Limited Power of Attorney
A limited power of attorney is a legal form utilized to appoint an attorney-in-fact to engage in a specific transaction for a specific period of time. The attorney-in-fact is not authorized to perform any acts other than what is stated in the POA form.
A common use of limited power of attorney is to allow another person to engage in financial transactions. Examples could be letting a person manage checking and savings accounts by making deposits, transferring funds, or paying bills. Another use would be to authorize your agent to sell a car or piece of real estate.
Limited POA should not be confused with other types of forms such as durable power of attorney or general power of attorney. These kinds of POA forms grant broad powers that allow agents to conduct many kinds of transactions and have access to sensitive financial and healthcare information.
Durable power of attorney allows agents to have substantial influence over nearly all aspects of a person's life. However, certain kinds of POA documents disallow agents from engaging in transactions until a physician has claimed the Principal to be incompetent and incapable of making decisions for their self.
Limited POA can be utilized for any type of dealing that a person is unable to take care of for their self. For instance, if a person has relocated to another state and needs to sell their house they can assign POA rights to a realtor, lawyer, friend, relative, or business partner. Or, if a person is experiencing health problems and needs someone to pay their bills and make deposits into bank accounts they can appoint an agent to perform those tasks.
With limited power of attorney, the attorney-in-fact does not have access to sensitive data, nor can they conduct other kinds of transactions. They are limited to the one specific dealing. Once the transaction is complete, privileges expire and the POA is no longer valid.
Privileges given through limited POA can extend for as long as the Principal requires. The timeframe is provided in the power of attorney form and will declare if privileges extend indefinitely, until the transaction is complete, or on a certain date. Furthermore, Principal's can revoke POA rights at any time by executing a revocation form.
The process for establishing power of attorney rights differs by state, but essentially involves filling out a form and having it witnessed by two individuals in front of a notary public.
Selecting an attorney-in-fact requires careful thought. It's important to choose a trustworthy individual that can be counted on to carry out their duties and act in the best interest of the Principal.
Limited power of attorney can be established for just about anything a person engages in with daily life. These can include, but aren't limited to: personal banking; business banking; real estate transactions and property management; business management; buying and selling automobiles, personal property, or business assets; debt collection; dealing with tax issues; custodial care of minor children; and child medical care.
It's recommended to talk with a lawyer when in need of limited power of attorney or other POA forms. While it's not necessary to hire a lawyer, most attorneys only charge a small fee to execute documents.
We invite you to learn about the different kinds of power of attorney forms and their uses, as well as find out additional uses for limited power of attorney in our personal finance and estate planning article library.
Published on November 15, 2011 at 03:28 AM