A Kentucky durable power of attorney form enables one person to make financial decisions on behalf of another person.
The principal is the one granting authority, while the agent or attorney-in-fact is the person who will be performing actions on behalf of the principal. This type of document remains effective even if the principal loses their mental capacity or ability to handle their own finances.
In Kentucky, power of attorney forms are durable by default.
Laws
- Statute: § 457.010 (Uniform Power of Attorney Act).
- Presumed Durable: Yes – durability presumed (§ 457.040).
- Signing Requirements: The signature of the principal is required.
- Notarization: Signature presumed genuine if acknowledged before a notary public (§ 457.050). If the agent chooses to sign an optional Agent Certification document, this should also be acknowledged before a notary public (§ 457.050, § 457.430).
- Statutory Form: Yes (§ 457.420).
Definitions
Durable – “”Durable,” with respect to a power of attorney, means not terminated by the principal’s incapacity.” (457.020(2))
Power of Attorney – “”Power of attorney” means 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.” ((457.020(7))
Specific Powers and Limitations
Here are some essential factors to keep in mind before drafting your DPOA in Kentucky:
Restrictions on Gifts and Transfers
When it comes to gifts and transfers, there are restrictions on the agent’s authority in Kentucky. As per § 457.400, here are the types of gifts and transfers that are allowed:
Types of Gifts
- Gifts to individuals: The agent can make gifts to individuals, including gifts “for the benefit of” a person, which includes gifts to a trust, an account under the Uniform Transfers to Minors Act (1983/1986), and a tuition savings account or prepaid tuition plan as defined under Internal Revenue Code Section 529, 26 USC sec. 529.
- Gifts to charitable organizations: The agent can make gifts to charitable organizations if authorized.
- Transfers to trusts: The agent may place the principal’s assets into a trust that the principal can revoke unless the document explicitly authorizes an irrevocable trust.
Considerations
- A DPOA with general authority allows the agent to make gifts within the annual dollar limits of the federal gift tax exclusion.
- The agent can split a gift made by the principal’s spouse within the annual gift tax exclusion limits.
- Gifts cannot exceed the annual federal gift tax exclusion.
- The agent can make gifts in excess of the principal’s remaining estate after death if authorized.
- Must expressly authorize the agent’s authority to make gifts.
- An agent may make a gift based on the principal’s objectives or best interest, taking into account relevant factors such as:
- The value and nature of the principal’s property
- Obligations and need for maintenance
- Tax minimization
- Eligibility for benefits
- Personal history of making or joining in making gifts.
Agent’s Authority
As per § 457.245, an agent can act on behalf of the principal only if a durable power of attorney expressly grants the agent the authority to take specific actions. These actions may include:
- Creating, amending, revoking, or terminating an inter vivos trust
- Making a gift
- Creating or changing rights of survivorship or beneficiary designation.
It is important to note that any act performed by an agent pursuant to a DPOA has the same effect and inures to the benefit of and binds the principal and the principal’s successors in interest as if the principal had performed the act.
Revocation and Termination
As per § 457.100, there are several steps and considerations to keep in mind when it comes to revoking or terminating a DPOA.
Steps Needed to Revoke
To revoke a Kentucky durable power of attorney, the following steps are required:
Step 1. Provide a written notice of revocation to the agent and any third parties acting under the DPOA.
Step 2. Retrieve all copies of the document from the agent and any institutions where it was presented.
Step 3. File the revocation notice with the same office where the original document was recorded, if applicable.
Considerations
- Does not terminate automatically in case of the incapacity of the principal, unless specified otherwise in the document.
- The death of the principal does not terminate unless specified otherwise.
- Termination of an agent’s authority or power of attorney doesn’t affect a person who acts in good faith without knowledge of the termination.
- An act performed in such good faith is binding to the principal and their successors in interest.
- Execution doesn’t revoke a previously executed power of attorney unless the subsequent DPOA explicitly states so.
Cost Considerations
Notary fees: Notarization of the revocation is mandatory, with costs ranging from $10 per signature.
Recording fees: If the original document was recorded, the revocation should be, too, for $25 to $50, depending on the county.
Safekeeping and Registration
Kentucky does not have a statewide registry for durable powers of attorney. Therefore, the principal must keep the original document in a safe, accessible location and inform trusted individuals, such as family members or an attorney, of its location.
Additional Resources
- Kentucky Bar Association – A voluntary organization of lawyers that aims to promote the practice of law and improve the administration of justice.
- Legal Aid Network of Kentucky – A non-profit organization that provides free legal information and services to low-income individuals and families.
- Kentucky Attorney General – Chief legal officer of the state and is responsible for providing legal advice and representation to the state government and its agencies.
