Dec232025
Probate Q&A Series

What steps do I take as successor trustee to recover assets wrongfully withdrawn by a power of attorney? – North Carolina

Short Answer

In North Carolina, a successor trustee usually cannot recover a deceased person’s individually titled assets (like a bank account or annuity still in the person’s name) until a personal representative is appointed in the estate. The typical steps are to open the estate in the county where the decedent lived, obtain authority for the personal representative, demand records and return of funds from the former agent, and then pursue a court claim to trace and recover the money if it is not voluntarily returned. Because the funds were moved into a personal account, prompt action to gather documents and consider a court order can matter.

Understanding the Problem

In North Carolina probate and trust administration, the key question is: what steps must a successor trustee take when a family member acting under a power of attorney withdrew or cashed out assets that were still titled in the decedent’s individual name, and the family member refuses to deliver the funds after the decedent’s death? The decision point is who has the legal authority to demand, sue for, and receive those assets—especially when some property never made it into the trust and must move through the estate administration process before it can be used to fund the trust.

Apply the Law

North Carolina treats an agent under a power of attorney as a fiduciary. That role comes with duties like acting loyally for the principal and keeping the principal’s money separate from the agent’s. When an agent uses a power of attorney to move the principal’s funds into the agent’s personal account, the recovery path commonly involves (1) establishing who has standing to act (often the personal representative for individually titled assets), (2) demanding an accounting and return of funds, and (3) using a court process to trace and recover the funds or their proceeds if the agent will not cooperate. For trust-related disputes, North Carolina’s trust law allows court remedies like ordering restoration of property and tracing wrongfully transferred assets.

Key Requirements

  • Proper decision-maker (standing/authority): Individually titled assets are generally controlled by the estate after death, so a personal representative (executor/administrator) typically must act to recover them before they can be transferred into the trust.
  • Proof of wrongful control or transfer: Recovery usually turns on showing the agent used authority in a way that benefited the agent or was inconsistent with the principal’s ownership and intent (for example, cashing out an annuity and depositing proceeds into the agent’s account).
  • Traceable money or proceeds: When money moved through multiple accounts, the claim often focuses on locating the proceeds and asking the court to order return, impose a constructive trust, or otherwise trace and recover the funds.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The bank account and annuity stayed in the decedent’s individual name and were not funded into the trust before death, so the estate’s personal representative will usually be the party with authority to demand those assets and sue for recovery. The family member used power of attorney authority to cash in the annuity and move the proceeds to a personal account, which commonly supports claims that the agent exceeded proper fiduciary conduct and wrongfully converted or misapplied the principal’s funds. Because the agent refuses to deliver the assets, the practical path is to secure a personal representative appointment, gather account and annuity records to prove the flow of funds, and then pursue a court order compelling return or tracing the proceeds if informal demand fails.

Process & Timing

  1. Who files: The person nominated in the will (executor) or another qualified person (administrator) files. Where: Clerk of Superior Court (Estates) in the North Carolina county where the decedent lived. What: An estate opening filing (application for letters and supporting documents) to appoint the personal representative. When: As soon as practical after death, especially if assets are being withheld or moved.
  2. Demand and document collection: After appointment, the personal representative (often coordinating with the successor trustee) sends written demands for (a) an accounting of all transactions the agent made, and (b) immediate return of the funds. At the same time, the personal representative requests bank records, annuity surrender paperwork, signature cards, beneficiary designations, and transfer confirmations to trace the money and identify where it went.
  3. Court enforcement if no cooperation: If the agent still refuses, the personal representative typically files a civil action in North Carolina Superior Court seeking relief such as return of property, tracing of proceeds, and related remedies. If the facts show that the money can be identified in another account or used to buy other property, the complaint often asks the court to treat that property as held for the estate (and ultimately for the trust once transferred).

Exceptions & Pitfalls

  • Mixing up trust authority and estate authority: A successor trustee may manage trust assets, but the estate usually controls individually titled assets after death. Opening the estate and appointing a personal representative often determines who can force turnover.
  • Not gathering the right documents early: Recovery often depends on tracing. Key items include the annuity surrender request, proof of where proceeds were deposited, and the timeline for any account ownership or beneficiary changes.
  • Assuming the bank or annuity company will reverse the transaction: Financial institutions often treat agent-signed withdrawals as valid unless they have clear notice of death, termination of authority, or other legal restraints. The claim often ends up focusing on recovery from the individual who received and kept the money.
  • Forgetting the special needs subtrust funding issue: When a trust includes a special needs subtrust, delays in recovering and transferring assets can delay funding that subtrust. Coordination between the estate administration and the trust administration helps avoid contradictory instructions and missed steps.

Conclusion

In North Carolina, when an agent using a power of attorney cashes out or withdraws assets that were still titled in the decedent’s individual name, the successor trustee typically must work through the estate: open the probate estate in the decedent’s county, have a personal representative appointed, and then use that authority to demand records and return of funds and, if needed, file a Superior Court action to trace and recover the proceeds. The next step is to file to open the estate with the Clerk of Superior Court as soon as practical.

Talk to a Probate Attorney

If a family member used a power of attorney to move a decedent’s money into a personal account and now refuses to turn it over, our firm has experienced attorneys who can help clarify who has authority to act, what records to request, and what court options may be available. 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: 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.