The Power of Attorney: The Basics

A guest post by Christopher S. Morden, Monroe Wallace Law Group

Thank you to the attorneys and staff of Miller Monroe & Plyler PLLC for the opportunity to submit a guest post on their legal blog. This post addresses the common questions: what is a Power of Attorney and why is it important?

A Power of Attorney (“POA”) is a written instrument where one person (“principal”) appoints another person (“agent”) to perform certain actions on their behalf. The POA authorizes the agent only to perform those acts set out in the document. The agent is essentially authorized to step into the shoes of the principal and to perform only those actions listed in the document and determined by the agent to be in the principal’s best interests.

A POA may be either a Special POA or a General POA. A Special POA (sometimes referred to as a Limited POA) limits the agent’s authority to one or more specific transactions. A Special POA is frequently used when the principal will be absent for a short period of time and/or a specific transaction. Examples of common usage of Special POA include: the sale or purchase of a home or the filing of a tax return. Special POAs often have a limited duration and have an expiration date contained in the terms of the document.

A General POA grants the agent authority to perform any act the principal may delegate within the terms of the document. General POAs are frequently used in estate planning and elder law. Chapter 32A of our North Carolina General Statutes contains a listing of categories of tasks an agent may be authorized to perform in the terms of a General POA. It is important to review and understand the meaning of all the powers contained in any POA before signing.

All fifty states and the District of Columbia have adopted statutes permitting a principal to create a POA surviving a principal’s incapacity. A POA remaining effective after the principal’s incapacity is termed a Durable POA. To create a Durable POA in North Carolina, the document must be in writing and contain words showing the principal’s intent for the power to survive his or her incapacity.

The feature of “durability” is critical when it is planned for the POA to serve to permit a family member, friend, or professional manager to act on the principal’s behalf during a period of long-term incapacity or dementia. In many cases, a Durable POA may serve to avoid the need for court proceedings and the imposition of a guardianship when a principal’s capacity deteriorates.

Because a POA is a grant of authority, only those powers specifically granted are authorized by the law. This particularly applies to the gifting or transferring of assets pursuant to a POA. Please be cautious when considering the use of any POA. Careful thought must be given to the naming of agents, goals and priorities of the document, and needs as physical or mental capacity may deteriorate.

This article does not establish an attorney-client relationship and must not be construed as legal advice.

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