Undoubtedly, the path to putting an estate plan together is rife with tough questions and difficult decisions. Most are shrouded in thoughts of death and what will happen when you’re gone, but equally important are those choices concerning your affairs during life. Naturally, decisions involving your health and finances are yours to make as long as you’re able. Unfortunately, no one can rule out the possibility of incapacity or a lifetime disability, hence, the need for powers of attorney – documents in which you appoint another person to act on your behalf.
So, what’s new?
Perhaps you have a Power of Attorney in place. If so, have you revisited it? If not, now is a great time to start. Effective January 1, 2018, much of the law dealing with powers of attorney in North Carolina will change, and you’ll want to be sure that your document is set up correctly and is effective where and how you want it to be.
On July 20, 2017, Governor Cooper signed the North Carolina Uniform Power of Attorney Act (“UPAA”) into law. Essentially, this new law fully governs the manner in which a financial power of attorney is created, interpreted, or applied, even if it was executed prior to January 1, 2018.[1] Of note, however, is that UPAA does not apply to health care powers of attorney or health care consents for minor children.
Legislative updates and what you really need to know.
The changes are vast, but not all that earth-shattering. Rather than bog-down in the details, here are a few of the more prominent changes:
- Presumption of durability – A power of attorney is now presumed to be “durable,” meaning that it does not terminate at the incapacity of the principal. This is a reversal of the current law which required specific language to indicate durability.
- Recording no longer required – A power of attorney no longer needs to be filed (recorded at the Register of Deeds) to be legally effective at the incapacity of the principal. Please note some banking institutions have separate policies and may still require you to file your POA.
- Anyone may be appointed to determine incapacity – The principal may now authorize an individual (including the agent) to determine incapacity as well as other contingencies without need for medical certification.
- POA must be accepted within seven days – Those presented with an acknowledged (notarized) power of attorney must accept the power of attorney within seven days of it being presented unless grounds for refusal exist as defined in the UPAA.
- Additional or different forms not required – Those presented with an acknowledged power of attorney may not require an additional or a different form of power of attorney, if the one presented “reasonably appears” to allow the agent to take the action desired.
What does all of this mean for me?
For those of you with an existing financial power of attorney, very little will change. Your document continues to be valid if it was executed in accordance with North Carolina law at the time you signed it. Because the UPAA allows individual powers of attorney to define the powers it grants to an agent, the powers granted by your existing power of attorney will continue to exist as they do today. If, however, there are general references to certain powers in your document, or if you use one of the new short-form powers of attorney, the substantive provisions of the UPAA will kick in and control what your agent can and cannot do. Whether this is proper for your planning needs largely depends on your goals, which we are happy to discuss with you.
If nothing else, this change of law warrants a review of your personal plan. If your current documents have some age on them, or if you do not already have a plan in place, our team of attorneys is here to help you evaluate your estate planning needs and put the right plan in place.
[1] There is one exception to the retroactivity of the law. If your existing power of attorney is a Statutory Short Form POA (meaning it is the same form provided by statute), the old law, as opposed to the UPAA, will be used to determine your agent’s powers.
We are here to help you evaluate your foundation estate planning documents and answer your questions.
