions of Kentucky's new power of attorney law
The new law builds in protections against fraudulent drafting of powers of attorney as well as for businesses and individuals faced with accepting powers of attorney in transactions.
A major change is a new requirement that two disinterested persons witness the principal's signing of the power of attorney document. The two witnesses must then also sign the document.
A principal who is not able to sign because of physical disability may authorize someone else to sign for him or her in the principal's "conscious presence," but must explain the reason for this method of signing within the power of attorney document.
The principal's signature affixed to a power of attorney is presumed genuine if the signing principal acknowledged it in the presence of a notary public or similar official.
In Part 2 of this post, we will talk about the legal and fiduciary duties of an agent as well as new protections for third parties who rely on powers of attorney.