Estate planning is about far more than deciding who gets what. It is about putting the right structure in place to protect yourself and your family—regardless of what tomorrow might entail.
The power of attorney (POA) is an important part of a comprehensive estate plan. It is a tool that you can use to give a trusted family member or loved one the authority to act on your behalf if you are temporarily or permanently incapacitated. In this article, you will find a more in-depth overview of the most important things to understand about the power of attorney in North Carolina.
What is the Power of Attorney (POA)?
Simply defined, power of attorney (POA) is a type of legal authority that gives a person the power to act on behalf of another. The authority is governed by the North Carolina Uniform Power of Attorney Act.
Most common in estate planning, a durable power of attorney means that “the incapacity of the principal does not terminate the power of attorney.” In other words, a durable POA is still effective when a person is not in a position to manage their own affairs. North Carolina law allows parties to divide POA in the following manner:
- General Power of Attorney: Authority to make financial and legal decisions.
- Health Care Power of Attorney: Authority to make medical decisions.
In North Carolina, the same trusted person can hold both general powers of attorney and health care power of attorney. However, that is not required by the law. These responsibilities can be split up among multiple family members or trusted loved ones.
Why is Power of Attorney an Important Estate Planning Tool?
Although it can be uncomfortable to think about, the reality is that there may come a day when you cannot effectively make your own decisions. Temporary or permanent incapacity is a possibility that should be prepared for in the estate planning process.
Setting up a power of attorney is one of the best steps that you can take. It is a cost-effective way to provide a trusted loved one (spouse, siblings, adult children, close friends, etc) the ability to on your behalf if you cannot do so.
What Someone Can (and Cannot) Do With Power of Attorney in North Carolina
There are many misconceptions about what power of attorney is and how it works in North Carolina. In setting up your estate plan, it is imperative that you have a general understanding of how power of attorney works. Here are three things that you can do with the power of attorney and three key things that you cannot do with power of attorney:
- CAN Pay Bills: The person holding POA can pay bills and handle other basic financial issues. This is one of the core responsibilities of a person holding power of attorney.
- CAN Manage Most Legal Affairs: With POA, most legal affairs can be handled.
- CAN Make Medical Decisions (Health Care POA): Assuming you hold a health care (medical) POA, you can make medical decisions on behalf of a vulnerable person. Though, power of attorney will not override medical directives.
- CANNOT Alter a Will: Power of attorney cannot be used to alter a will in North Carolina. No matter what type of POA one holds, the will cannot be changed.
- CANNOT Breach Fiduciary Duty: The person with power of attorney has a duty to act in the best interests of the other party. If they violate this duty, they may be liable for damages.
- CANNOT Act After Death: In North Carolina, power of attorney is automatically extinguished when a person passes away. You cannot use power of attorney for probate or any other post-death matters.
An Estate Plan Should Be Customized to Meet Your Unique Needs
One-size-fits-all solutions are not good enough for estate planning in North Carolina. You should always have a plan in place that is well-suited to your unique needs and objectives. Power of attorney is part of the most comprehensive estate plan. How exactly it will be structured depends entirely on your specific situation. An experienced Wilmington, NC estate planning lawyer can review your case and help you put the right plan in place for your situation.
Get Help From An Experienced Wilmington, NC Estate Planning Attorney
Estate planning is complicated. Power of attorney (POA) is one of many issues that should be considered and addressed. You do not have to navigate the estate planning process alone. If you have any specific questions about the power of attorney or any other related matter, contact the team here at David E Anderson, PLLC today for guidance and support.