As of January 1, 2018, North Carolina has adopted a version of the Uniform Power of Attorney Act. This new statute overhauls the way we look at Durable Powers of Attorney. A Power of Attorney is a legal document that authorizes someone else to act as your Agent. “Durable” just means it remains valid even after the Principal becomes incapacitated, until a stated termination date or event occurs, or the Principal dies. Financial Exploitation from Powers of Attorney is a growing problem and this new Act is intended to provide intelligibility for those serving as Agents (we used to call them Attorney-in-Fact) and additional guidance and protections for the Principal (the individual who has appointed the Agent to act for them) as well as those third parties (banks and other financial institutions, for example) who are asked to honor a power of attorney. The new Act addresses concerns that a Power of Attorney may be used to alter the Principal’s estate plan or dissipate their assets over time, also effectively altering the estate plan.
Many questions should be considered when executing a new Power of Attorney. By considering questions such as these, you eliminate questions about your intent. These include, but are not limited to:
- Should your Agent be paid and do you want to set out how much is reasonable?
- Should your agent be allowed to give gifts? To your family? To the Agent him or herself? Should gifts between children have to be equal? Should gifts be limited to the Annual Exclusion Amount of $15,000.00? Should there be different rules if the Agent is your spouse?
- Should you appoint a third person to check behind your Agent; someone to whom your Agent has to give copies of his or her annual accounting or at a minimum, the bank statements?
- Should your Agent be able to change your beneficiary designations?
- Should your Agent be able to open a bank account and make it “joint with right of survivorship” with the Agent?
- Although the law no longer requires the Power of Attorney to be recorded (unless it’s for real estate) for it to remain effective after you become incapacitated, do you want it recorded for ease of accessibility?
- Do you want the Power of Attorney to go in to effect immediately or only in the future, upon your incapacity?
- If you have two Agents, do you want them to always have to act together or can they each act independently? If one of them dies, should the other act alone?
- Should your Agent be allowed to establish a Revocable Trust for you in the future if it does not alter the beneficiaries in your current estate plan?
While the Powers of Attorney signed under the old law are still valid, they lack some of the protections under the new law. As time passes, the old form and some of the language therein will become unfamiliar and may become hard to use; therefore those who have a Power of Attorney under the old law may consider updating it under the new statute. This new law does not affect Health Care Powers of Attorney whose statute went under a similar overhaul in 2008.
The attorneys at Black, Slaughter & Black, P.A. in both Greensboro and Charlotte can assist you with questions about Powers of Attorney and in updating your Durable Power of Attorney.