What "Bad Faith" Looks Like for a NC Power of Attorney Agent

"Bad faith" isn't a single act — it's a pattern. A power of attorney agent who is misusing their authority rarely announces it. This page describes the behaviors North Carolina courts and elder law attorneys recognize as evidence of an agent acting in bad faith, and what you can do about it.

The Legal Standard

Under G.S. § 32C-1-114, a POA agent must act in good faith, in the principal's best interests, and without creating conflicts of interest. "Bad faith" is the opposite: acting with knowledge that your conduct is contrary to the principal's interests, or recklessly disregarding those interests.

Bad faith doesn't require proving the agent intended to steal. It can arise from self-serving decisions, willful neglect, or deliberate concealment — even when no single act looks catastrophic on its own.

Common Patterns of Bad Faith

Financial Self-Dealing

The most common form. Examples include:

Transferring the principal's money, real estate, or investments to the agent or the agent's family
Changing beneficiary designations on life insurance, retirement accounts, or bank accounts to benefit the agent
"Gifting" the principal's assets to family members at amounts that exceed what the principal would have approved
Paying the agent for caregiving services at inflated rates without written authorization
Using the principal's credit cards or accounts for personal expenses

In re Estate of Skinner and Horry v. Woodbury both involved this pattern. Courts treat self-dealing transactions as presumptively invalid — the agent bears the burden of proving authorization and fairness.

Refusing to Pay for the Principal's Care

An agent who controls the principal's finances is legally required to use those funds for the principal's benefit. Refusing to authorize needed care, leaving bills unpaid, or allowing the principal to go without necessary services while preserving assets for the agent's eventual inheritance is a breach of fiduciary duty.

This is sometimes subtle: the agent pays the minimum required for care, delays necessary medical appointments, or steers the principal toward cheaper options that aren't in their best interest — while managing money that could pay for better care.

Isolating the Principal

Bad-faith agents often limit the principal's access to family, friends, or advisors who might raise concerns. Signs include:

Intercepting or screening the principal's mail, phone calls, or messages
Moving the principal to a location that makes family visits difficult
Telling the principal that family members are trying to take advantage of them
Being present for every conversation the principal has with doctors, attorneys, or social workers — and dominating those conversations
Preventing the principal from meeting with an attorney privately

Isolation is particularly serious because it creates conditions for further abuse. Courts treat it as a red flag for undue influence.

Failing to Keep Records

An agent is required by law to maintain records of all transactions made on the principal's behalf. An agent who cannot or will not produce records when asked — by a family member, a court, or the principal — is almost certainly in breach of their duty.

This includes refusing to show bank statements, stonewalling questions about account activity, or claiming records were lost or never kept.

Making Decisions Based on the Agent's Interests, Not the Principal's

Under James v. Schoonderwoerd, North Carolina courts look at the motivation behind an agent's decisions — not just whether those decisions caused direct harm. An agent who makes financial or care decisions primarily for their own convenience, or to preserve an anticipated inheritance, is acting in bad faith even if the principal isn't immediately harmed.

Examples:

Declining a recommended medical procedure because of cost concerns tied to the agent's inheritance
Choosing a care facility based on price rather than quality — while managing funds that could pay for better care
Refusing to allow modifications to a home or purchase of equipment that would improve the principal's quality of life

Concealment

An agent who hides what they're doing — from the principal, from family members, or from the court — is displaying bad faith by definition. Concealment includes:

Failing to tell the principal about transactions made on their behalf
Making misrepresentations to banks or institutions about the purpose of a transaction
Hiding documents, statements, or correspondence from family members asking questions
Providing false information in any court filing or accounting

What to Do If You See These Patterns

Document everything. Collect bank statements, account records, property records (search the county Register of Deeds for deed transfers), and any written or electronic communications from the agent.

Request an accounting. Under G.S. § 32C-1-116, any interested person can petition the Superior Court to require the agent to provide a full accounting of all transactions made under the POA.

Consult an elder law attorney before acting. Filing too early, without sufficient documentation, can tip off a bad-faith agent who then moves more assets quickly. An attorney can advise on timing and help you seek emergency relief — including a temporary restraining order — if assets are at immediate risk.

Contact Adult Protective Services if the principal is a vulnerable adult who is being financially exploited. APS can conduct an independent investigation under G.S. § 108A-100.

The information on this page is for educational purposes only and does not constitute legal advice. Please consult a licensed North Carolina attorney for guidance specific to your situation. Learn more about ElderAdvocate.law.