Powers of Attorney – The Dos and Don’ts

If you think back to the movie Rocky V, Rocky Balboa executed a “power of attorney” in favor of an individual he believed he trusted. The individual who received Rocky’s power of attorney (the “Agent”) proceeded to squander all of Rocky’s money leaving him broke and forced to move out of his mansion and back to his old apartment. One might ask, “How is that even possible?” The answer comes in the form of a Durable Power of Attorney.

What is a Durable Power of Attorney?

A Durable Power of Attorney is a power of attorney (“POA”) that allows the Agent to make financial decisions on behalf of the individual who creates the POA (the “Principal”). The term “durable” means that the POA remains in effect even if the Principal becomes incapacitated and cannot make financial decisions on behalf of him- or herself.

POAs have become a hot topic in the North Carolina legal community as of late for two main reasons.  
First, the State of North Carolina recently adopted the Uniform Power of Attorney Act (“Uniform Act”) that becomes effective January 1, 2018 and replaces the prior POA Statutes. 

Second, the North Carolina State Bar recently issued a Letter of Caution stating that a nursing home and elder care facility committed the “Unauthorized Practice of Law” by providing an individual with a blank POA.  The individuals who provided the POA were not licensed to practice law or provide legal services in the State of North Carolina.

The Uniform Act – What’s new?

The Uniform Act provides several modifications to the prior POA statutes.  Under the Uniform Act, a POA is durable UNLESS the POA expressly provides that the document is terminated by the incapacity of the Principal.  A clause that states that the POA will not be affected by the Principal’s incapacity is no longer required.  In addition, the POA will not need to be recorded with the Register of Deeds to make it durable.

Another difference is that under the Uniform Act, the Principal’s signature must be acknowledged, which means the signature must be acknowledged before a notary public or another individual authorized by law to take acknowledgements.  There are several other changes that the Uniform Act provides as well. If you currently have a POA that is compliant with the law prior to January 1, 2018, your POA will still be valid after the Uniform Act goes into effect.  

Be Careful if You Are Going to Distribute POA Forms

On November 9, 2017 a Letter of Caution was issued by the North Carolina State Bar’s Authorized Practice Committee (“Committee”) regarding providing a POA and the Unauthorized Practice of Law.  Pursuant to the Letter of Caution, a North Carolina resident entered a nursing home following a stroke in December 2016.  The resident did not have a POA and fell behind on her payments.  The nursing home informed the resident’s granddaughter that she would be evicted if her bill was not paid.  Consequently, the non-attorney staff members told the granddaughter to have the resident appoint the granddaughter as her Agent under a POA.  In addition, the nursing home provided the granddaughter with a blank POA and had the facility’s social worker explain the POA to the resident.  The social worker proceeded to organize and supervise the execution of the POA by the resident.

The nursing home argued that its employees did not provide any legal advice to the resident or the granddaughter.  The Committee failed to agree with the nursing home’s argument.  The North Carolina General Statutes prohibits individuals or entities who are not active members of the North Carolina State Bar from practicing law or providing legal services.  Legal services include giving legal advice or counsel and selecting or assisting in the completion of legal documents such as POAs.

The Committee found that the non-attorney employees of the nursing home selected the POA to use, advised how to complete the POA, assisted in the POA’s completion, and aided in the execution and filing of the POA.  As such, the Committee concluded that the nursing home committed the Unauthorized Practice of Law and issued the Letter of Caution. Notwithstanding the above, the Committee chose not to seek any legal ramifications against the nursing home but stated that it “expects that you will stop engaging in those activities.”

So what does it mean?

In summary, I would caution any non-attorney from providing POAs to individuals based on the Letter of Caution, and I would be hesitant if a non-attorney offers you a blank POA to use.  Instead, I would advise you seek the advice of an attorney if you do not have a POA, especially considering the implementation of the “Uniform Act” on January 1, 2018.  Also, please be careful when selecting your Agent for the POA.  We do not want you to end up like Rocky!

Published by Hutchens Law Firm on December 13, 2017.