Why using the Statutory Short Form Power of Attorney is a Bad Idea in North Carolina

short form power of attorneyIn North Carolina, the legislature has prepared a statutory short form power of attorney to help and guide attorneys and citizens who need a durable power of attorney. (Which is pretty much everyone).

However, just because it is out there, doesn’t mean you should use it.

Here is a link to the statutory short form. (Or scroll to the bottom of this page, I’ve copied and pasted the form into this post).

But if the Law Provides this Form, isn’t that good enough?

No, not necessarily.

Here is a story that illustrates what I’m talking about.

Yesterday I was meeting with a friend of mine to go over Medicaid planning for his Grandmother.

Thirty years ago my friend’s Grandmother executed a short form power of attorney, appointing my friend’s father as the attorney-in-fact to represent him.

Fast forward to today, my friend’s grandmother is in her 90’s and has Alzheimer and Dementia.

They now need to do some Medicaid planning for her but are limited in what they can do.

I know what you are thinking – they have a power of attorney, so what’s the problem?

The problem is that the short form power of attorney they used thirty years ago does not confer on my friend’s father the power to gift property. It says that he can engage in “real property transactions”, but the North Carolina Supreme Court has said this language is not sufficient to gift real estate.

And that’s a big problem because the Grandmother now has Alzheimer’s and Dementia and very well may lack the mental competence to sign a new power of attorney form.

What to Do if the Short Form Power of Attorney is Not Sufficient for Your Planning Needs?

This is an all-too-common scenario. And if the short form power of attorney you or your loved one used many years ago is no longer valid for your purposes today, than you have two options.

The first option and the least expensive option is to hire a lawyer to draft a new power of attorney for that person to sign. However, they must be mentally competent to sign the power of attorney. That means they understand what they are signing and the powers it confers.

That’s a tall order for someone who has dementia or Alzheimer’s. Although they may have momentary periods of lucidity, those moments may be few and far between. You will need an attorney to question them and make sure they are competent.

If they are no longer competent, then the only other option is to petition the court to have someone appointed as a guardian. This is a costly legal proceeding that takes time. And for someone who is applying for Medicaid benefits, every month that goes by is another month without those important and valuable benefits.

Not only that, but once a guardian is appointed, then annual accountings must be prepared and reported to the court for as long as the guardian is needed.

There is a Better Option

Rather than rely on North Carolina’s Short Form Power of Attorney, we work with our clients to customize a long form power of attorney that covers every possible contingency. The last thing we want is for family members to be worried about guardianship proceedings or rushing to get a new power of attorney drafted while someone is in a momentary state of lucidity.

If you or a family member are in a situation where you may need a power of attorney, please reach out to our office at (919) 460-5422 or fill out our online contact form. We would be happy to schedule a no-cost planning session to go over your specific estate planning needs.

North Carolina Statutory Short Form Power of Attorney

§ 32A-1.  Statutory Short Form of General Power of Attorney.

The use of the following form in the creation of a power of attorney is lawful, and, when used, it shall be construed in accordance with the provisions of this Chapter.

“NOTICE: THE POWERS GRANTED BY THIS DOCUMENT ARE BROAD AND SWEEPING. THEY ARE DEFINED IN CHAPTER 32A OF THE NORTH CAROLINA GENERAL STATUTES WHICH EXPRESSLY PERMITS THE USE OF ANY OTHER OR DIFFERENT FORM OF POWER OF ATTORNEY DESIRED BY THE PARTIES CONCERNED.

State of ______.

County of ______.

I ________, appoint ________ to be my attorney-in-fact, to act in my name in any way which I could act for myself, with respect to the following matters as each of them is defined in Chapter 32A of the North Carolina General Statutes. (DIRECTIONS: Initial the line opposite any one or more of the subdivisions as to which the principal desires to give the attorney-in-fact authority.)

(1)……. Real property transactions…………………………………………………………. _________

(2)……. Personal property transactions……………………………………………………. _________

(2a)….. Obtain, request, and authorize disclosure of digital assets……………… _________

(3)……. Bond, share, stock, securities, and commodity

……….. transactions……………………………………………………………………………… _________

(4)……. Banking transactions…………………………………………………………………. _________

(5)……. Safe deposits……………………………………………………………………………. _________

(6)……. Business operating transactions………………………………………………….. _________

(7)……. Insurance transactions……………………………………………………………….. _________

(8)……. Estate transactions……………………………………………………………………. _________

(9)……. Personal relationships and affairs……………………………………………….. _________

(10)….. Social security and unemployment……………………………………………… _________

(11)….. Benefits from military service…………………………………………………….. _________

(12)….. Tax matters……………………………………………………………………………… _________

(13)….. Employment of agents………………………………………………………………. _________

(14)….. Gifts to charities, and to individuals other than the

……….. attorney-in-fact………………………………………………………………………… _________

(15)….. Gifts to the named attorney-in-fact…………………………………………….. _________

(16)….. Renunciation of an interest in or power over property to

……….. benefit persons other than the attorney-in-fact……………………………… _________

(17)….. Renunciation of an interest in or power over property

……….. to benefit persons including the attorney-in-fact…………………………… _________

(If power of substitution and revocation is to be given, add: ‘I also give to such person full power to appoint another to act as my attorney-in-fact and full power to revoke such appointment.’)

(If period of power of attorney is to be limited, add: “This power terminates ____, ___’)

(If power of attorney is to be a durable power of attorney under the provision of Article 2 of Chapter 32A and is to continue in effect after the incapacity or mental incompetence of the principal, add: ‘This power of attorney shall not be affected by my subsequent incapacity or mental incompetence.’)

(If power of attorney is to take effect only after the incapacity or mental incompetence of the principal, add: ‘This power of attorney shall become effective after I become incapacitated or mentally incompetent.’)

(If power of attorney is to be effective to terminate or direct the administration of a custodial trust created under the Uniform Custodial Trust Act, add: ‘In the event of my subsequent incapacity or mental incompetence, the attorney-in-fact of this power of attorney shall have the power to terminate or to direct the administration of any custodial trust of which I am the beneficiary.’)

(If power of attorney is to be effective to determine whether a beneficiary under the Uniform Custodial Trust Act is incapacitated or ceases to be incapacitated, add: ‘The attorney-in-fact of this power of attorney shall have the power to determine whether I am incapacitated or whether my incapacity has ceased for the purposes of any custodial trust of which I am the beneficiary.’)

Dated___________, _______ .

_______________________________ (Seal)

Signature

STATE OF ____________________ COUNTY OF _______________

On this ______ day of___________, ______, personally appeared before me, the said named ______ to me known and known to me to be the person described in and who executed the foregoing instrument and he (or she) acknowledged that he (or she) executed the same and being duly sworn by me, made oath that the statements in the foregoing instrument are true.

My Commission Expires ______________________.

                                                            ________________________________________________

                                                              (Signature of Notary Public)

Notary Public (Official Seal)”

  (1983, c. 626, s. 1; 1985, c. 162, s. 1; c. 618, s. 1; 1995, c. 331, s. 1; c. 486, s. 2; 2009-48, s. 11; 2016-53, s. 5.)