Is It Time to Update Your Power of Attorney Documents?
Attorney Jane Dearwester
The General Durable Power of Attorney is one of the most important estate planning documents to have in place and to keep updated. In 2018, the North Carolina General Assembly made sweeping changes to the North Carolina statutes relating to powers of attorney. The changes only apply to the General Durable Power of Attorney, and not to health care powers of attorney. So, if you have a General Durable Power of Attorney that was drafted prior to 2018 and you haven’t already updated it – now is the time.
New POA Law
One of the major changes under the new law is that powers of attorney are automatically durable, meaning the Power of Attorney (“POA”) document is still valid upon the incapacity of the Principal, unless the document explicitly states an intention that it not be durable. Under the prior version of the statute, the reverse was true. The new statute also changed the law regarding recordation of the POA document with the county Register of Deeds. Under the old law, the document had to be recorded to be “durable” or to survive the incapacity of the Principal. Under the new law, the powers granted are presumed to be durable and there is no requirement for the document to be recorded to be valid and enforceable. However, the exception to this is that when an agent signs documents for the Principal relating to a real estate transaction, the POA document must be recorded to give record notice of the designation.
Another major change is that powers of attorney now must be acknowledged, no other witnesses are required except the notary – whereas POAs executed before January 1, 2018 were sufficient with just witnesses, all POAs executed January 1, 2018 or later require a notary acknowledgement. A power of attorney that was validly executed prior to January 1, 2018 under the laws as they existed at that time is still valid. So, if you have a POA that was witnessed but not acknowledged, you do not need to worry that your POA is no longer valid.
Authorization of Powers
Regardless of when your POA document was signed, the new statute designated certain powers of the agent that MUST be specifically stated and authorized by the Principal in the POA to be valid. Those include the following powers: (1) to make a gift; (2) to create or change rights of survivorship; (3) to create or change a beneficiary designation; (4) to delegate authority granted under the POA; (5) to waive the Principal’s rights to be a beneficiary of a join and survivor annuity; (6) to exercise fiduciary powers that the principal has the authority to delegate; and (7) to renounce or disclaim property, including a power of appointment. With regard to trusts, the new POA statute requires the Principal to specifically designate that their agent has the power to exercise the powers of the Principal as settlor of a revocable trust in accordance with N.C.G.S. §36C-6-602.1 and also that the agent has the powers of the Principal as settlor of an irrevocable trust to consent to the trust’s modification or termination per N.C.G.S. §36C-4-411(a). These powers become paramount during long term care planning and qualification for long term care Medicaid benefits. Without these express powers designated in your POA document, your agent might be unable to transfer assets or to take advantage of all available options to revise your estate plan as your needs change over time.
What Makes for a Good POA?
A thoughtfully drafted and comprehensive POA document can be one of the most powerful and important estate planning documents because it protects you while you’re still alive, but in your most vulnerable state. When you cannot make decisions for yourself due to incapacity, you need to have a trusted designated legal agent named who can pick up and do what is needed to protect you and your assets. It’s important to keep in mind that healthy spouses cannot automatically act on behalf of their incapacitated spouse without a POA in place. This is a very common misconception. Many married couples assume that the bonds of marriage are a replacement for a POA document. Marriage does not empower one spouse to legally act on behalf of the other.
McIntyre Elder Law Can Help
If you do not have a named agent in place, your loved ones may be forced to bring a legal guardianship proceeding to be designated as your legal guardian. In that proceeding, which costs thousands of dollars, if deemed incompetent, you will be stripped of your personal rights and deemed a ward of the State. The minimal cost of a POA document that aligns with current North Carolina laws is vital to protect you and your assets. A solid POA also will help to minimize confusion and delay if and when you lose capacity to handle your own legal affairs.
📍 Offices in Shelby, Charlotte, and Hendersonville
📞 Call us at 1-888-999-6600
🌍 Visit our website: www.mcelderlaw.com
Don’t wait until it’s too late—take control of your future today!
Attorney Jane Dearwester
Estate Planning & Elder Law Attorney
McIntyre Elder Law
Hendersonville, NC
