A limited power of attorney (LPOA) is a legal document that gives another person the authority to act on your behalf in specific legal, personal or financial matters. This document is also referred to as a special power of attorney.
A limited POA may be the best solution if you want another person to complete a basic or routine task for you, such as selling a home or filing taxes.
Limited Power of Attorney: Definition and Use
A limited power of attorney is a document that authorizes your agent to act on your behalf but only for the specific circumstances you indicate in the POA form. For example, you could put a limited POA in place to have someone sign a single document when you can’t be there to do it yourself.
What’s the difference between power of attorney and limited power of attorney?
Both a general power of attorney and a limited power of attorney authorize an agent that you choose to handle your legal or financial affairs, but the main difference is the scope of the agent’s powers.
A general power of attorney gives an agent broad powers over your affairs to act on your behalf and perform almost any legal action that you could do yourself (except what you specifically restrict them from doing in your instructions on the form).
A limited power of attorney, on the other hand, grants your agent authority to perform only the specific task or set of tasks on your behalf without giving them unlimited access to your personal affairs.
For instance, a limited power of attorney can allow someone to cash checks for you and open your safety deposit box, but that agent wouldn’t be able to withdraw money or access your finances in any other way.
It’s important to keep in mind that a power of attorney, whether limited or not, doesn’t give an agent unrestrained power over your affairs. The form can easily be revoked at any time as long as the principal is of sound mind, and POA agents have a responsibility (fiduciary duty) to act in your best interests and not theirs.
Why Would You Need a Limited Power of Attorney?
A limited power of attorney lets you give specific powers to your agent so they can complete certain tasks for you but don’t have too much power over your affairs.
Here are some examples of circumstances in which a limited POA may be useful:
- Aging or ill adults anticipating future challenges handling routine affairs like banking or mail
- Parents who need to assign a guardian for their children for a short period of time
- Businesses wishing to segment responsibility in separately structured POAs so that multiple people can carry out specific operational tasks
- Real estate transactions where a real estate agent can negotiate and make offers to buy or sell a property on behalf of their client
- Travelers away on an extended vacation or working abroad and wishing to appoint a trusted person to handle their basic financial matters during this time
- Investing where a financial manager can make trades or investments on someone’s behalf
- Tax preparation where a tax advisor can prepare and file taxes for someone
- Military personnel deployed overseas seeking to manage their affairs while away from home
You may also choose to create a special power of attorney form for any minor task that requires an agent to responsibly oversee your property, such as driving your car cross-country or building on your land.
How Long Does a Limited Power of Attorney Last?
A limited power of attorney lasts for as long as the living principal chooses. If the principal dies or becomes mentally incompetent, the power of attorney is automatically terminated unless it’s a durable power of attorney.
To revoke your agent’s power at a certain time or after a certain event, you can simply leave instructions in the document. A limited POA is designed to expire once the specific task or set of tasks have been completed or at the date stated in the form. For example, the document may state that the agent’s authority ends upon the principal’s return to the U.S.
To change, cancel, or revoke your current power of attorney before its original end date, you should complete a revocation of power of attorney and provide written notification to the agent, any parties that received the limited POA, and any other relevant third parties.