Understanding the different types of Power of Attorney can feel overwhelming, especially when making important life decisions. However, understanding POAs is crucial for effective estate planning. So let’s look at the question, “What is the difference between a durable and general power of attorney?” and give you a clear explanation so you can make informed choices for your future.

What is a Power of Attorney Legal Document?

A Power of Attorney is a legal document that allows one person, known as the principal, to delegate decision-making authority to another person, called the agent or attorney-in-fact.

This authority can cover a range of responsibilities, including financial management, property transactions, and healthcare decisions. The scope of an agent’s powers can be as broad or as limited as the principal chooses.

Power of Attorney arrangements in North Carolina are governed by Chapter 32C of the North Carolina General Statutes. These laws outline the conditions, limitations, and obligations tied to the various types of Power of Attorney in the state.

What Powers Can You Give to Your Agent?

When you create a Power of Attorney in North Carolina, you can give your agent different kinds of powers. It’s crucial to be thorough and specific while drafting a POA, as an unclear or improperly prepared POA can lead to unintended consequences.

Common Powers You Can Grant to Your Agent

  • Give a Gift: You can let your agent give gifts on your behalf.
  • Change the Rights of Survivorship: Your agent can change who gets what after you pass away.
  • Change Beneficiary Designation: You can let your agent decide who gets things like your insurance money when you’re gone.
  • Delegate Authority: If you’ve given your agent certain powers, you can also let them pass on some of those powers to someone else.
  • Change Who Gets Retirement Benefits: If you have a retirement plan that pays out benefits to survivors, you can let your agent give up that right so someone else can receive those benefits.
  • Use Your Fiduciary Powers: If you manage someone else’s money or property, you can allow your agent to do that job for you.
  • Reject Property or Money: You can give your agent the power to refuse to inherit property or money for you.
  • Handle Your Emails and Texts: Your agent can read, send, or manage your emails and other electronic messages.

Special Powers Needing Extra Permission

  • Change Your Revocable Trust: If you have a revocable trust, you must expressly state in POA documents that your agent can change it.
  • Change Your Irrevocable Trust: Similarly, if you have an irrevocable trust, you need to clearly say that your agent can agree to changes or even end the trust.

While you can draft a Power of Attorney on your own, many people consult an estate planning attorney to ensure that the document meets all legal requirements and addresses their specific needs. A lawyer can ensure you’re doing everything right and understand what powers you’re giving to your agent.

What is the Difference Between a Durable and General Power of Attorney (POA) in North Carolina?

In North Carolina, the distinction between Durable and General Power of Attorney is a question of whether your agent can continue making decisions for you if you become incapacitated or incompetent.

In other words, if you fall into a coma, a Durable POA continues. Your agent continues to act for you in whatever capacity you spelled out in your POA documents.

However, your agent’s powers end if you fall into a coma with a General POA.

Durable Power of Attorney (POA)

A Durable Power of Attorney in North Carolina remains in effect even if you become mentally incapacitated. This is possible due to a “durability” clause.

Your agent can continue making decisions on your behalf even if you can no longer make those decisions independently. A Durable POA remains in effect even if you become incapacitated.

Under Chapter 32C-1-104, for a POA to be durable, it must contain language that specifies that the power survives your incapacity.

Decisions a Durable POA could make may include:

  • Financial power: paying bills transactions, managing property, completing your tax returns, business transactions, business decisions, and other financial decisions.
  • Making medical decisions, if explicitly stated
  • Making Personal Decisions When You Can’t: Durable powers mean that the powers your POA legal documents give your agent will continue if you cannot care for yourself or make your own decisions.

A Durable Financial POA allows the agent to continue managing your financial affairs even if you become mentally incapacitated.

General Power of Attorney (POA)

On the other hand, a General Power of Attorney grants the agent broad powers to act on behalf of the principal. They can do a vast array of things for you and make all kinds of decisions for you. 

However, the General POA becomes void if you become incapacitated.

Individuals often use this type of Power of Attorney for a set time period while they travel.

Combining the Two POAs: Durable General Power of Attorney

There’s also a POA known as a Durable General Power of Attorney. This combines the features of both the Durable and General POAs. The agent has broad powers to act on your behalf and can continue even if you become incapacitated.

In other words, your agent has broad general powers covering almost anything, even if you become incapacitated or incompetent.

Creating a Power of Attorney in North Carolina requires specific language to ensure its legality.

Consult an attorney to ensure the document aligns with state law, specifically Chapter 32C of the North Carolina General Statutes. This law dictates the requirements and limitations for all types of Power of Attorney in the state.

Potential Powers Available to Different Types of POAs in North Carolina

Below, we explore common types of POAs in North Carolina, as governed by Chapter 32C of the North Carolina General Statutes, and give examples of the powers that can be granted under each.

Financial POA

Under a financial POA, the agent may be granted various financial responsibilities, ranging from managing bank accounts to handling investments.

According to Chapter 32C-2-201 of the North Carolina General Statutes, an agent may be able to “create, amend, revoke, or terminate an inter vivos trust.”

Example: The principal might grant the agent the power to manage their bank accounts, file taxes, and pay bills.

Medical POA

Medical POAs are specifically for healthcare decisions. They come into effect if the principal cannot make their own healthcare decisions. Per North Carolina General Statute 32C-1-102(6), this type of POA doesn’t fall under the same chapter as other POAs but is just as legally binding.

Example: An agent could be granted the power to consult with physicians, approve or disapprove medical treatments, and decide on end-of-life care options for the principal.

Real Estate POA

Real estate POAs focus on property management. They can allow an agent to buy, sell, or manage properties on the principal’s behalf. According to Chapter 32C-2-212, this includes the power to “acquire or sell an interest in real property.”

Example: If the principal owns multiple properties, they may grant the agent the ability to manage rentals, carry out maintenance, or even sell a property.

Limited or Special POA

Limited or special power POAs are designed for specific tasks or timeframes. The law allows the principal to limit the scope of powers granted to the agent as they see fit (Chapter 32C-2-201).

Example: The principal may give the agent the authority to sell a specific piece of property or to handle their affairs while out of the country.

By understanding the different types of POAs and the powers they can grant, you can make better choices to suit your specific needs. Consult with a qualified estate planning attorney to ensure your POA meets all of North Carolina’s legal requirements.

An Experienced Attorney Can Help With Your Estate Planning

At Plekan Law, we understand that making an estate plan involves making critical decisions that can impact you and your loved ones for years to come. Our team of knowledgeable estate planning attorneys guides you through the complexities of Powers of Attorney, advance directives, wills, and other estate planning tools.

We help you tailor these legal instruments to your unique needs, ensuring that your assets and well-being are well-managed now and in the future. Get in touch today and start securing peace of mind for you and your family.