Changes to North Carolina’s Power of Attorney Laws Have Taken Effect

On July 20, 2017, Governor Roy Cooper signed the bill enacting the North Carolina Uniform Power of Attorney Act (the “Act”). The Act repeals much of the older existing law dealing with powers of attorney (POA), and seeks to clarify and add uniformity to POA utilized for most personal business transactions. The Act is modeled upon the Uniform Power of Attorney Act drafted and approved by the National Conference of Commissioners on Uniform State Laws, although it contains numerous tweaks and modifications to the Uniform State Laws. The bill became effective January 1, 2018.

Generally speaking, a POA is a document that allows you to appoint an agent to manage your affairs if you become unable to do so. They are useful when a person cannot handle certain affairs due to other commitments (think travel) or health issues. Selling property (personal and real), managing real estate, personal and family maintenance, and handling business transactions are some of the common matters specified in a durable POA document. This change does not impact healthcare powers of attorney. A reminder that all POAs are not created equal such that it is imperative that you consult an attorney to insure a POA is effective for your purposes.

It is important to understand that, under the previously existing law, a POA had to be filed to be accepted and even then, third parties could question the authority of your agent. The Act amends the North Carolina General Statues by adding Chapter 32C. “Power of Attorney” is defined by § 32C-1-102 as “a writing or other record that grants authority to an agent to act in the place of the principal, whether or not the term power of attorney is used.”  In the Act, Article 1 of the Act outlines definitions and general provisions, including applicability, durability, execution, and validity of the power of attorney. A POA created pursuant to Chapter 32C is “durable,” meaning it continues in effect unless specifically revoked or otherwise limited. The previous act provided that a POA was not durable unless very specifically set out as such and thereby too often created confusion.

Article 2 of the Act includes provisions regarding the general and specific authority that a principal may give an agent in a power of attorney, such as authority involving gifting, changing beneficiary designations, real property, tangible personal property, stocks and bonds, banking, taxes, handling claims and litigation, among others. In addition, Article 2 addresses concerns that an agent’s authority might be used to dissipate the principal’s property or alter the principal’s estate plan by listing specific categories of authority that cannot be implied from a grant of general authority—they can only be granted by express language in a POA.

Article 3 provides three model statutory forms, including a statutory short form POA, an agent’s certification, and a limited POA for real property transactions. These are optional forms and there are options within each form. Lawyers are already at work modifying these models to create more user-friendly and in some instances less ambiguous forms. The key is that whatever form is used, as long as it complies with the Act, it will be deemed acceptable and third parties are to rely upon it.

Article 4, entitled “Miscellaneous Provisions”, clarifies the relationship of the Act to other law, giving consideration for the need to promote uniformity of law with other states, and clarifying the effect of pre-existing powers of attorney.

The newly enacted law is designed to clear up what was formerly a confusing area of the law. If you, a family member or someone you know has a POA currently, or is planning on setting one up, it would be a good idea to review the new law, so that the POA can be used as the parties intend.