POWER OF ATTORNEY

IN NORTH CAROLINA

PART 1

CHERYL K. DAVID

North Carolina Estate Planning and Elder Law Attorney

One of the More Important Legal Documents Anyone can Create is the Power of Attorney, or POA

A Power of Attorney Gives You Some Substantial Protections and Abilities

North Carolina Estate Planning – Basic Understanding www.cheryldavid.com 3

One of the more important legal documents anyone can create is the Power

of Attorney, or POA. A Power of Attorney gives you some substantial

protections and abilities. While every estate plan is slightly different, almost

every plan will rely on one or more of these vital documents. In our first of

two discussions about Powers of Attorney, we are going to take a closer look

at some important concepts you should understand.

POWERS OF ATTORNEY

Though they come in many forms and with different details, all Powers of

Attorney are essentially legal documents that give you the ability to delegate

some of your decision-making

responsibilities. Through your

Power of Attorney document,

you can choose a

representative who will

receive the legal authority to

make decisions on your

behalf.

When you create a Power of Attorney, you have to state not only the types

of powers you choose to grant your representative, but also identify who

you want your representative to be. You also have to make sure that the

document itself complies with relevant laws.nt di

nces.

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ATTORNEYS AND POWERS OF ATTORNEY

Before we go into more detail about what Powers of Attorneys are, how they

work, and what they do, it's important to clarify some basic terminology.

Whenever someone talks about a Power of Attorney, you need to

understand that all they are talking about is a special kind of legal

document.

Despite the word “attorney” being in the title, Powers of Attorney do not

require you to be an attorney, hire an

attorney, or have any kind of legal

training. When you create a Power of

Attorney, you do not have to choose an

attorney as your representative.

Further, the person you choose does

not gain the right to begin practicing

law. For our purposes in discussing Power of Attorney, the word “attorney”

simply means representative.

However, there is a significant caveat we need to make. Because Powers of

Attorney are legal documents, you should always create them with the aid

and guidance of an experienced attorney. Though you are under no legal

obligation to hire an attorney whenever you make or use a Power of

Attorney, you can only be certain that your Power of Attorney will be

effective if an attorney creates it for you.

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AGENTS AND ATTORNEYS-IN-FACT

So, now that we know that a Power of Attorney doesn't involve attorneys,

we can now talk about the attorney-in-fact. When you create a Power of

Attorney and choose a representative, that representative becomes known

as either your agent or attorney-in-fact. The terms are interchangeable, and

don't mean anything more than a person or organization who has the legal

authority to represent you under a Power of Attorney.

Depending on the kind of Power of Attorney you create, you can choose one

or more agents, a single agent, or choose an organization to be your agent.

For example, many people creating a Health Care Power of Attorney decide

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that they want a spouse or close family member to serve as their agent. On

the other hand, a Financial Power of Attorney might require your agent to

make significant decisions about your finances and your money. In this

situation, some people choose an organization to serve as their agent, such

as a bank or trust company.

It's also important to point out that your agent has to be willing and capable

of serving as your representative. You cannot, for example, choose a child to

serve as your agent under a Power of Attorney. And while you can choose

anyone you like, that person or organization has to be willing to take on the

responsibility. For example, should you choose your sibling to serve as your

agent under a Power of Attorney, your sibling can choose to refuse to serve.

This is why it's important for you to create Powers of Attorney that name

alternative agents who can step in when necessary.

TYPES OF POWERS OF ATTORNEY

We've already hinted at the specific types of Powers of Attorney that most

people use. Though we will discuss the specific types, and how you will use

them, in more detail in our next discussion, for now all you need to realize

is that there are two basic types of Powers of Attorney: Financial and

Health Care.

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A Financial Power of Attorney, as the name implies, gives your agent the

ability to manage your money, your property, and to make financial

decisions on your behalf. A Health Care Power of Attorney, on the other

hand, allows an agent to make medical choices for you when you are

incapacitated and cannot make them yourself.

Beyond these two general types, there are also specific types of Powers of

Attorney that limit an agent's

authority in one or more

ways. A Springing Power of

Attorney, for example, gives

an agent the ability to act only

after certain events take

place. For example, you might

want to make a Springing

Power of Attorney that takes effect if, and only if, you become

incapacitated. There are also other Powers of Attorney that have additional

limitations, which we will discuss in more detail in our next paper on this

subject.

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CREATING POWERS

Every Power of Attorney you create has to be made to meet your individual

needs and circumstances. Not only that, but the document has to contain

specific elements as required under the law. Knowing what your document

must contain, what options you have when creating a Power of Attorney,

and what limitations you might want to impose on your agent's authority is

vital if you want to get the most out of these documents.

If you have questions about Powers of Attorney or need assistance in

creating or using them, you should contact the Law Offices of Cheryl David

as soon as possible.

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ABOUT THE AUTHOR

Cheryl David is a graduate of UNC-Chapel Hill, the

University of Baltimore School of Law, and the

prestigious Trial Lawyer’s College presided over by

Gerry Spence. A former Administrative Judge, Cheryl

is certified as an Estate Planning Law Specialist by the

ABA accredited Estate Law Specialists Board, Inc. She

is also a member of the American Academy of Estate

Planning Attorneys, Medicaid Practice Systems and

the National Academy of Elder Law Attorneys.

In 2008, Cheryl received the honor of becoming a Fellow with the American Academy of Estate Planning Attorneys. The Fellow program recognizes Academy Members who demonstrate advanced expertise and significant practical experience in the total estate planning, trust, tax planning, guardianship, probate and estate administration fields. In order to maintain this advanced expertise, Cheryl takes over 36 hours of continuing education in Estate Planning, Elder Law, and Taxation each year. Also a Financial Planner, she holds the Series 7 and 66 Investment Licenses in addition to both Insurance and Long Term Care/Medicare designations.

Her professional capabilities, together with over 25 years in practice, have combined to bring positive change to the lives of over 4500 clients and their families.

528 College Road Greensboro, NC 27410 Phone: (336) 547-9999 Fax: (336) 547-9477

WWW.CHERYLDAVID.COM