Durable Power of Attorney

Understanding Durable Power of Attorney

A power of attorney is a legal document that authorizes someone else to act as your agent. There are different types of powers of attorney, including a health care power of attorney and a durable power of attorney, both of which can be used for estate planning purposes. A durable power of attorney in North Carolina can grant broad or limited authority and remains in effect even if you become incapacitated.

What is a Durable Power of Attorney?

Typically, a power of attorney is void or ceases to be effective once the principal (the person granting the power of attorney) becomes incapacitated. However, for a power of attorney to be considered durable it must remain in effect after the principal becomes unable to act on their own behalf.

Under North Carolina G.S. §32A-8, a durable power of attorney is defined as such, when a principal designates another person (called an agent or attorney-in-fact) in writing and the document contains one of the following statements:

• “This power of attorney shall not be affected by my subsequent incapacity or mental incompetence,” or
• “This power of attorney shall become effective after I become incapacitated or mentally incompetent,” or
• Similar words demonstrating the principal’s intent that the authority granted shall be exercisable despite the principal’s subsequent incapacity or mental incompetence.

In other words, a durable power of attorney either (1) continues to be in effect if you become incapacitated or (1) is only effective in the event of your incapacity. The latter is referred to as a springing durable power of attorney.

What are the Requirements for a Durable Power of Attorney?

The durable power of attorney must be signed and acknowledged by the principal in the presence of notary public. You must be at least 18 years of age, mentally competent, and have capacity when the durable power of attorney is signed. North Carolina law states that a durable power of attorney must be registered at your local county office of the register of deeds to be effective after your incapacity.

Within 30 days of registration, the attorney-in-fact/agent shall file a copy of the durable power of attorney with the clerk of superior court in the county registration. Your attorney-in-fact/agent is required to keep full and accurate records of all transactions. However, the law does allow these two requirements to be waived.

What Authority Can Be Granted with a Durable Power of Attorney?

The authority granted by a durable power of attorney can be either general or special. A general power of attorney grants broad powers to your agent, essentially allowing them to perform any legal or financial transaction on your behalf. A special power of attorney limits the authority granted to the agent by specifically listing their powers. Those powers can include, but are not limited to:

• Buying or selling real estate
• Disposing of or purchasing personal property
• Transactions involving bonds, stock, securities, or other commodities
• Banking Transactions
• Personal affairs
• Social Security benefits
• Unemployment benefits
• Military benefits
• Tax Matters
• Charitable gifts

The relationship between a principal and agent is fiduciary in nature, meaning that the agent must act in good faith and in your best interest. That being said, a power of attorney can be abused so you should exercise great care in choosing your agent.

A durable power of attorney automatically ceases to be effective upon your death. You also have the ability to limit the authority granted in a durable power of attorney to a specific time period. A durable power of attorney can also be revoked at any time so long as you are not incapacitated or mentally incompetent.

Why Do I Need a Durable Power of Attorney?

A durable power of attorney can be very useful if you become incapacitated or mentally incompetent due to a sudden accident or illness. If you were to become incapacitated without having a durable power of attorney, your loved one would have to petition the court to become your guardian, which can be a lengthy and expensive process.

A durable power of attorney, unlike the guardianship process, allows you to decide which family member or trusted individual will act as your agent should you no longer be able to speak and act for yourself. Furthermore, you can have a durable power of attorney take effect immediately so there is minimal delay in the management of your affairs.