The New North Carolina Power of Attorney Act:
What You Need to Know
If you do not have a Power of Attorney it could cause significant financial problems in the event of a major illness or injury making you unable to handle your own financial affairs. If someone you trust does not have the legal authority to use your money and other assets to pay your bills, then your mortgage, your car payments, your insurance, and your utilities may not be able to be paid. For this reason, you should consider consulting a good estate planning attorney about whether you need a POA.
The new statute for the creation of a POA added some very distinct provisions for the authority conveyed to the Attorney-In-Fact. Here are some of the key facts about this new North Carolina Power of Attorney Act:
- Old POAs remain effective
- A POA based on the old law remains effective, so long as it was executed properly before January 1, 2018.
- New Rules for POA Execution
- A POA signed in North Carolina on or after January 1, 2018 is valid if it is (1) signed by the principal or in the principal's conscious presence by another individual directed by the principal to sign the principal's name on the POA, and (2) acknowledged (i.e., notarized).
- Effective When Signed
- A POA created under the new law is immediately effective, unless made effective only upon the happening of some future event.
- In most cases, this rule is a good one. The most common need for a POA arises when the Principal becomes unexpectedly incompetent as the result of injury or illness.
- In these situations, the Agent-In-Fact can begin to assist the Principal immediately.
- Power Until Death
- A POA created under the new law remains effective even after the Principal becomes incompetent, unless otherwise stated.
- The POA terminates when the Principal dies.
- However, you can set other limits on the POA, and you can always revoke the POA.
- For Handling Real Estate
- If you want to POA to include the right to buy and sell real estate, you should have two (2) witnesses to the execution of the new POA and have their witnesses notarized.
- This allows for the POA to be recorded in your county’s Register of Deeds and can be accepted for real estate transactions.
- Increased Protection Against Abuse
- You should select someone to be your Attorney-In-Fact only if you have a firm belief that they are entirely trustworthy.
- However, the best policy may be to use new provisions of the 2018 NC POA Act to provide better protection
- For example, there are certain types of authority which the Attorney-In-Fact only has under the 2018 Act if granted by the Principal specifically. These authorities include making gifts, changing beneficiaries on life insurance, and modifying trusts.
- Even if granted, the Attorney-In-Fact must show that these actions would be in the Principal’s best interest.
We are glad to review your current Power of Attorney and help you determine if, due to changes in the law or changes in circumstances, you would benefit from a new POA. We can also review your other Estate Planning documents, and help you update or create your estate plan. We believe in helping our clients make the best-informed decisions and would be glad to talk with you.