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What Is Power of Attorney?

younger woman hugging an elderly woman

With a Power of Attorney (POA) document, you (the “principal”) can appoint someone to act on your behalf known as an agent or attorney-in-fact. Your agent should be someone you completely trust in making financial and legal decisions for you. In North Carolina, you must be at least 18 and of sound mind to establish a Power of Attorney. Your Power of Attorney document should be stored in a safe, secure place and a copy should be provided to your agent. Listed below are several important terms to remember when looking at appointing a Power of Attorney:

  • Durable Power of Attorney: A Power of Attorney that remains in effect even if you become incapacitated. In North Carolina, a Power of Attorney is considered to be durable unless it specifically states that it ends upon the principal’s incapacity
  • Springing Power of Attorney: A Power of Attorney that can “spring” into effect only in the occurrence of a future event, such as your incapacity or incompetence
  • Special or Limited Power of Attorney: A Power of Attorney granting your agent only certain powers or powers within a specified time period

What happens if I don’t have a Power of Attorney?

If you become incapacitated and do not have a Power of Attorney, a court will likely need to appoint a guardian to act on your behalf, and it may not be the person you would have chosen. With guardianship proceedings, accountings of your finances must be filed with the court – making your assets a matter of public record. Additionally, there would be a delay in the management of your financial affairs until the guardian could be appointed.

How to create a Power of Attorney

SECU recommends you consult a qualified estate planning attorney to create a Power of Attorney document.  There are self-service templates that allow you to create your own Power of Attorney; however, you should consult an attorney to obtain legal advice about your individual situation. A Power of Attorney can grant broad or limited powers over your finances and property, and an estate planning attorney can assist in creating a document specific to your needs.

Attorney fees to draft a Power of Attorney can vary greatly depending on the complexity of your situation.  You should ask about the fee before you agree to the services provided.

What does a Power of Attorney allow my agent to do on my behalf?

You can grant your agent broad and sweeping powers or authority to perform almost any transaction for you. These powers can include one or all of the following subjects:

  • Real property transactions
  • Tangible personal property transactions
  • Stocks and bonds transactions
  • Banks and other financial institutions
  • Operation of an entity or business
  • Insurance and annuities
  • Estates, Trusts, and other beneficial interests
  • Claims and litigation
  • Personal and family maintenance
  • Benefits from governmental programs or civil or military service
  • Retirement plans
  • Taxes
  • Make gifts
  • Create or change rights of survivorship
  • Create or change a beneficiary designation
  • Authorizing another person to exercise the authority granted under the Power of Attorney

Members currently serving as agent under Power of Attorney for a loved one may find this Fiduciary Resource Guide helpful.

Choosing your agent under a Power of Attorney

Your agent should be someone you trust completely to make sound financial and legal decisions for you. When choosing your agent, it is important to consider who has the competence, time, and organizational skills to manage your financial and legal affairs for you, including at what may be an emotional, difficult time if you were to become incapacitated.

Is a Power of Attorney revocable?

You may revoke your Power of Attorney at any time as long as you are not incapacitated.

When does a Power of Attorney terminate?

There are several situations which can cause a Power of Attorney to terminate, and thus end the agent’s authority to act on your behalf. Any Power of Attorney automatically ends at the death of the principal. A Power of Attorney can also end upon a specific expiration date or occurrence. If a Power of Attorney is not durable, it will end upon the principal’s incapacity.

Does a Power of Attorney have to be recorded?

In North Carolina, a Power of Attorney document is generally no longer required to be recorded to be effective after your incapacity. Your Power of Attorney document may need to be recorded if your agent is authorizing a transaction that must be recorded, such as a real estate sale or loan.

Do I still need a Will if I have a Power of Attorney?

Yes. Your Power of Attorney allows your agent to manage your assets during your lifetime and their granted authority ends at death. A Will is needed to appoint an executor to manage your assets after your death.

When to change a Power of Attorney

As circumstances in your life change, you may want to update your Power of Attorney to reflect these changes. You may wish to change your Power of Attorney to provide for the following life events:

  • Marriage, separation, or divorce
  • Incapacity or death of a named agent
  • Move to a different state

You should work with a qualified estate planning attorney to make changes to your Power of Attorney. It is not advisable to make changes on your own, including any hand-written notes.