A power of attorney (POA) is an estate planning tool in Kentucky where you appoint a person, known as the agent, to manage your affairs. Typically, the POA is appointed to handle your financial or medical matters when you cannot do so yourself because you are incapacitated by illness or injury.
People are often confused, however, as to when and which type of POA is needed. At Fred Simon Law, I will listen to your concerns and needs, review your estate, and advise you on which POA is best for you and your unique situation. Contact me at (502) 558-8576 to schedule a Consultation and learn more about how and why a POA can complement your estate plan.
What Constitutes a Power of Attorney in Kentucky?
A power of attorney is the legal authorization for one person, the agent, to act on behalf of another person, the principal. Often called a letter of attorney or just a "POA", they are a common element of estate planning as they allow another person to manage their personal affairs and trust them to make decisions on their behalf.
There are six types of POAs, described below.
1. Durable POA
A durable POA takes effect immediately upon signing unless the POA states otherwise and allows the agent to continue acting on your behalf even when you are incapacitated. A durable POA terminates only when you die or when a statement of revocation of the POA is signed.
2. Non-durable POA
A non-durable POA takes effect immediately upon signing unless the POA states otherwise. It does not allow the agent to continue acting on your behalf when you become incapacitated. Because it is non-durable, only a court-appointed guardian or conservator can then make decisions on your behalf.
3. Medical POA
A medical POA is sometimes referred to as an advance directive because it allows you to appoint a healthcare agent to make medical decisions for you when you cannot do so. It is limited by your specific medical preferences and any other directive you may have as part of your estate plan, like a living will or a Do Not Resuscitate (DNR) form.
4. General POA
A general POA allocates broad powers to the agent to act on financial, business, real estate, and legal matters. This POA is limited only by the terms set out in the POA or by the relevant Kentucky statutes.
5. Limited (Special) POA
A limited (Special) POA allows the agent to act for a specific purpose and once that purpose is accomplished, the POA expires or the authority to act by the agent ends.
6. Springing POA
A springing POA takes effect if/when a certain event or medical condition occurs as specified in the POA. It ends at a specified time as outlined in the POA or if/when you become incapacitated or die.
When is a Power of Attorney Necessary in Kentucky?
A power of attorney can be a useful tool for people who are planning their estate but who may be losing the ability to understand the repercussions of their decisions and actions. By giving an agent the power to make those decisions, a principal can rest assured that someone will be able to take care of them.
A POA is common in the following situations:
- The principal suffers from a worsening medical condition that impacts their mental capacity, like Alzheimer's or dementia
- The principal is physically disabled and cannot sign important documents
- The principal wants to give someone else the power to make specific decisions on their behalf
There are, of course, other reasons why you may need or want a power of attorney created. Speaking to an estate planning attorney in Kentucky is the best way for you to identify and determine what will work best for you.
How is a Power of Attorney Created in Kentucky?
While each state has its own requirements for creating a power of attorney, most are based on the parties signing a form under oath before a notary public. Because having the power to make financial and medical decisions for someone else is such a serious matter, each state incorporates formalities that must be followed to:
- Ensure the power of attorney is legitimate; and
- Confirm the person delegating their rights is doing it knowingly and voluntarily.
Many states require a witness along with notarization. Contact us in Louisville to find out exactly what the process is so that you don't make mistakes that could prompt delays or problems.
Challenges to a POA in Kentucky
A family member or another close person is usually listed as the power of attorney. Sometimes, problems or conflict arises, leading to another family member disputing the POA. Although not exclusive, there are three main ways to challenge a POA.
- The principal is mentally incompetent. The principal of the POA is the one who grants a power of attorney, and the principal gets to choose who that POA is. If a family member wants to revoke or contest the validity of a POA, then proving the principal was mentally incompetent (e.g., has dementia, a psychiatric issue, or another form of mental incapacity) is one way it might be done. This type of dispute may ultimately be determined by the winner of the battle of the experts.
- Formalities were not followed. POAs require a number of formalities, which vary by state. Failure to follow or satisfy the formalities can mean the POA is invalid. You want to look out for specific language that's required by state law, signature and witness requirements, and notarization requirements.
- Agent abused authority. Agents are the ones chosen by the principal to act as their POA. When an agent abuses this authority, a POA can be challenged. Examples of abuse include stealing the principal's assets, mismanaging assets, or neglecting the principal's needs altogether. This type of dispute may be difficult and expensive to prove.
Having an attorney to help you with the POA is one way to help prevent disputes in the future.
Contact an Estate Planning Lawyer in Louisville Today
Powers of attorney are powerful tools to make sure your finances and other business or personal matters are properly managed while you are incapacitated or otherwise unable to oversee them yourself. You can speak to an estate planning attorney at Fred Simon Law to discuss estate planning generally and powers of attorney as part of the estate plan specifically.
We always believe that our clients in Kentucky make better choices for themselves and their loved ones when they are well-informed and adequately prepared. Contact us directly at (502) 558-8576 or online today to schedule a Consultation.