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What Should I Know about Powers of Attorney?

Sanjay R. Gohil & Ruiling (Amy) Zhang Aug. 31, 2022

What is a power of attorney?

A power of attorney is a legal document that gives power to someone to make critical financial decisions on behalf of someone else (typically during a time of incapacity or incompetency). The “agent” is the person who receives this authority, and the subject of a power of attorney is the “principal.” The agent can be granted restricted or unlimited authority to make decisions on the principal’s behalf, like managing property, finances, and healthcare. Often, a power of attorney is used when the principal has an illness or disability which prevents them from acting on their own behalf.  However, powers of attorney can also be used when a principal is not physically present to sign legal documents for real estate or financial transactions, contracts, etc.

In North Carolina, powers of attorney are split between financial powers of attorney (acting on behalf of the principal’s estate) and health care powers of attorney (acting on behalf of the principal’s person). In these instances, the agent can be the same person or different people.  The agent should be a trusted person (usually a close friend or family member).  

The agent’s powers end in situations where the agent can no longer carry out the responsibilities outlined, the principal passes away, or the principal revokes the agreement. 

What does making a “durable” power of attorney mean?

Most power of attorney agreements are voided when the principal becomes mentally incapacitated or unable to make sound financial decisions. If the principal wants to keep a power of attorney in place even after health deterioration, the principal must sign a “durable” power of attorney. Often, the agent uses the durable power of attorney to pay for medical bills or sign checks when the principal cannot do so. 

What is a healthcare power of attorney?

A healthcare power of attorney agreement, also called a “healthcare proxy,” allows the agent to make healthcare decisions for the principal when the principal is incapacitated or unable to communicate their medical choices to healthcare providers. The healthcare power of attorney only takes effect when the principal cannot make their own healthcare decisions. The agent will be familiar with the principal’s healthcare preferences and make decisions concerning the care, treatment, or procedures regarding the principal’s physical or mental health and life-prolonging measures, if necessary. 

What happens if a principal does not have a power of attorney agreement in place?

If a principal does not have a signed durable power of attorney in place and then becomes incapacitated or legally incompetent, then a guardianship proceeding must occur before the local Clerk of Court.  During this guardianship proceeding, a hearing typically occurs to appoint a designated agent to handle these responsibilities.  This guardianship proceeding takes time and will require filings to be made in the Special Proceedings Office of the local county courthouse. To avoid this guardianship process, it is recommended that durable powers of attorney be signed while the principal is competent and legally able to designate these agents in advance by contract.

Find peace of mind and plan for the future by contacting the Law Offices of Sanjay R. Gohil, PLLC. Otherwise, you can call us at (704) 814-0729! Our firm can walk you through the process of developing a comprehensive power of attorney for either financial or healthcare matters.