North Carolina Durable Powers of Attorney
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A Durable Power of Attorney (“DPOA”) is an essential estate planning tool for most of our clients, allowing them to name an individual to handle their financial affairs in the event of incapacity. Typically, we draft DPOA’s so that the agent named in the document has authority to act on behalf of the principal immediately upon signing, rather than requiring a determination of incapacity before the agent gains authority to act. Should the principal later become incapacitated, the agent retains the authority to act, but under North Carolina law, the DPOA only remains effective if the original signed document has been recorded in the office of the register of deeds of the principal’s domiciliary county.
If a DPOA has been recorded and the client later executes a new DPOA, the principal must notify the register of deeds that the old DPOA has been revoked prior to recording the new DPOA. If the client later changes county of domicile, the DPOA must be re-recorded in the office of the register of deeds for the new county. For these reasons, our clients sometimes opt not to record the DPOA until the need for its use arises. While a DPOA can be recorded at the office of the register of deeds at any time, by any person, it is necessary that the original signed DPOA be presented for recording. Thus, a problem might arise if, at the time the agent needs to execute his or her authority under an unrecorded DPOA, the agent cannot find or does not have access to the original DPOA.
Many clients keep their original signed DPOA’s in a safe deposit box in order to prevent against the possibility that the document might be inadvertently lost or destroyed. However, if the principal becomes incapacitated prior to recording the DPOA and has not named a co-signatory on the safety deposit box, it is possible that the agent might not be able to access the DPOA to record it. Even a copy of the unrecorded DPOA is not effective proof of authority in this circumstance allow the agent to act on the incapacitated principal’s behalf, including by accessing the safety deposit box.
Thus, while recording the DPOA shortly after signing it might result in additional future costs if that DPOA is changed in the future or if the client moves, it is likely the safest option for ensuring that the named agent will be able to act following the principal’s incapacity. While some clients choose to keep their original DPOA’s at home in a fire-proof safe, this does not guard as effectively against inadvertent destruction or misplacement as does keeping it in a safe deposit box. Recording the DPOA proactively will ensure that the named agent has authority to act even if that agent does not have access to the original DPOA. Alternatively, clients should ensure that there is at least one other signatory (preferably the agent named in the DPOA) on the safe deposit box to guard against denial of access to the original document.
