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| Janice L. Davies |
Janice L. Davies, a Charlotte attorney and certified specialist in estate planning and probate law, also serves as the chair of the North Carolina Uniform Power of Attorney Act legislative subcommittee for North Carolina Bar Association Estate Planning and Fiduciary Law Section. Along with others, she worked on the Act for more than three years, reviewing the uniform law and existing North Carolina law, modifying the uniform law for North Carolina, and lobbying for the bill before the General Assembly.
Davies says that the Act establishes a legal framework “for the creation and use of powers of attorney and furnishes guidance to and protections for principals, clarity for agents, and certainty for third parties asked to accept a power of attorney.”
The Act, she said, is expected “to enhance the effectiveness of the power of attorney and to prevent, identify, and redress the abuse or misuse” of a power of attorney by an agent.
“The abuse or misuse of powers of attorney has been recognized as a serious problem,” Davies said. “The UPOAA intends to strike a balance by preserving the durable power of attorney as a private form of surrogate decision making while deterring use of the durable power of attorney as a tool for financial abuse of an incapacitated principal.”
New governor in town
Those familiar with the Act, though they may be few, relatively speaking, recommend that any North Carolina attorney who prepares, reviews, construes, accepts, or in an manner deals with powers of attorney familiarize herself with the Act, which will repeal general statute Chapter 32A, with the exception of Article 3 and Article 4, which deal with healthcare powers of attorney and consent to healthcare for minors, respectively.
The newly created Chapter 32C will now govern powers of attorney in North Carolina, and it features new forms, making the old ones obsolete; new terminology; and many changes to how business and financial affairs are currently conducted in the state.
According to Davies, the degree of change in the laws runs from static to significant, and getting the word out is paramount because of the various practice areas and disciplines that will be affected by those changes.
“As a common and private form of surrogate decision making, attorneys, bankers, title company representatives, persons involved in social services, the clerks of superior court, and the judges in North Carolina must be familiar with the Act for its use and application on or after January 1, 2018,” she said.
But from what she’s seen so far, Davies is concerned that too few individuals, including attorneys, are unaware of what the new year will bring regarding powers of attorney.
“What I don’t want is for a bunch of people to be caught flat-footed on this,” she said.
So what’s new?
Davies recently co-planned a CLE on the Act, telling Lawyers Weekly that there was more material to cover than she could fit in the day-long seminar. But as one individual who is taking the lead on educating the masses about Chapter 32C, she offered information on several areas that she says have become topics of discussion lately.
Automatic Durability: “That means that the power of attorney will survive your incapacity automatically. You don’t need magic words or expressed words in the instrument. The default is, it’s durable unless it says otherwise. The other thing is, in North Carolina you had to record it with the register of deeds in order for it to be durable; that rule is no more.”
Davies believes this rule could be the most misunderstood of them all, because while powers of attorney can, and in some cases — such as real estate transactions — must be recorded, it is not required for durability purposes.
Judicial Relief: These are heavily modified from uniform law so the procedures are similar to current estate or trust proceedings in North Carolina.
“One of the major things that changed is that a guardianship proceeding was sometimes necessary to stop abuse of a power of attorney by the agent for an incapacitated person, and now there’s more relief available so that you could, for example, go to court and get an accounting and prove or disprove that the agent was doing something wrong or not doing something wrong.”
“I think what I would say is that there are better avenues to the court to protect the elderly and the incapacitated in North Carolina — I think that’s a big deal.”
Terminology: So as not to confuse the layperson regarding what an attorney is versus what an attorney-in-fact is, “attorney-in-fact” will be replaced by “agent.” The term “incapacity” will replace “disability” since disability does not necessarily render one incapable of managing property and business. Also, the authorities that a principal may give an agent in a power of attorney, are referred to as general and specific authorities, which are modernized to better serve North Carolinians.
A helping hand
In his September blog on the Act, James Creekman, a financial institutions and regulatory attorney with Ward and Smith in Raleigh, wrote that up to this point, dealing with powers of attorney has been “frustrating.” Referencing the Act, he proclaimed, “Help is on the way!”
Existing law, he wrote, provides a template for a short-form power of attorney, rigid rules regarding durable powers of attorney and an agent’s authority to make gifts from the principle’s estate, and limited guidance for third parties dealing with agents.
“The Act covers much more territory,” Creekman wrote. “It is rationally organized, relatively straight-forward, and divided into four articles.”
Those articles are: Article 1: Definitions and General Provisions; Article 2: Authority; Article 3: Statutory Forms; and Article 4: Miscellaneous Provisions.
Davies provided Lawyers Weekly with a synopsis of each article.
Article 1 contains the definitions and general provisions about the creation and use of a power of attorney, most of which are default rules. The mandatory rules in this article may
protect the principal, the agent, and the persons asked to rely on the agent’s authority.
Article 2 provides default definitions for the various authorities that may be granted to an agent. Certain authorities, referred to as specific authorities, must be granted with express language because of their heightened risk of abuse by an agent and to the estate plan of the principal.
Article 3 provides three optional statutory forms, the North Carolina Statutory Short Form Power of Attorney; the Agent’s Certification as to the Validity of Power of Attorney and Agent’s Authority; and the North Carolina Limited Power of Attorney for Real Property.
Article 4 contains provisions concerning the relationship of Chapter 32C to other laws and to existing powers of attorney.
Knowledge is power (of attorney)
Jessica Hardin, a trust and estates lawyer with Robinson Bradshaw in Charlotte, said that her recommendation to clients under the new law will be the same as it has been: consider signing a durable general power of attorney.
“Beginning on January 1, the document itself will look a little different but it will still have the important effect of naming a trusted person to handle the client’s business and financial affairs when necessary,” she said.
In her effort to continue spreading the knowledge of North Carolina’s newest powers of attorney statutes, Davies encourages those with a need to know to visit the state bar association’s website and take in the CLE “Power of Attorney: 2018 North Carolina Uniform Power of Attorney Act.” It is available by video replay and On Demand.
“Not enough people know,” she said.
Full Article & Source:
New power of attorney laws take effect Jan. 1
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