Kathleen Rodberg, a member of our Trusts, Estates & Elder Law team, presented recent developments in North Carolina law at the North Carolina Bar Association’s 22nd Annual Elder and Special Needs Law Symposium. The Symposium was at Pinehurst Resort in Pinehurst, North Carolina, on February 22nd and 23rd. We thought our blog subscribers would be interested to know some of the major estate and elder law developments of the past year.
Two of the most important changes in North Carolina’s statutes are as follows:North Carolina enacted the Uniform Trust Decanting Act. This legislation makes numerous substantive changes to the process of modifying or decanting (i.e. replacing) an existing trust. In particular, this Act provides a separate set of rules and requirements when changing a special needs trust for a disabled beneficiary. These changes are particularly beneficial to allow for the modification of a potentially disqualifying trust so a trust beneficiary does not lose his or her public benefits, like Medicaid.
North Carolina enacted the Uniform Power of Attorney Act. The Act became effective January 1, 2018, and applies to powers of attorney signed before, on, or after that date, with limited exceptions. This legislation almost entirely replaced previous laws governing powers of attorney as found in Chapter 32A of the North Carolina General Statutes, by adding Chapter 32C. Some of the key changes are:
-A revised short-form power of attorney is provided.
-Two new forms were developed: agent’s certification and limited power of attorney for real property.
-Broader authority provided in some of the “default” powers that can be incorporated by reference.
-Greater clarity on certain powers that must be expressly included, or else the agent does not have that authority (e.g. authority to create or change a beneficiary designation).
-A power of attorney is assumed to be durable (meaning it remains valid through the signer’s incapacity) unless the document specifically states that it is not durable (this is the opposite of the prior law).
-Additional clarity on how a power of attorney can be executed if the principal has mental capacity, but does not have the physical ability to sign the document.
-Sets forth specific duties that the agent owes to the principal. Some of those duties may be modified, but some are always applicable.
Russell v. Russell: A man had several children and two grandchildren that he raised. He designated one of his granddaughters to be his agent under a power of attorney. The power of attorney included specific authority for the agent to make gifts of assets, including real property, to his descendants, as the agent determined, and that the gifts need not be equal among the descendants. Prior to his death, the granddaughter made a gift of the man’s real property to the other grandchild that the man raised. One of the man’s daughter, in her individual capacity and as personal representative of his estate, sued to set aside the property transfers. The court upheld the gifts of the real property, as the power of attorney provided specific authority for the agent to take that action and she acted within the scope of the authority granted.
In the Matter of the Estate of Skinner: A husband was appointed as guardian for his wife and as trustee of her special needs trust, which held funds that the wife inherited from her mother. The husband then used the funds in the trust to purchase a number of items, the largest of which was a home, diminishing the cash on hand that could be used for the woman’s care. The woman’s siblings then requested that the clerk of superior court remove the husband as guardian and trustee. The clerk agreed, and removed the husband. He then appealed and was successful before the North Carolina Court of Appeals. However, that decision was appealed to North Carolina’s Supreme Court, which upheld the removal of the husband as guardian and trustee.
In the Matter of the Will of Allen: Handwritten notations in the margins of a typewritten will were not a valid codicil, as (1) the notation could not be interpreted on their own and referenced a portion of the typewritten will, and (2) it could not be determined if the signer has present testamentary intent at the time that the notation was added (i.e. the notation said “Effective 7-7-03…” and it is not known if the notation was added before, on, or after that date.