Granting someone a power of attorney (POA) is a significant decision that involves entrusting them with authority over certain aspects of your life. It’s natural to have questions about the extent of the powers granted to an appointed agent. One common query revolves around bank accounts: Can a POA withdraw money from a bank account? This blog post will explore the rights and limitations of different types of POAs. Understanding these dynamics will empower you to safeguard your financial and personal interests.
Power of Attorney (POA) is a Powerful Legal Document
There are many types of recognized powers of attorney that you can grant to a person in North Carolina. These legal documents give authority to an individual (referred to as the “agent” or “attorney-in-fact”) to make specific decisions on behalf of another person (referred to as the “principal”). (1)
But can a POA withdraw money from a bank account? Depending on the type of POA, your agent can withdraw money from your bank accounts. First, let’s look at a POA with even more power than taking money out of your accounts. The healthcare POA is close to having power over life and death.
Healthcare Power of Attorney
In North Carolina, a healthcare power of attorney allows your agent to make healthcare decisions for you if you cannot make those decisions for yourself. This document is also known as a healthcare proxy or a medical power of attorney.
The powers granted by a healthcare power of attorney in North Carolina typically include the following:
Medical Treatment Decisions
The agent can make decisions regarding your medical treatment, including consent, refusal, or withdrawal of any medical, surgical, diagnostic, or other healthcare procedures or treatments.
Choice of Healthcare Providers
The agent can select healthcare providers, hospitals, and other medical facilities for the principal.
Access to Medical Information
The agent can access the principal’s medical records, discuss their medical condition with healthcare professionals, and obtain any necessary information to make informed decisions.
End-of-Life Decisions
The agent can make decisions regarding life-sustaining treatments, such as using ventilators, feeding tubes, or resuscitation measures. It may also include decisions about organ donation or anatomical gifts. However, you can work with your attorney to draw up advance directives stating your desires. Your agent must honor your wishes in advance directives.
Mental Health Treatment
The agent may have the power to make decisions regarding mental health treatment, including hospitalization and administration of psychiatric medications if specified in the document.
The powers granted by a healthcare power of attorney can be as broad or as limited as you wish. They can outline specific instructions or preferences for your agent to follow. Consider your values, beliefs, and medical treatment preferences when appointing an agent and drafting the healthcare power of attorney document.
It’s advisable to consult with an attorney familiar with North Carolina law to ensure the document meets all legal requirements and accurately reflects your wishes.
The next type of POA we will examine has power over your financial and legal decisions!
Durable Power of Attorney: Can a POA Withdraw Money From a Bank Account?
In a financial or durable power of attorney, your trusted decision-maker acts on your behalf if you become disabled or unable to manage your financial affairs. Depending on the provisions you choose to include, your agent may have the power to do the following:
- Buy and sell property
- Manage or withdraw money from a bank account
- Invest money on your behalf
- Make decisions about your retirement benefits
- Pay your bills
- Handle your taxes
A durable power of attorney grants limited powers to make decisions and conduct financial matters on your behalf during your life. Your agent does not possess broad authority covering healthcare decisions or other legal powers in this type of POA. It is written to grant only certain powers specifically.
On the other hand, a general power of attorney grants an agent broad authority to make financial and legal decisions on your behalf. However, this authority typically terminates if you become incapacitated.
Durable General Power Of Attorney
When you add the terms “durable” and “general,” the agent has BROAD and EXTENSIVE power to act on your behalf. A durable general POA remains valid and effective even if you lose your decision-making capacity.
This durability ensures that your agent can continue to act in your best interests and manage your financial affairs during incapacity.
A durable general power of attorney grants broad powers to an individual. While a durable general power of attorney grants significant powers to the agent, it does not automatically include the powers of a healthcare power of attorney.
The healthcare power of attorney is a separate document specifically designed to address healthcare decisions. However, it’s possible to include healthcare-related powers within a durable general power of attorney by including specific provisions or language related to medical decision-making.
The additional powers that a durable general power of attorney can grant to the agent in North Carolina may include the following:
Financial Management (Including Bank Accounts)
The agent can manage the principal’s finances, including banking transactions, bill payments, investment decisions, and property transactions.
Real Estate Matters
The agent can buy, sell, lease, or manage real estate on behalf of the principal.
Legal Proceedings
The agent can initiate or defend legal actions on behalf of the principal, such as filing lawsuits or responding to legal claims. (They cannot get married for you, though.)
Government Benefits
The agent can apply for and manage the principal’s government benefits, such as Social Security or Medicaid.
Business Operations
If the principal owns a business, the agent may have the power to make decisions related to its operation, contracts, and financial matters.
It’s important to note that a durable general power of attorney should be carefully drafted to specify the exact powers granted to the agent. The principal has the flexibility to determine the scope of authority and can limit or expand the agent’s powers based on their preferences and needs.
A durable general power of attorney provides continuity by allowing the agent’s powers to remain in effect even if the principal becomes incapacitated. This means that the agent can continue to act on the principal’s behalf, managing financial affairs and making important decisions, ensuring a seamless transition and ongoing support during incapacity.
Consulting with an attorney experienced in North Carolina law when creating a durable general power of attorney is crucial. A knowledgeable attorney can ensure it complies with legal requirements and accurately reflects your intentions.
Ethical and Legal Considerations
When you are selecting powers to give your agent, you should carefully consider the following three powers in particular:
- Gifting on your behalf
- Making or changing your estate plan
- Prosecuting and defending legal actions on your behalf
The Power to Gift
Depending on how it is written, the power to gift authorizes your agent to give your money and property to any person or organization on your behalf. On the one hand, this power could be quite beneficial because it can enable your family to accomplish necessary
Medicaid and other public benefits eligibility planning after you become incapacitated. It also allows your agent to continue your charitable giving practices, such as tithing to your church or donating to your favorite charities or scholarship funds.
In addition, if a need arises after you can no longer manage your affairs, it allows your agent flexibility to help family members the way you would have financially.
Drawbacks of the Power to Gift
On the other hand, you must exercise caution when including the power to gift because it may invite financial exploitation by the agent. Your agent could be tempted to make substantial gifts to themselves or their loved ones to the detriment of your chosen beneficiaries.
Abusing power to gift can disrupt an entire estate plan. Therefore, you may limit the ability to gift by specifying that your agent may not make gifts that disrupt your estate plan’s essential provisions. Or a provision stating your agent can only make gifts to a trust that preserves your estate plan’s main provisions, such as a Medicaid Asset Protection Trust.
To create a check on the agent, consider naming an independent third party to approve any gifts the agent makes.
The Power to Make or Change Your Estate Plan
This power is sensitive because it also invites potential exploitation by an agent who could create or alter your estate plan so that they receive all of your property or more than the share you want them to receive.
On the other hand, such a power can allow a trusted agent to alter an estate plan in a way and under circumstances that you would have wanted but are now unable to do yourself.
For example, if a child develops an addiction after Mom and Dad become incapacitated, this power would allow the agent to alter the estate plan to include contingency provisions. These provisions would let the child receive an inheritance with helpful restrictions to limit lump sum dispersals. The contingencies could help the child by creating practical provisions for their addiction.
So, the power to make or change an estate plan could allow a beneficial change for the loved one. Contingencies can help heirs going through a messy divorce, facing bankruptcy, or dealing with an addiction.
You may consider limiting language to prevent improper estate plan changes. For example, you could require that your agent seek approval from a disinterested third party before changing your estate plan.
The Power to Prosecute and Defend Legal Actions
This power allows your agent to start, settle, defend, intervene in, and appeal a legal action. The following example illustrates this power’s benefits:
Helen goes to her estate planning lawyer’s office and signs a power of attorney, including the power to prosecute and defend legal actions. A short time later, Helen goes into a nursing home where she has a fall that causes a stroke.
The nursing home staff fails to check on her for more than eighteen hours, which results in brain damage and leaves Helen significantly paralyzed. Helen’s son, her agent under her power of attorney, seeks out a medical malpractice lawyer. He receives legal advice that Helen has a claim against the nursing home.
Because Helen’s power of attorney specifically allows her agent to initiate legal action, the medical malpractice attorney can immediately file a lawsuit against the nursing home. Without that provision, Helen’s son would have had to go to court and seek guardianship over Helen first. Granting the power to prosecute avoided that delay and additional expense.
The downside to including the power to prosecute and defend legal actions is that an agent could conceivably abuse the ability to harass or seek revenge on another person, such as a sibling against whom they have a personal grudge. It may be possible to guard against such abuses by including limiting language that excludes legal actions against family members.
Ensure that you carefully discuss the potential pros and cons of a POA before signing legal documents with your attorney.
POAs and Uncertainty About Incapacity
Disputes may not arise about your level of incapacity if you are in a coma or suffer a severe and debilitating injury.
However, family or friends may dispute your incapacity if you are in a slow decline with alternating moments of clarity and confusion. Doctors, family members, and your agent could disagree about whether you are incapacitated.
Family members could challenge your incapacity in court. The agent has no authority to act until the uncertainty about your incapacity is settled.
Legal Considerations Surrounding Financial Institutions
Banks may be nervous about granting access to a customer’s account and have been known to decline financial POAs. The bank may want to see the financial POA document, the physician’s letter, and other documents to verify the POA.
Even then, they may refuse to honor the financial POA if it is over a couple of years old. Some banks have their own forms for appointing an agent to manage your accounts with that particular bank. To avoid trouble, ask your bank about their specific requirements.
In addition, consult your estate planning attorney about how a revocable living trust could serve your needs instead if you face incapacitation.
Bottom Line
Your POA must comply with state law and be legally enforceable in your state. If you move to another state, consider reviewing and updating your POA to ensure it complies with that state’s law. An experienced estate planning attorney in North Carolina can help ensure the legal authority of your POA.
A financial power of attorney is one of the most crucial estate planning documents you can have. For peace of mind, your attorney can walk you through other estate planning documents, such as an advance healthcare directive and a revocable living trust, to ensure you have chosen the right people to manage your affairs if you cannot care for yourself.
We Can Help
At The Vail Gardner Law Firm, we have a comprehensive understanding of the power of attorney (POA) laws in North Carolina, along with the significance of estate planning. Our experienced attorneys are here to guide you through the complexities of POAs, ensuring you clearly understand the different types and their implications.
We take the time to listen to your specific needs and goals, tailoring an estate plan that aligns with your unique situation. Whether you require a durable general power of attorney, a healthcare power of attorney, or a living trust, we provide personalized legal advice and assistance to help you make informed decisions.
Vail Gardner empowers you to secure your financial and personal affairs, offering peace of mind for you and your loved ones. Contact us today to discuss your POA and estate planning needs and find out how we can help.