Governor Matt Bevin has signed House Bill 11 into law, adopting provisions of the Uniform Power of Attorney Act of 2006 and creating new power of attorney standards in Kentucky. The provisions go into effect July 14, 2018.
The Uniform Power of Attorney Act of 2006 (UPOAA) seeks to preserve the durable power of attorney as a low-cost form of surrogate decision making, providing protections for the principal, the agent, and any individual who deals with the agent. KRS 457 defines a power of attorney as “a writing or other record that grants authority to an agent to act in the place of the principal, whether or not the term power of attorney is used. Further, any power of attorney is considered durable unless it expressly provides otherwise
The proper execution of a power of attorney requires the principal, or a representative, to sign the document in the presence of two disinterested witnesses. The signature is presumed genuine if the principal acknowledges the signature before a notary public or other individual authorized by law to take acknowledgments. A power of attorney can become effective either when it is executed, at a future specified date, or upon the occurrence of a future event or contingency. Upon the execution of an acknowledged power of attorney, a person should either accept it or request a certification, translation, or opinion of counsel no later than seven days after its presentation for acceptance. A person will be court ordered to accept the power of attorney and pay reasonable attorney’s fees and costs for the time spent confirming the validity of the power if they refuse to accept an acknowledge power of attorney without a valid exception.
An agent has many duties including acting within the principal’s reasonable expectations, in good faith, and within the scope of authority granted. They should also act loyally, impartially, with care, competence, and diligence, keep records of all transactions, cooperate with a health-care surrogate, and preserve the principal’s estate plans. Principals are allowed to include provisions eliminating an agent’s liability. However, these provisions will not be enforceable if they eliminate liability for breaches committed in dishonesty, with an improper motive or reckless indifference, or were written as a result of abuse of a confidential or fiduciary relationship.
In order to resign, an agent must give notice to the principal or to a conservator, guardian, co-agent, successor agent, or other caregiver if the principal is incapacitated. A power of attorney will terminate when: 1) the principal dies, 2) the principal becomes incapacitated if not durable, 3) the court appoints a conservator or guardian to manage the principal’s estate unless otherwise provided, 4) the principal revokes the power of attorney, 5) the power of attorney provides that it terminates, 6) the purpose of the power is accomplished, or 7) the principal revokes the agents authority or the agent dies, is incapacitated, or resigns. The agent must have actual knowledge of a termination in order for it to be effective. If an agent continues to act in good faith under the power of attorney because they did not receive this notice, the termination will not be considered effective. The execution of a subsequent power of attorney will not terminate a previous power of attorney unless the new document explicitly provides for its termination.
Furthermore, a principal may nominate a conservator or guardian in a power of attorney for consideration by the court if they become incapacitated after the execution of the power of attorney. An agent’s authority under an executed power of attorney will terminate upon the appointment of a conservator or guardian by the court unless the court provides otherwise.
A principal may designate two or more individuals as co-agents and one or more successor agent(s). Co-agents exercise authority independently unless otherwise provided. Successor agents act with the same authority as an agent but only after all predecessor agents have re-signed, died, or become incapacitated. An agent will not be liable for the actions of other agents unless they have actual knowledge of the breach of fiduciary duty or have concealed the breach.
House Bill 11 applies to powers of attorney created on or after July 14, 2018. Powers of attorney created prior to July 14, 2018 remain valid so long as they were created in compliance with the applicable jurisdiction’s law.
*DBL Law Summer Associate Erin Shaughnessy contributed to this article.