People are sometimes forced to turn over control of their finances to a trusted person, usually a friend or family member, through a document known as a power of attorney. The granting of a power of attorney is not to be done lightly, for it gives the holder of the power broad powers over the grantor’s assets. North Carolina common law imposes a strict fiduciary duty requiring the holder of the power of attorney to only use the power to benefit the grantor of the power.
Powers of attorney are occasionally abused. The most common way this occurs is by the holder of the power giving some or all of the grantor’s property to themselves or to a member of their family. Another possible abuse of a power of attorney is to transfer assets into an account that is payable to the holder of the power when the grantor dies. Sometimes transfers like this are entirely proper. Sometimes they are nothing more than stealing. Whether the transfer may be contested or challenged will depend on whether the transfer of the grantor’s property benefited the grantor or furthered some purpose of the grantor’s.
It is sometimes difficult to know whether a theft has been committed using a power of attorney. Often the person who is trusted enough to be made power of attorney is the same person who is named as executor of the estate in a will. In this situation it may be necessary to file a petition to remove the executor so that an impartial person can be appointed to take over the estate so that questions about possible misuse of the power of attorney may be investigated.
Fortunately, the abuse of the power of attorney usually leaves a paper trail. An experienced attorney can often recover copies of all of the relevant documents. These documents can be used to perform a forensic accounting to determine whether a power of attorney has been misused.
If it is found that a power of attorney has been abused, North Carolina law allows the injured party to recover punitive damages as well as actual damages. If the abuse of the power of attorney claim is brought in connection with an estate it is often possible to have the lawyers’ fees paid or reimbursed by the estate.
Sometimes people take advantage of an elderly person’s trust and cause them to write a will disinheriting members of the elderly person’s family. Often the wrongdoer is a family member, friend or caretaker of the elderly person. North Carolina law provides important protections for persons who are wrongfully written out of a will.
Anyone interested in contesting a will should remember the old cliché that this is still a free country. Under North Carolina law citizens are pretty much free to leave their property to whomever they choose. [1] The recent incident where Leona Helmsley in New York left millions of dollars to her cat is an excellent example of this freedom. Before deciding to contest a will it is important to ask yourself whether the will is what the writer of the will actually wanted.
Will contests are based on a number of grounds. One common ground is that the person who wrote the will (called the testator) was not competent to write a will. Many elderly people suffer from dementia. Thus, a diagnosis of dementia, by itself, may not resolve the question of whether the testator was mentally competent to write a will. The question which must be resolved is whether the testator was competent under North Carolina law. Resolving this question often involves the examination of the testator’s medical records and the use of expert witnesses in the areas of medicine, psychiatry or psychology.
Another common ground for challenging a will is the doctrine of undue influence. Undue influence must be more than just convincing the testator to write a will in a certain way. The influence must be so strong that it unfairly deprives the testator of free will. Proof of undue influence often involves medical evidence as well as proof that the will was a result of unfair coercion exercised by the person receiving the property.
Under North Carolina law wills may also be challenged for failure to meet the statutory requirements for a will or for fraud. If a will is challenged, North Carolina law allows the challenging party to ask that their attorneys’ fees be paid out of the estate.
[1] An important limitation on this freedom is discussed in the section on protection of husbands and wives below.
Handwritten wills are called holographic wills. North Carolina law recognizes the validity of handwritten wills if the statutory requirements are met.
North Carolina law does limit testamentary freedom in that it does not allow a person to completely disinherit their husband or wife. North Carolina law does this by allowing husbands and wives to file what is called a “dissent” from their spouse’s will to claim the spouse’s yearly allowance and the spouse’s elective share. A husband or wife’s right to an elective share may be waived by a valid premarital agreement or separation agreement.
North Carolina law does not provide protection for the children of a testator as it does for the husband or wife of a testator. Generally, a child’s only recourse if their parent writes them out of their will is described in the section on Will Contests.
North Carolina law may enforce contracts to make a will. These contracts usually arise out of two fact patterns. The first is where a person agrees to care for an elderly person in exchange for an agreement that the elderly person will Will property to the care taker. The second is where a husband and wife agreed on a joint estate plan that involves each party writing a will in a certain way. A contract to make a will regarding personal property may be oral. North Carolina law requires that a contract to make a will involving real property must be memorialized in a writing signed by the person to be charged.
Trusts are a common device used to manage assets of an estate. The use of a trust allows a person to control their money and/or property after their death. Trusts are managed by trustees. North Carolina law places strict fiduciary duties on trustees. Trustees do not always fulfill their duties. This can occur through inattention to the trust’s business, improper investment or improper use of estate property or outright theft. If a trustee does not fulfill their fiduciary duties, then a petition can be filed with the clerk of court seeking the trustee’s removal. A trustee may also be required to pay damages to the trust. In some instances the trustee may be required to pay punitive damages as a result of wrongdoing. If an action is brought arising out of the wrongdoing of the trustee it is possible to have the trust pay the attorneys’ fees associated with the legal action.
North Carolina law places strict fiduciary duties on administrators and executors of estates. Executors and administrators of estates do not always fulfill these fiduciary duties. This can occur through inattention to the estate, improper investments, improper use of the estate property or outright theft. If an executor or an administrator of an estate does not fulfill their fiduciary duties then a petition can be filed with the clerk of court seeking their removal. An executor or administrator may also be required to pay damages to the estate. In some instances punitive damages may be awarded against an executor or administrator for wrongdoing. If a claim is made by an estate that an executor or administrator has acted improperly it is possible to ask the court to have the estate pay the attorneys’ fees associated with the legal action.
