power of attorneyEffective January 1, 2018, North Carolina has joined with a majority of states by adopting a form of the Uniform Power of Attorney Act.  Uniform laws like the new act are model laws which are developed and lobbied to the states in an effort to homogenize US statutory law.  Like most model laws, North Carolina’s version of the act adopts large portions of the model act while tailoring it to our state.  The most immediately recognizable effect of this is that the existing act, codified under Articles 1, 2, 2A, 2B, and 5 of Chapter 32A of the North Carolina General Statutes, is (generally) out, and all powers of attorney going forward shall be governed by the newly codified Chapter 32C.

If you’re starting to panic, the good news for you (and bad news for lawyers) is that this legislative change shouldn’t invalidate your existing documents. Health care powers of attorney aren’t affected by the new act at all—they are still governed by Article 3 of Chapter 32A.  Meanwhile, if you have a durable power of attorney executed before January 1, 2018, it is still effective, but its terms will be governed by the new 32C unless the power of attorney (1) contains a clear indication of contrary intent or (2) the application of a particular provision of [32C] would substantially impair the rights of a party.

There are also other caveats.  For instance, the old 32A-1 provided a form that was statutorily valid and used by many laypeople and attorneys in their estate planning.  If you have one of these old 32A-1 statutory short forms, it is still valid, but it will be governed by 32A-2, not 32C.  Also—and this is hugely important—if you have executed a short-form power of attorney under 32A-1 on or after January 1, 2018, that document should be considered ineffective.  In other words, if you use the statutory form for a power of attorney on or after January 1, 2018, you should only use the form provided in Article 32C, and we always recommend seeking competent professional legal advice rather than trying to rely on statutory forms.

This also begs the question of when an application of 32C would “substantially impair” the rights of a party.  That is a good question, and one you probably don’t want to litigate to find out.  The truth is 32C is rife with structural changes, refinements, and other differences from 32A, which may or may not affect how your power of attorney functions.  For instance, 32C now makes a power of attorney durable unless the document specifically states otherwise (the reverse was true under the old act).  The new act also does away with the requirement that powers of attorney be recorded in order to be durable, but it will still need to be recorded for use in real estate transactions!

In short, while the new act won’t wipe out your estate plan or invalidate documents that were property executed before January 1, you should be aware that it’s in place and consider reviewing your existing power of attorney with your lawyer for more information on how these changes may affect it.