Power of Attorney Law 101
A power of attorney is a legal document that gives one person, called the "agent," the power to take certain actions on behalf of another person, called the "principal." This can be very useful if the principal can't be present to sign legal documents, or wants to assure financial matters and healthcare can be taken care of in the event of he or she becomes incapacitated.
POAs traditionally ended if the principal became incapacitated, and gave the agent power the moment they were signed. You can create a "durable" POA, which continues after the principal becomes incapacitated, or a "springing" POA, which gives your agent the power to act only if you become incapacitated.
A healthcare POA gives your agent the power to make medical treatment decisions for you, but only if you are physically or mentally incapable of making your own decisions. By its very nature, a healthcare POA is both durable and springing.
A financial POA must be signed by the principal, and the signature must be acknowledged before a notary public or another person authorized by law to take acknowledgments. If the principal is physically unable to sign, another person may sign the principal's name, but the principal must direct the other person to sign, and that person must sign "in the principal's conscious presence."
North Carolina power of attorney forms
The form for a Statutory Short Form Power of Attorney may be found in the North Carolina General Statutes, Chapter 32C, at Section 32C-3-301. A recent law states that POAs created before the 2018 law are still effective, but it would be a good idea to create a new one using the current form.
The form lists various types of financial transactions, each of which is explained in detail in the North Carolina General Statutes. To give your agent the power to engage in all matters, you can initial the line in front of the phrase "All Preceding Subjects." Otherwise, you need to initial the line before each type of power you do want your agent to have. There is a separate section, under the heading "GRANT OF SPECIFIC AUTHORITY," relating to powers that are considered extraordinary powers not typically granted to an agent.
The form states that it becomes effective immediately. If you don't want it to become effective unless you are incapacitated, the form must be modified in two places. You will need to cross out or delete the seventh paragraph under the heading "IMPORTANT INFORMATION," which states: "This power of attorney becomes effective immediately." Under the heading "EFFECTIVE DATE," you need to replace the sentence "This power of attorney is effective immediately" with a description of when it will take effect. For example: "This power of attorney shall become effective after I become incapacitated, as certified in writing by my attending physician."
Under North Carolina law, you may state in the POA how incapacity will be determined, as in the example above. If not stated, or if the person designated can't or refuses to make the decision, incapacity will be determined by either two individuals who are physicians or licensed psychologists who have examined the principal; or by a lawyer, judge, or "an appropriate government official."
Incapacity is defined as the inability to manage property or business affairs because the principal "has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance"; or "is missing, detained, including incarcerated in a penal system, or outside the United States and unable to return."
The new law also created two other forms:
- Agent's Certification as to the Validity of Power of Attorney and Agent's Authority. This is for an agent to sign to certify that the POA remains valid.
- Limited Power of Attorney for Real Property. This allows an agent to handle real estate transactions for specifically designated property, for a limited amount of time.
Healthcare power of attorney
The North Carolina legislature also created a Health Care Power of Attorney form in 2018. In addition to the general authority that is granted, there are specific provisions related to particular types of healthcare decisions, including nutrition, mental health, and organ donation.
The healthcare POA form must be dated and signed by the principal and two witnesses. The principal and the witnesses must sign before a notary public. The notary section of the form sets forth the requirements for the witnesses, so be sure to read it. This form may be found in the North Carolina General Statutes, Chapter 32A, Section 32A-25.
The best time to learn about both the healthcare and financial powers of attorney is well before you need them. By putting these North Carolina documents in place in advance, however, you'll be prepared for whatever occurs.