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New NC Uniform Power of Attorney Act: What You Need To Know

Estate Planning, Featured

The experienced estate planning attorneys here at Matthew Charles Law in Chapel Hill, NC understand that keeping current on new Power of Attorney laws in North Carolina is important. The new North Carolina Uniform Power of Attorney Act went into effect on January 1st, 2018 and here’s what you need to know! If you’d like to watch the entire video replay of the North Carolina Uniform Power of Attorney Act CLE visit this link for more information.

Description of CLE event: What better way to learn about the changes involved than by the primary drafters of the new Act and just a few of the numerous people who shared their insight and experience with the drafters.

  • Learn insight on the Act, its history, changes to NC law under the new Act, the provisions of the new Act, and the application of these provisions.
  • Review of the general and specific authorities that may be granted to an agent by the principal, agent duties and liabilities, and discussions of the use and application of a power of attorney under the new Act for gifting, estate planning, real estate transactions, banking, and judicial relief.
  • Hear discussions regarding the new North Carolina Statutory Short Form Power of Attorney and the introduction and review of an alternative form for a North Carolina power of attorney, including drafting tips for a power of attorney under NC law and the new Act.

Legend. This is going to be a lengthy & technical article to let’s get on the same page with some legal terminology.
 

  • The “Act” refers to the North Carolina Uniform Power of Attorney Act, codified as Chapter 32C of the North Carolina General Statutes.
  • A “POA” is a power of attorney — a document signed by the principal that appoints and empowers the agent, formerly attorney-in-fact.
  • The “principal” is the individual who grants authority to an agent in a POA. Also known as grantor or donor in some states.
  • The “agent” is the replacement term for attorney-in-fact named in a POA and authorized by the POA to act on behalf of the principal.  “Agent” is the term used throughout the Act in lieu of “attorney-in-fact.”

1) What Are The Objectives Of The New Power of Attorney?

Two of the primary objectives of the new law are to prevent financial abuse by the authorized agent and to protect your self-determination rights as the principal. (Note the recent Justin Timberlake-Prince controversy.) Another word for principal is grantor or donor. For example, as the prinicpal, you are now required to expressly grant certain powers to the agent. You must expressly grant powers such as designating beneficiaries or gift giving for example. If your current estate planning documents do not expressly grant these powers you may want to consider updating your records to comply with this new law which recently went into effect.

2)  Effective Date & Application

The NC Uniform Power of Attorney Act went into effect on January 1, 2018. Most of its provisions apply to powers of attorney drafted before the Act went into effect. Beginning January 1, 2018, only Article 3 (Health Care Powers of Attorney) and Article 4 (Consent to Health Care for Minor) will remain in effect—the rest of Chapter 32A is repealed and replaced by the Act.

3) New NCGS Chapter 32C

The Act creates a new chapter in North Carolina’s General Statutes: Chapter 32C. Chapter 32C replaces most of Chapter 32A, which previously governed North Carolina Powers of Attorney. Only the sections of Chapter 32A governing Health Care Powers of Attorney and Consents to Health Care for Minors have survived the amendment.

According to new § 32C-4-403(a) of the Act:

  • The Act applies to a POA created before, on, or after January 1, 2018 unless (i) the POA contains a clear indication of a contrary intent, or (ii) the application of a particular provision of the Act would substantially impair the rights of a party.
  • A rule of construction or presumption provided by the Act applies to POAs executed before January 1, 2018 unless (i) the POA contains a clear indication of a contrary intent, or (ii) the application of the rule of construction or presumption would substantially impair the rights of a party created under North Carolina law in effect prior to January 1, 2018, in which case the Act’s rule of construction or presumption does not apply and the superseded rule of construction or presumption applies.

4) Important Terminology Changes

The Act changes some terms and definitions. For example, in the new Chapter 32C, the person authorized to act on behalf of the principal who was previously called the “attorney-in-fact” is now called an “agent.” These changes are consistent with the terminology used in most other states.

5) Recording

The New NC Uniform Power of Attorney Act does not require durable POAs to be recorded with the Register of Deeds. A “durable” POA is defined in § 32C-1-102(2) as one in which the “incapacity of the principal does not terminate” the POA.  “Incapacity,” in turn, is precisely defined as follows in § 32C-1-102(6): Incapacity. – The inability of an individual to manage property or business affairs because the individual has any of the following statuses:

  1. An impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance.
  1. Is missing, detained, including incarcerated in a penal system, or outside the United States and unable to return.
  • According to § 32C-1-104, a POA is a durable POA unless it “expressly provides that it is terminated by the incapacity of the principal.”  This is the complete opposite of existing law, which says a POA is not a “durable” POA unless it says it is.

The only POAs that have a recording requirement under the new law are POAs for real estate loan transactions. POAs for real estate transactions must be filed with the Register of Deeds in the appropriate county in short-form. The full POA does not need to be recorded.

6) Impact on Previously Drafted POAs

The substantial changes the NC Uniform Power of Attorney Act is bringing in 2018 have many asking whether they will need to redraft their POA. Fortunately, the Act does not invalidate powers of attorney drafted before it went into effect so most POAs will not need to be redrafted and will remain valid, though for the most part subject to interpretation under the new law.

Here are the basic guideliness regarding the execution and validity of a POA according to new § 32C-1-105 and § 32C-1-106 of the Act:

  • A POA signed in North Carolina before January 1, 2018 is valid if its execution complied with the North Carolina law in effect at the time the POA was signed.
  • A POA signed in North Carolina on or after January 1, 2018 is valid if it is (i) 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 (ii) acknowledged (i.e., notarized).

Again, your existing POA does not need to be redrafted. However, it is important to remember that if a POA is NOT a durable POA, the agent’s authority to act on the principal’s behalf automatically terminates when the principal becomes incapacitated. If you do want help with redrafting an existing POA or drafting a new POA, the attorneys at Matthew Charles Law are here to help.

Why Should I Choose Matthew Charles Law

Over the years Matthew has created hundreds of Estate Plans cases throughout the state. As such, Matthew has the skill set and experience necessary to handle your Estate Planning needs. Give the Law Office of Matthew Charles Suczynski, PLLC a call today to discuss your case at (919) 619-3242 or visit our Estate Planning page for more information.

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