North Carolina enacts new Power of Attorney Act

Effective January 1, 2018, North Carolina has enacted a new Power of Attorney Act (the “Act”) under N.C. Gen. Stat. § 32C. The Act generally governs all financial power of attorneys in North Carolina regardless of whether a power of attorney is executed before or after January 1, 2018. While a large portion of the Act is similar to its predecessor statute, the Act includes a number of important updates and changes, particularly in the area of judicial relief for power of attorney abuse.

N.C. Gen. Stat. § 32C-1-116 expands the availability of obtaining judicial relief to protect principals from financial abuse by an agent using a power of attorney. Under the previous version of the Power of Attorney Act, removal of an abusive agent was difficult as it often required the initiation of a guardianship proceeding and appointment of a guardian of the principal’s estate or general guardian to terminate the agent’s authority. However, new N.C. Gen. Stat. § 32C-1-116 has relaxed the standing requirements as to who may bring actions against an agent for power of attorney abuse. In addition to the principal, agent, guardian, or personal representative of the principal’s estate, N.C. Gen. Stat. § 32C-1-116 also gives standing to someone who is able to make healthcare decisions for the principal and “any other interested person….” The Act does not define specifically who would constitute an interested person, but the threshold appears to be fairly low so long as the petitioner can demonstrate they have an interest in the principal’s care and/or well-being.

An individual with standing may petition the clerk of court to compel an accounting from the agent or for the removal, suspension, or limitation of authority of the agent. A person with standing may also petition the court to hold an agent liable for breach of fiduciary duty under N.C. Gen. Stat. § 32C-1-117(b)(2). Under the Act, an agent’s violation of the Act is, per se, a “breach of fiduciary duty.” N.C. Gen. Stat. § 32C-1-117(a). The changes provide an accessible mechanism to restore the principal’s lost or stolen property due to the agent’s misconduct and to remove or limit the agent’s authority.

While the new Power of Attorney Act keeps many of the previous provisions intact, major changes to the prior statutes have been made. The Act’s new provisions on judicial relief provide increased transparency and accountability that practitioners, agents, and principals should be aware of when pursuing or defending an action under the Act.

Christian Perrin has substantial experience advising individuals and institutions on estate planning, estate administration and probate law issues. He also represents beneficiaries and fiduciaries in trust and estate related disputes. He is licensed to practice law in North Carolina, South Carolina and Georgia. 

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January 10th, 2018|