The Bench & Bar magazine is published to provide members of the KBA with information that will increase their knowledge of the law, improve the practice of law, and assist in improving the quality of legal services for the citizenry.
Issue link: https://kentuckybenchandbar.epubxp.com/i/132126
KENTUCKY POWERS OF ATTORNEY: A NECESSARY PLANNING TOOL FOR END OF LIFE By: Carolyn L. Kenton & Amy E. Dougherty Bluegrass Elderlaw, PLLC Robert L. McClelland McClelland and Associates Monica M. McFarlin, Esq. General practice attorneys may prepare a standard one-page power of attorney document for their client feeling that it is an adequate grant of authority. Alternatively, the client's child may download a form from the internet. In neither case do those documents satisfy the necessary specificity required and may be counterproductive to the client's actual needs. These documents may be so brief that they merely grant powers to act for the grantor in the grantor's name, place and stead and the power to do any act for the grantor which the grantor might do or perform for himself. A power of attorney is a contract between the "principal" and an "agent" granting the agent specific authority to act on behalf of the principal to the extent shown in the instrument.1 The common law rules of agency require a specific statement of the scope of the power granted; therefore, although well meaning, general language is insufficient authority for the agent to perform his duties. Specifically stated powers, although essential in every context, are pivotal in relation to asset preservation and Medicaid planning. A power of attorney document for an older client, if the family wishes to engage in asset preservation, should permit the attorney in fact both the authority to execute deeds and enable intra family gifting. CAPACITY TO EXECUTE AND SUBSEQUENT INCAPACITY OF PRINCIPAL It is important for older clients to name an agent while they have their full faculties because with advancing age comes the likelihood of incapacity or disability possibly rendering them unable to execute such documents. Even the simplest of daily transactions such as paying the utility bill or addressing pharmacy needs may be blocked by the inability of a child or significant other to act on behalf of their loved one. 2 No Kentucky cases address the issue of the level of competency necessary to execute agency documents as exists regarding executing testamentary documents. It is important to emphasize, however, that since a power of attorney is a contract, there is a standard of capacity required of the parties who enter into such an agreement which reaches above that required for executing testamentary documents. 3 A practitioner should carefully vet a person's ability to understand the scope, power and implications inherent in the document she/he is signing. The principal should also have a firm and realistic understanding of the capabilities of the agent being appointed as this document is transferring substantial powers to another person either immediately or upon a stated contingency. Under the common law, incapacity of the principal prevented or extinguished the authority of the agent to act for the principal. 4 To permit the agent of an incapacitated person to continue handling the business affairs of the principal, the Kentucky General Assembly in 1972 enacted KRS 386.093(1). This statute defines "durable power of attorney" to mean a written power of attorney by which a principal delegates another as the principal's attorney in fact. In order to become "durable," the instrument must contain words such as, "This power of attorney shall not be B&B; • 05.13 17 Lawyers are routinely called upon to draft and execute agency agreements, primarily powers of attorney. This article addresses the importance of using specific language in agency appointments and powers of attorney. Specifically, it addresses the unique needs of the elder client and particular clauses which offer protection to the client and latitude in planning.