Jan82026
Guardianship Q&A Series

Can a power of attorney be challenged or invalidated if the person may not have had capacity when they signed it? – North Carolina

Short Answer

Yes. In North Carolina, a power of attorney can be challenged if the person who signed it (the “principal”) did not have the mental capacity to understand what they were signing at the time of signing, or if the document was the product of undue influence, fraud, or improper execution. A successful challenge can limit or undo the agent’s authority going forward, and it may also support court orders requiring an accounting and repayment if an agent misused funds.

Understanding the Problem

In North Carolina guardianship disputes, a common question is: can a power of attorney be set aside when the principal may not have understood the document at signing, especially when an agent is using the power of attorney to move money or withdraw funds? The decision point is whether the principal had capacity at the moment the power of attorney was executed (and whether the signing was voluntary), because that determines whether the document should be treated as valid authority for the agent’s actions.

Apply the Law

Under North Carolina law, a power of attorney is generally intended to be a voluntary delegation of authority from the principal to an agent. If the principal lacked capacity when signing, or the signature was obtained through improper pressure or deception, a court can treat the power of attorney as invalid or limit its effect. Separately, even when a power of attorney is valid, agents still must act in the principal’s interests and within the scope of authority granted; misuse can lead to court intervention and remedies.

Key Requirements

  • Capacity at signing: The principal must have had enough understanding to know they were giving another person authority and to grasp the general nature of that authority at the time the document was signed.
  • Proper execution: The power of attorney must be signed and completed in the manner required for that type of power of attorney (for example, health care powers of attorney have specific witnessing and notarization requirements).
  • No undue influence or fraud: The document must reflect the principal’s free choice, not a result of coercion, manipulation, or deception that overrode the principal’s will.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The facts describe a child’s power of attorney naming both parents as agents, with concern that one agent has been transferring money to themself and withdrawing from accounts without a clear reason. If the child did not have capacity when the power of attorney was signed, that can support a challenge to the document’s validity. Even if the power of attorney is valid, unexplained self-transfers and withdrawals are common red flags that can justify court involvement to demand records, restrict the agent’s authority, and protect the child’s assets.

In practice, capacity disputes usually focus on what the principal could understand at the time of signing (not weeks earlier or later). Evidence often comes from medical records, school or treatment records (for a child with significant limitations), and testimony from people who observed the signing. When there are two co-agents, the document’s wording also matters: some powers of attorney require agents to act jointly, while others allow either agent to act alone. If the document required joint action but one agent acted solo, that can be another basis to challenge the transactions.

When financial exploitation is suspected, it is also common to pursue relief that focuses on stopping harm and getting transparency (account statements, transaction histories, explanations), not only on whether the power of attorney was valid on day one. For related guidance, see steps to protect finances when an agent may be taking money and getting a court order to temporarily stop an agent.

Process & Timing

  1. Who files: Typically a parent/co-agent, guardian, or other interested person with a legitimate concern about capacity or misuse. Where: Usually the Clerk of Superior Court in the county where a guardianship is filed or would be filed, or the appropriate trial court depending on the relief requested. What: A petition/motion asking the court to determine the power of attorney’s validity (capacity/undue influence), to restrict or suspend the agent’s authority, and to order production of records and an accounting. When: As soon as there are credible signs of incapacity at signing or ongoing financial harm.
  2. Evidence gathering: Obtain the signed power of attorney, identify whether it requires joint action by co-agents, and collect bank statements and transaction records showing transfers/withdrawals. Capacity evidence often includes medical or treatment records close in time to signing and witness information about the signing ceremony.
  3. Court orders and follow-through: Depending on the facts, the court may restrict the agent, require an accounting, and in a guardianship context appoint a guardian to take control of decisions and assets. If a guardian is appointed, the guardian can seek suspension of a health care agent’s authority in the manner allowed by statute for health care powers of attorney.

Exceptions & Pitfalls

  • Capacity is time-specific: A diagnosis or disability does not automatically prove incapacity to sign; the key question is what the principal could understand at the moment of signing.
  • Co-agent authority can be misunderstood: If the document allows either agent to act independently, a bank may accept one agent’s instructions. If the document requires joint action, solo transactions may be challengeable, but the paperwork must be reviewed closely.
  • Focus only on “invalid POA” and ignore remedies: Even when a power of attorney is valid, self-dealing and unexplained transfers can still lead to court-ordered accounting and other protections. A strategy often needs to address both validity and misuse.

Conclusion

Yes. In North Carolina, a power of attorney can be challenged if the principal lacked capacity when signing or if the signing resulted from undue influence, fraud, or improper execution. In a situation involving unexplained withdrawals or transfers by an agent, the practical goal is usually to stop further transactions and force transparency through court orders. The next step is to file a court request to review the power of attorney’s validity and seek an accounting and restrictions on the agent as soon as suspicious activity is identified.

Talk to a Guardianship Attorney

If a co-agent under a power of attorney may be moving money or withdrawing funds without a clear reason, our firm has experienced attorneys who can help explain options for challenging the document, seeking an accounting, and protecting assets. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Guardianship Q&A Series

Author: Pierce Law

Pierce Law Group is a North Carolina law firm focused on probate administration, real estate partition matters, and surplus funds claims across North Carolina. We know these situations often come with stress, family dynamics, and time-sensitive decisions—so we prioritize clear communication, steady guidance, and a practical plan from day one. Our goal is to make a complicated process feel manageable, while protecting what matters most to you.