Instrument: Power of attorney (POA)

What is it for?
The POA allows an adult (the “principal”) to authorize one or more “agents” to make financial decisions on the principal’s behalf. Generally, the POA does not cover health care decisions. Ky. Rev. Stat. Ann. § 457.030.

What does it do?
Unless stated otherwise in the POA, agents are generally presumed authorized to take certain types of actions, such as contracting or suing on the principal’s behalf or accessing communications intended for the principal. Ky. Rev. Stat. Ann. § 457.265. Some decisions may require a specific grant in the POA. Ky. Rev. Stat. Ann. § 457.245.

In exercising the authority granted by the principal, an agent also must act loyally, avoid conflicts of interest, and act with care, competence, and diligence consistent with a fiduciary duty. An agent is not liable if the principal’s property declines as a result of the agent’s actions absent a breach of this duty. Ky. Rev. Stat. Ann. § 457.140.

Third parties are generally obligated to accept decisions by an agent pursuant to a POA, unless they have a good faith reason for refusing to do so, such as actual knowledge that another person has reported to adult protective services that the agent may be abusing, neglecting, or exploiting the principal. A third party may, for example, request the agent to provide a certification, and Kentucky law provides a form for this purpose. Ky. Rev. Stat. Ann. § 457.430. A third party may not require a principal’s POA to be created using a specific form, so long as the POA substantially conforms to the statutory form located at Ky. Rev. Stat. Ann. § 457.420. However, a third party may request a written certification from the agent of the POA’s validity. Ky. Rev. Stat. Ann. § 457.200. Third parties who rely in good faith on a POA to accept the decisions of an agent are not subject to liability. Ky. Rev. Stat. Ann. § 457.190.

How does one make it?
A POA must be signed by the principal or in the principal’s conscious presence by another individual directed by the principal to sign the principal’s name. If signed by another individual, the reason for this method of signing must be stated in the POA. The signature must also be notarized. Ky. Rev. Stat. Ann. § 457.050

When does it come into effect?
A POA is effective when executed unless the principal provides in the power of attorney that it becomes effective at a future date or upon the occurrence of a future event or contingency. If a POA becomes effective upon the principal’s incapacity, the principal may authorized a specific person to determine whether the principal is incapacitated. If not, then the POA becomes effective upon a written determination of incapacity by a physician, an advanced practice registered nurse, a licensed psychologist, or a person licensed or certified as a social worker or an employee of the Cabinet for Health and Family Services. Ky. Rev. Stat. Ann. § 457.090.

For the purposes of an incapacity determination, “incapacity” is defined as the inability of an individual to manage property or business affairs because the individual: has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance. Ky. Rev. Stat. Ann. §457.020(5). Note that a POA is presumed to be “durable” (i.e. presumed to survive the principal’s incapacity) unless it expressly provides that it is terminated by the incapacity of the principal. Ky. Rev. Stat. Ann. § 457.040.

How long does it last?
The POA for financial matters generally lasts until either the principal revokes it; the principal dies; the agent dies or becomes incapacitated or resigns; or upon the POA’s termination date, if one is provided. Ky. Rev. Stat. Ann. § 457.100. Note that the execution of a subsequent POA does not automatically revoke any prior POA unless the subsequent POA expressly states that the prior POA(s) is/are revoked.

How does one end it?
Kentucky does not specify the means by which the principal may revoke a POA.

What does an example look like?
Kentucky has a statutory POA form. Ky. Rev. Stat. Ann. § 457.420. A copy is available here. A sample agent’s certification form (for affirming the agent’s authority) is available here.

What else should one know?
Kentucky’s POA is based on the Uniform Power of Attorney Act, with certain exceptions.

Last updated April 2021

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