Dec232025
Estate Planning Q&A Series

With a durable power of attorney in place, what planning steps can I legally take now to protect assets before long-term care costs increase? – North Carolina

Short Answer

In North Carolina, having a durable power of attorney (DPOA) does not automatically allow broad “asset-protection” transfers. The agent must stay within the authority granted in the document, avoid improper self-dealing, and act in the principal’s best interest. The most legally defensible early steps often include tightening financial control, documenting ownership correctly, and getting court approval before any gift or transfer that benefits the agent or changes who will inherit.

Understanding the Problem

Under North Carolina estate planning and long-term care planning, the common decision point is: can an agent acting under a durable power of attorney make changes now—such as moving money, changing titles, or transferring a home—to reduce future exposure to assisted living or nursing facility costs and to reduce exposure to estate recovery later. The key trigger is the relative’s move toward long-term care and the need to pay for care, which often leads families to consider whether certain assets can be kept for a spouse or family members while still meeting program rules.

Apply the Law

North Carolina law generally expects an agent under a DPOA to follow the document, keep good records, and avoid conflicts of interest. Many “asset protection” moves (especially gifts or transfers that benefit the agent) can create legal risk if the DPOA does not clearly authorize them, if they undermine the principal’s ability to pay for care, or if they create the appearance of financial exploitation. If the situation requires a court-supervised fiduciary (a guardian), North Carolina statutes spell out when gifts may be allowed, but they typically require a verified petition and court approval, plus notice to interested persons.

Key Requirements

  • Stay within the DPOA and avoid conflicts: The agent can only do what the DPOA authorizes and should assume heightened scrutiny for any transaction that benefits the agent or changes inheritance.
  • Protect the principal’s ability to pay for care: Planning steps should not leave the principal without resources for support, maintenance, comfort, and welfare, especially during a hospitalization-to-assisted-living transition.
  • Use the right forum for high-risk transfers: If gifting or transferring assets is necessary (particularly to individuals, including the agent), court approval may be required in a guardianship context, and the court may require advance notice to family members or other interested persons.

What the Statutes Say

Analysis

Apply the Rule to the Facts: Here, the agent already has a DPOA and other advance directives, and the relative is transitioning from hospitalization to assisted living. Because the agent is on bank accounts and may be a co-owner of the home, transactions that shift money or change title could be viewed as self-interested unless the DPOA clearly authorizes them and the agent can document that the steps match the relative’s wishes and needs. The safest “now” steps usually focus on stabilizing finances, confirming legal ownership, and planning how to pay for care, rather than making last-minute transfers that can be challenged later.

Process & Timing

  1. Who acts: The agent under the durable power of attorney. Where: Primarily with banks, investment custodians, and the county Register of Deeds for title records (and, if guardianship becomes necessary, through the Clerk of Superior Court and Superior Court in North Carolina). What: Gather the signed DPOA, confirm it is durable, and collect account statements, deeds, and beneficiary designations. When: As early as possible before care contracts begin and before major spending decisions are made.
  2. Clean up and document ownership: Determine whether bank accounts are true joint accounts with survivorship rights or convenience arrangements; confirm how the home is titled; and document the relative’s contributions to any jointly titled assets. Avoid “quick title fixes” that change ownership without a clear paper trail.
  3. Identify high-risk transfers and get approvals if needed: If any contemplated step involves gifting, changing the relative’s plan of inheritance, or transferring assets to the agent or other individuals, treat it as high risk. If the relative lacks capacity and a guardian becomes involved, a court-approved petition process may be required before gifts can be made under North Carolina law.

Exceptions & Pitfalls

  • Self-dealing and “agent benefits”: Transfers to the agent (even if the agent believes the family “would have wanted it”) can lead to claims of undue influence, exploitation, or breach of fiduciary duty if the DPOA does not clearly allow it and the agent cannot prove it served the principal’s interests.
  • Joint accounts and co-ownership misunderstandings: Being “listed on” an account or “maybe” being on the deed does not always mean the agent owns the money or the home outright. Mistakes here can create inheritance disputes and can complicate benefit applications.
  • Assuming DPOA equals guardianship authority: A DPOA is not the same as a court appointment. If capacity is lost and family members seek guardianship, North Carolina statutes often require a petition, judge approval, and notice before gifts can be approved.
  • Medicaid planning traps: This article does not give tax advice, and it does not walk through Medicaid eligibility calculations. Medicaid rules are technical and change over time; an attorney should review any plan before transfers occur.

Conclusion

In North Carolina, a durable power of attorney can allow an agent to manage and preserve assets, but it does not automatically authorize asset transfers meant to shelter property from long-term care costs. The agent should confirm the DPOA’s gifting and real estate powers, document ownership and the principal’s intent, and treat any transfer benefiting the agent as high risk. The most practical next step is to have a North Carolina attorney review the DPOA and the deed before any gift or title change is made.

Talk to a Estate Planning Attorney

If a relative is moving from the hospital to assisted living and there is concern about protecting a home and savings, an estate planning attorney can help evaluate what a durable power of attorney allows, what steps carry risk, and what timelines matter. 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: Estate Planning Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.