North Carolina’s New Uniform Power of Attorney Act

January 04, 2018

Effective January 1, 2018, North Carolina adopted a new Uniform Power of Attorney Act (the “Act”) that is codified in Chapter 32C of the North Carolina General Statutes.  The new Act addresses the creation, execution, and termination of a financial power of attorney (“POA”), and makes sweeping changes to the old Act with the goal of making it easier for the agent to manage the principal’s affairs.

Arguably one of the most significant changes to the statute is the filing requirement.  Under the previous Act, all POAs were required to be recorded with the Register of Deeds before the agent could act on behalf of an incapacitated principal.  Under the new Act, however, recording with the Register of Deeds is no longer mandatory, unless real estate transactions are involved.

Furthermore, there is now a presumption that a POA is “durable” (meaning the incapacity of the principal does not terminate the POA or the agent’s authority).  Under the prior Act, a POA was not considered “durable” unless the POA explicitly stated so.  Now a POA is presumed to be “durable” unless the POA expressly provides that it terminates upon the incapacity of the principal.

The new Act also provides greater guidance on what actions an agent may undertake on the principal’s behalf.  This is evidenced by a clear and concise list of express powers that must be explicitly granted in the POA in order for the agent to exercise those powers on the principal’s behalf.  These powers include making gifts, creating or changing rights of survivorship, creating or changing beneficiary designations, delegating the agent’s authority, exercising fiduciary powers of the principal, managing the principal’s digital assets, renouncing or disclaiming property, and exercising the principal’s powers as grantor of a revocable or an irrevocable trust.  By providing a list of express powers in the POA, there are now greater assurances to third parties to accept the POA.

North Carolina adopted the Uniform Power of Attorney Act to provide greater clarity and comfort to principals, agents, and third parties who rely on a POA during legal transactions.  While the new Act clarifies and expands the functionality of a POA, the Act does not invalidate old POAs validly executed under the prior Act.  However, the adoption of the new Act highlights the need for people to review their POAs.

Individuals with POAs that are relatively recent should consider signing a new POA the next time they update their estate plan.  On the other hand, individuals with POAs that are more than a few years old should update their POAs now to include the new powers that address the modern uses of a POA (for example dealing with the principal’s digital assets).  This also presents an excellent opportunity for those individuals to review their entire estate plan to determine if other updates are appropriate.  Lastly, principals who are currently relying on their agent to handle their personal affairs (or anticipate doing so in the near future) should update their POA to take advantage of the more modern powers and avoid any ambiguities in interpreting the agent’s authority to act under their old POA.