Probate Q&A Series

Can I challenge transfers made under a power of attorney if I suspect my grandfather lacked capacity at the time? — North Carolina

Short Answer

Yes. In North Carolina, you can ask the court to review an agent’s transactions under a power of attorney, compel a full accounting, and undo or recover improper transfers. You can challenge the power of attorney itself if your grandfather lacked capacity when he signed it, and you can also challenge specific transfers if the agent exceeded their authority, engaged in self-dealing, or breached fiduciary duties—regardless of your grandfather’s later incapacity.

How North Carolina Law Applies

North Carolina’s power-of-attorney law lets the court step in to protect principals and their estates. If your concern is that your grandfather lacked capacity when he signed the power of attorney, you may file a civil action in Superior Court to set it aside. Separately, even when a power of attorney is valid, an agent must act in the principal’s best interests and within the authority granted. You can petition the Clerk of Superior Court to compel an accounting, determine the agent’s authority, suspend or remove the agent, and order restoration of assets. If the agent made gifts, added themselves to accounts, or changed beneficiary designations without specific authority, the court can void transactions, impose a constructive trust, and order payback.

If your grandfather has died, the estate’s personal representative (executor or administrator) typically takes the lead to demand records, trace funds, and sue to recover assets. Heirs and beneficiaries may also have standing to seek an accounting or other relief in some circumstances. For example, if an agent moved funds from your grandfather’s account to themselves while he was ill, the court can order the agent to account, trace the money, and return it if the transfer wasn’t authorized or in his best interests.

Key Requirements

  • Capacity at signing vs. transactions later: If your grandfather lacked capacity when he signed the power of attorney, a Superior Court action can seek to invalidate the document. If the concern is about later transfers, the focus is on the agent’s authority and fiduciary duties—not your grandfather’s capacity at that time (a durable power of attorney operates during incapacity).

  • Fiduciary duties and records: Agents must act loyally, avoid conflicts, follow the document, and keep detailed records of all transactions. A court can compel accountings and documentation even if the document waived routine reporting.

  • Authority for “hot powers”: Certain acts require specific, express authority in the power of attorney, including making gifts, creating or changing rights of survivorship, and changing beneficiary designations. Without explicit language, those actions are vulnerable to challenge.

  • Gifts by an agent: Even when gifts are authorized, they are generally limited to the principal’s past gifting pattern or the federal annual exclusion unless a court authorizes more. Gifts that benefit the agent are closely scrutinized.

  • Standing: While the principal is alive, the principal, a guardian, or an interested person can seek judicial relief. After death, the personal representative usually leads recovery efforts; heirs/beneficiaries may petition for an accounting or related relief in appropriate cases.

Process & Timing

  1. Identify the relief you need. Examples: an accounting, suspension or removal of the agent, determination of the agent’s authority, or recovery of specific assets.

  2. Choose the forum. File a petition with the Clerk of Superior Court under the power‑of‑attorney statute to compel an accounting, determine authority, or seek interim relief. File a separate civil action in Superior Court for money damages (breach of fiduciary duty, conversion, constructive fraud) or to set aside a power of attorney for lack of capacity or undue influence.

  3. Venue. You may file in the county where the principal resides or is domiciled, where the agent resides, or where the principal’s property is located.

  4. Start the Clerk proceeding (if applicable). File a petition; the Clerk issues a summons; serve the agent and any required parties. In contested matters, the respondent typically has 20 days to respond. The Clerk can order discovery, accountings, and hearings. Contested authority issues may be transferred to Superior Court.

  5. Emergency relief. If assets are at risk, request interim orders—such as suspending the agent, freezing accounts, appointing a special fiduciary, or seeking a temporary restraining order/attachment in a related Superior Court action.

  6. After death of the principal. The personal representative can demand an accounting from the former agent, bring a Clerk petition to examine persons holding estate property, and file a Superior Court action to recover assets or unwind improper transfers.

  7. Evidence and deadlines. Gather the power of attorney, bank and investment statements, signature cards, beneficiary forms, deeds, medical records, caregiver/witness statements, and the agent’s records. Limitation periods and “discovery” rules can apply and may be tolled while a fiduciary relationship exists, but timing rules are technical—act promptly.

What the Statutes Say

  • N.C. Gen. Stat. § 32C-1-116: Authorizes judicial relief related to powers of attorney; sets what the Clerk can decide (accountings, authority questions, compensation, and certain limits) and identifies venue.
  • N.C. Gen. Stat. § 32C-1-117: Provides remedies for an agent’s breach of fiduciary duty, including enjoining conduct, restoring property, imposing constructive trusts, suspending/removing the agent, and ordering other appropriate relief.
  • N.C. Gen. Stat. § 32C-1-114: Defines an agent’s duties and recordkeeping obligations and allows courts and certain parties to require disclosures and accountings.
  • N.C. Gen. Stat. § 32C-2-201: Lists the scope of an agent’s authority and identifies actions that require a specific grant (e.g., gifts, survivorship changes, beneficiary changes).
  • N.C. Gen. Stat. § 32C-2-217: Governs gifts by an agent, generally limiting gifts to the principal’s gift history or the annual exclusion unless otherwise authorized.
  • N.C. Gen. Stat. § 32C-2-218: Allows a court to authorize gifts beyond the default limits when appropriate.
  • N.C. Gen. Stat. § 32C-4-403: Explains the Act’s applicability to powers of attorney executed before January 1, 2018.
  • N.C. Gen. Stat. § 28A-15-12: Lets a personal representative sue to recover estate property and petition the Clerk to examine persons believed to hold estate assets.

Exceptions & Pitfalls

  • Wrong forum. The Clerk can order accountings and address authority questions, but claims for money damages (breach of fiduciary duty, fraud) and actions to void a power of attorney generally belong in Superior Court.

  • Express authority defeats challenges. If the power of attorney clearly authorizes gifts, survivorship changes, or beneficiary changes, a transfer may be valid—though it still must be in the principal’s best interests and comply with statutory limits.

  • Third-party protections. Banks and others who relied in good faith on a facially valid power of attorney may be protected. Your remedy is often against the agent personally, with tracing of assets the agent received.

  • Bona fide purchasers. If the agent sold property to an innocent buyer who paid value without notice, unwinding the sale may be limited; the court can instead award money damages or impose a constructive trust on sale proceeds.

  • Timing traps. Deadlines can be short and complicated by “discovery” rules and fiduciary tolling. Act quickly to preserve records and assets.

  • After death, coordinate through the estate. Heirs often need the personal representative to lead recovery; if no one has been appointed, consider seeking appointment to pursue claims.

Helpful Hints

  • Collect the power of attorney document, bank/investment statements, signature cards, beneficiary forms, deeds, and any emails or texts from the agent.
  • Note red flags: the agent adding themselves to accounts, large “gift” checks, unusual ATM cash, or late‑in‑life beneficiary changes.
  • Get medical records and names of witnesses/caregivers to help show capacity concerns or undue influence at signing.
  • If your loved one has died, notify the personal representative immediately and share your documentation to support a prompt accounting demand.
  • Consider requesting temporary restraints or account freezes if funds may disappear.

Talk to a Probate Attorney

If you’re dealing with questionable transfers under a power of attorney or need to recover assets for a loved one’s estate, our firm has experienced attorneys who can help you understand your options and timelines. 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.