A Durable Power of Attorney allows you (the principal) to appoint an agent to handle your financial and business affairs if you become incapacitated. Since this form is “durable,” it goes into effect immediately upon execution and remains in effect even after the principal becomes ill, incapacitated, and/or unable to act on their own behalf.
How to Get a Durable Power of Attorney in North Carolina
To obtain a durable power of attorney, you must be at least 18 years old and understand the extent of your decisions. You and your appointed agent must sign your DPOA form, and a state government official must witness your signatures.
Although online DPOA forms are available, you shouldn’t do this yourself. DPOAs are complex legal documents, and you must understand the weight of the decisions you make in them. You will be placing all your finances and property in the control of someone else. If this form isn’t drafted with an attorney, you could unknowingly grant your agent authority to control property you didn’t intend—increasing the likelihood of abuse.
When Does a Durable Power of Attorney Go into Effect?
A durable power of attorney goes into effect immediately upon execution, so it is imperative that you select an agent you trust to not abuse the powers they are granted. Your durable power of attorney will remain in effect if you are ill, incapacitated, or otherwise unable to act on your own behalf. Individuals are considered incapacitated when they cannot handle property or business affairs due to their inability to communicate or comprehend information.
Incapacitation must be verified before powers are granted solely to the agent, meaning the principal no longer has the authority to act on their own behalf. This typically requires a physical or psychological evaluation to determine whether you are mentally incompetent to handle your financial affairs or business transactions. Once your incapacitation is verified, your agent will have sole authority to exercise the various powers granted in your DPOA document.
Can a Power of Attorney be Terminated?
A Power of Attorney doesn’t have to be permanent and could be terminated under the following circumstances:
- The principal died
- The principal revokes the DPOA
- The principal set the DPOA to terminate in the occurrence of a specified event
- The purpose of the DPOA is fulfilled
- In the case that you’re married to the principal, you divorce
What Can an Agent Do?
Your agent’s powers are broad, but they only have as much power as you give them. According to North Carolina law, an agent could be granted authority to make vital financial decisions, including selling, buying, or disposing of certain assets. The areas your agent could be given power over include the following:
- Real property
- Tangible personal property
- Stocks and bonds
- Commodities and options
- Banks and other financial institutions
- Operation of an Entity or Business
- Insurance or 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
What is The Agent’s Fiduciary Duty?
Given the agent’s potential power, they have a fiduciary responsibility to act in the principal’s best interest and do what the principal reasonably expects them to.
In addition to their fiduciary obligation, agents must perform other duties, such as keeping a record of all financial transactions made on the principal’s behalf, identifying themselves as the principal’s agent whenever they act on the principal’s behalf and cooperating with others who have authority over the principal’s health care decisions.
Suppose agents breach their fiduciary duty or extend their power beyond what has been granted. In that case, they could be held liable for their actions by restoring the value of the property affected or profit made from their breach of duty.
Why You Should Have a Durable Power of Attorney
Similar to what happens when you don’t appoint an executor for your Will, the court will appoint a guardian to manage your financial assets if you fail to name an agent in a DPOA.
Not only will a court-appointed guardian not know you well enough to act how you would in a given situation, but the process of selecting a guardian only wastes your family’s time and money.
Overall, your DPOA form gives you control over who manages your financial affairs, what circumstances this power is granted to them, and how long they have this power.
Let Charlotte Estate Planning Safeguard Your Future
You never know when things could take a turn for the worse. If they do, you want to know that your assets and other financial affairs are in good hands. A North Carolina durable power of attorney lawyer understands the implications of these complex legal documents and how they could impact your future.
Let North Carolina lawyer Ryan Stump advise you on how to draft your DPOA to ensure you know your rights and the power you’re handing over to your agent. Contact Charlotte Estate Planning today at (704) 766-8836.