POWERS OF ATTORNEY
North Carolina law provides for both Powers of Attorney and Health Care Powers of Attorney. A Power of Attorney is used for legal, financial, and business transactions. A Power of Attorney may take many forms such as a General Power of Attorney (often referred to as a Financial Power of Attorney), a Limited Power of Attorney or Special Power of Attorney, a Durable Power of Attorney, a Non-Durable Power of Attorney, a Springing Power of Attorney, or an Expiring Power of Attorney. Under a General Power of Attorney, a principal appoints an agent (historically referred to as an attorney-in-fact, who is often a spouse or child) to act in a legal capacity on behalf of the principal, such as making legal or financial decisions or signing binding documents. A General Power of Attorney often gives the agent the power to perform any act that the principal could do if present and acting. Even so, there are certain limitations on an agent’s authority; for example, an agent may not make or change a Last Will and Testament for the principal. This type of power of attorney is often a durable power of attorney because it continues after the principal becomes incapacitated or incompetent. A General Power of Attorney may be made non-durable if desired. With a non-durable power of attorney, the agent’s legal authority to act on behalf of the principal ends once the principal becomes incompetent or incapacitated. A Special Power of Attorney limits the agent’s authority to a specific transaction (such as the sale or purchase of a home) or specific event (for example, when the principal is out of the country) or a specific time frame (such as March and April of a given year). Special Powers of Attorney are often referred to as Limited Powers of Attorney. A Springing Power of Attorney is a power of attorney that only becomes effective upon the occurrence of a future event (such as the incapacity of the principal) or at a future time. With an Expiring Power of Attorney, the agent’s authority to act ends at a time specified in the power of attorney or upon the occurrence of some future event. However, a principal may revoke any power of attorney at any time prior to his or her incompetency, incapacity, or death. An agent’s authority to write checks, access bank accounts, sign documents, or otherwise act for his or her principal ends upon the death of the principal.
There are many reasons to have a Power of Attorney, not the least of which is that statistically almost all of us will at some point in time need help with our affairs and have to have someone to help us and act on our behalf. No estate planning discussion should be completed without a full discussion of powers of attorney. If you should become incapacitated or incompetent, having a Power of Attorney as well as a Health Care Power of Attorney in place could avoid the need for an incompetency special proceeding and resulting guardianship proceeding which can be a lengthy and costly legal process. If you become incapacitated or incompetent without a power of attorney, there is no one that can legally conduct financial, legal or business affairs for you. A guardian would have to be appointed for you. In order for a guardian to be appointed for you, you would have to be declared incompetent in a court proceeding call a Special Proceeding. A petition to have you declared incompetent would have to be filed (usually by a spouse or child) requesting the court to determine that you are incompetent and appoint a guardian for you. After a petition is filed, a hearing would be held in court before the Clerk of Court to determine if you are incompetent. If you are found to be incompetent, a guardian can be appointed for you. Often, some important and necessary actions will have be delayed in the meantime. If a guardian is appointed, the guardian must file inventories of your assets and provide detailed accounting concerning all transactions with the Clerk of Court. The detailed accounting will have to be made annually for the rest of the wards life. This can be a lengthy and expensive process.
North Carolina adopted the North Carolina Uniform Power of Attorney Act, which became effective in North Carolina on January 1, 2018, and provides detailed descriptions of actions the agent can take and standards under which the agent must act, providing guidance to those accepting the role of agent and comfort to principals signing a power of attorney. The new act make major changes particularly with respect to the agent’s authority to make gifts, change beneficiary designations, or change bank account designations. Additionally, North Carolina adopted the Revised Uniform Fiduciary Access to Digital Assets Act which applies to agents acting under a power of attorney. Although powers of attorney executed before January 1, 2018, are still valid, as time passes we anticipate that reluctance to accept older powers of attorney may increase. You may wish to consider replacing older documents with new ones to take advantage of the new laws and to provide that your agent shall have access to your digital assets. The new power of attorney law also removes the requirement that durable powers of attorney be recorded (except in the case of real estate transactions). (Healthcare powers of attorney are not affected by these statutes.)
Another form of power of attorney is a Health Care Power of Attorney under which an agent is appointed to make health care decisions on your behalf when you are no longer capable of doing so, such as end-of-life situations regarding breathing machines, CPR, life-prolonging medications and surgeries, and mental health treatment. This authority is only applicable if a physician or eligible psychologist determines that you are unable to make or communicate these decisions yourself. In the Health Care Power of Attorney, you designate an agent (often a spouse or child) to make health care decision on your behalf, including routine medical decisions, such as consent for surgery, and specific treatments that are unacceptable to you for religious or other reasons. Unlike other powers of attorney, your health care agent continues to have some authority after your death. For example, you may authorize your health care agent to donate your organs, authorize an autopsy, or dispose of your remains. If you have special wishes for disposition of your remains, it is a good idea to specify your wishes in your Health Care Power of Attorney and grant your agent the authority to carry out your wishes.
Along with your Health Care Power of Attorney, you may want a HIPAA Release (also often called a Medical Privacy Release). In a HIPAA Release, you would name the persons who have your permission to talk with and receive health care information from your medical providers. For example, HIPAA laws may prevent your family from receiving information about your condition or care in an emergency without this type of release.
Advanced Directives (also known as a Living Will or a Declaration of a Desire for a Natural Death) are legal documents in which you direct whether your life will be prolonged by medical procedures in any of the following three circumstances:
- You have an incurable or irreversible condition that will result in your death within a relatively short period of time;
- You become unconscious and your health care providers determine that, to a high degree of medical certainty, you will never regain consciousness; or
- You suffer from advanced dementia or any other condition which results in substantial loss of your cognitive ability, and your health care providers determine that, to a high degree of medical certainty, the loss is not reversible.
In an Advanced Directive (or Living Will), you may:
- Authorize the withholding or withdrawal of life-prolonging measures (for example, respirator care and artificial nutrition or hydration) that would only serve to delay your death or
- Direct the provision of artificial nutrition and/or artificial hydration, together with or separate from life-prolonging measures.
Because Advanced Directives and Health Care Powers of Attorney clearly state your preferences and appoint a health care agent with full authority to make the necessary decisions, they work to insure that your wishes are carried out and to prevent disagreements between family members or between your family and the attending physician to achieve your best medical care and the results you desire. Your agent could disagree with your decisions as reflected in your Advanced Directives. Therefore, it is important to decide whether your Advanced Directives can be overridden by your Health Care Agent.
Powers of Attorney and Health Care Powers of Attorney should be reviewed periodically to insure they reflect your desires about financial and health care decisions, especially in cases of separation and divorce, or death or disability of an agent. The authority of an agent in a Power of Attorney executed under the North Carolina Uniform Power of Attorney Act will automatically terminate upon entry of a divorce between the principal and the agent unless the power of attorney provides otherwise. The authority of a health care agent terminates upon entry of a decree of divorce or separation. However, when a principal and agent separate, we recommend that our clients immediately revoke existing powers of attorney and health care powers of attorney in which the estranged spouse in named as an agent.
As qualified and experienced estate planning and family law attorneys, our counsel and services in drafting these important documents for you is crucial because:
- You will insure your Financial Power of Attorney, Health Care Power of Attorney and Living Will reflect your specific needs, goals and desires should you become unable to make appropriate decisions for yourself. We will assist you in including as much direction and detail as you may wish, including any and all special provisions you may desire.
- We will examine the options available to you and explain the implications of these options to you to help assure that they meet your needs, now and in the future.
- We will properly draft these documents and insure they are validly executed to give you assurance that your health and financial affairs will be managed as you have set out.