Jan82026
Probate Q&A Series

Can a trustee pay a beneficiary’s share directly to the person who holds the beneficiary’s power of attorney instead of opening a trust account? – North Carolina

Short Answer

Sometimes, but it depends on what the trust requires and what the power of attorney actually authorizes under North Carolina law. A trustee generally must follow the trust’s distribution instructions and protect the beneficiary’s interest, which often means paying the beneficiary directly or paying third parties for the beneficiary’s benefit—not simply handing the beneficiary’s share to an agent. If the beneficiary is incapacitated or the trust restricts who can receive distributions, paying an agent can create avoidable risk unless the trustee confirms authority and documents the payment carefully.

Understanding the Problem

In North Carolina probate and trust administration, the decision point is whether a trustee can treat a beneficiary’s attorney-in-fact (the person holding a power of attorney) as an acceptable recipient of the beneficiary’s trust distribution, instead of paying the beneficiary or using a trust-controlled account. The question usually comes up when a will creates a simple discretionary trust, the trustee is ready to distribute proceeds from estate property that was sold, and the trustee wants a clean paper trail using a breakdown and a signed receipt before issuing checks.

Apply the Law

Under North Carolina trust administration principles, a trustee’s first job is to follow the trust terms and use a prudent process that protects the beneficiary and the trustee. A power of attorney can allow an agent to act for the beneficiary (the “principal”), but it does not automatically override trust terms or change who the trust says should receive distributions. If the beneficiary is under a legal disability or is incapacitated, different rules and safeguards may apply, and in some situations a court-appointed fiduciary (like a guardian of the estate) may be the proper recipient rather than a power-of-attorney agent.

Key Requirements

  • Follow the trust’s distribution instructions: The trustee must distribute in the manner the will/trust directs (including any limits on discretion, timing, or permitted recipients).
  • Confirm the agent’s authority and status: The trustee should confirm the power of attorney is valid, currently effective, and broad enough to allow the agent to receive and receipt funds on the beneficiary’s behalf.
  • Document the distribution and accounting: The trustee should provide a clear breakdown and obtain a proper receipt/release (as appropriate) showing what was paid, to whom, and why.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The trust is described as a simple discretionary trust and the trustee plans to pay the beneficiary’s share to the beneficiary’s agent under a power of attorney. That approach can be workable only if the trust terms allow it and the agent’s authority clearly covers receiving funds and signing receipts/releases for the beneficiary. Because the trustee is also preparing a breakdown and a notarized receipt before issuing checks, the documentation step supports a cleaner fiduciary record, but it does not fix a payment made to the wrong recipient if the trust requires payment to the beneficiary (or to a court-appointed fiduciary).

Process & Timing

  1. Who approves the distribution decision: The trustee. Where: Trust administration is typically handled privately, but the Clerk of Superior Court may become involved if the will requires clerk accountings or if a dispute arises. What: Review the trust language on discretionary distributions and any limits on who may receive funds; obtain a current copy of the power of attorney and identification for the agent. When: Before any check is issued.
  2. Confirm authority in writing: Ask for a certification/affidavit from the agent that the power of attorney is still in effect and that the agent has no knowledge of termination, and keep it with the trust records. If the beneficiary is incapacitated or under a legal disability, confirm whether a guardian of the estate has been appointed (which can change who should receive funds).
  3. Document and distribute: Send the breakdown and receipt/release package together, then issue the check payable in a way that matches the trust terms and the verified authority (for example, payable to the beneficiary, or payable to the agent clearly “as attorney-in-fact for” the beneficiary, if appropriate). Keep copies of the signed receipt and proof of payment in the trust file.

Exceptions & Pitfalls

  • Trust terms may restrict recipients: Some trusts require distributions only to the beneficiary or only for the beneficiary’s benefit (such as paying providers directly). Paying an agent “because it is easier” can be challenged if it conflicts with the trust’s directions.
  • Incapacity can change the right recipient: If a guardian of the estate exists (or should exist), paying a power-of-attorney agent instead can create problems, especially if the beneficiary cannot confirm or ratify the transaction.
  • Paperwork mismatch in estate sale proceeds: If estate personal property was sold, the estate accounting and supporting affidavits should reflect the actual purchasers and the correct payees/recipients. Listing the wrong recipient can create audit and approval issues later.
  • Receipts/releases must match the payment: A receipt signed by an agent should clearly show the agent’s capacity and attach or reference the power of attorney. A notarization helps with authenticity, but it does not substitute for actual authority.
  • Recordkeeping and transparency: Beneficiaries (or their legal representatives) commonly request records and transaction history. Maintaining a clear distribution memo, breakdown, and signed receipt reduces conflict risk. See also how to know whether the trustee is following the trust agreement and handling the trust money correctly.

Conclusion

In North Carolina, a trustee may be able to pay a beneficiary’s share to the beneficiary’s power-of-attorney agent, but only when the trust terms permit that method and the agent’s authority is current and clearly covers receiving and receipting the funds. The safest approach is to confirm whether the beneficiary is incapacitated or subject to a court-appointed fiduciary, then document the distribution with a written breakdown and a properly executed receipt/release before issuing the check.

Talk to a Probate Attorney

If a trustee is preparing to distribute a beneficiary’s share and questions exist about paying an agent under a power of attorney, our firm has experienced attorneys who can help clarify the trust terms, authority documents, and the paperwork needed for a clean distribution record. 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: Probate 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.