The Problem with Out of State Documents – Part 2

       In last week’s post I was telling you about a situation with a client who has a North Carolina power of attorney that his wife needed to use here in New Jersey where they currently live.  The document is a springing power of attorney, meaning it does not have effect until the principal is incompetent or incapacitated.

       The client’s wife presented the POA and a statement from his doctor expressing the opinion that he lacks the capacity to make financial decisions to the financial institution where his account was held for the purpose of liquidating and spending down the balance to achieve Medicaid eligibility.  The institution still refused to honor the POA.  Why?

       It turns out that North Carolina has a provision in it’s statute covering springing powers of attorney that requires the document to be registered with the Office of the Register of Deeds.  A POA is not valid when the principal is under a disability or incapacity until the document has been recorded.  We argued that since the client is now a New Jersey resident and no such requirement exists under New Jersey law, therefore, the registering process should be unnecessary.  The financial institution’s legal department disagreed and decided that the doctor’s statement was not enough to invoke the POA.

       This delayed our efforts to liquidate the account but we only had two choices.  We could file for guardianship in New Jersey or go back to North Carolina to registered the POA.  We opted for registering the document, which is quicker and less expensive than guardianship.  As I said last week, this experience just reinforces for me the soundness of my advice that people, after relocating to another state, should consult with a local attorney to determine the need to update their legal documents to be state specific.

       As a footnote to this story, effective January 1, 2018 North Carolina enacted a new power of attorney statute which has tried to clear up the problems that have caused many to be frustrated when dealing with powers of attorney in North Carolina.  Unfortunately, the change did not come soon enough to help solve my client’s problem.