Reasons for Executing a Limited Power of Attorney
Limited power of attorney refers to a legal document that is required to grant authority to an agent to conduct specific types of duties. Once tasks are completed the agent’s privileges are revoked and they are relieved of responsibilities.
Most people use a limited power of attorney to authorize agents to oversee financial transactions. These could involve managing bank accounts, paying bills, or selling titled property such as motor vehicles or real estate.
This type of document shouldn’t be confused with other kinds of POA forms such as general or durable power of attorney. These sorts of documents provide sweeping powers to agents and let them perform all types of duties related to personal and business finances.
Limited POA can be arranged for any kind of financial matter a person would normally conduct. For example, if a person owns real estate they want to sell, but reside in another state they could appoint an agent to take care of the sale. Or, if an individual is hospitalized and needs someone to manage their finances they could authorize an agent to access their bank account or use their credit card to pay bills.
When a limited power of attorney is used, agents can only perform the tasks described within the document. Once transactions are completed the agent’s powers are revoked and the POA is null and void.
The authority granted in this document can extend for the amount of time required to perform duties. The timeframe is acknowledged in the form and states if powers expire on a specific date, extend indefinitely, or expire when the transaction is completed. The person executing the document can revoke privileges at any time by creating a revocation document.
Procedures for setting up power of attorney privileges can vary by state, so it’s recommended to seek legal counsel. With that being said, every kind of POA has to include signatures from two witnesses that are not related to the person setting up the document. Additionally, witnesses have to sign the document in front of a notary public and their seal and signature is also required.
Choosing agents to carryout duties requires careful consideration. For obvious reasons agents should be someone that can be trusted to fulfill obligations and conduct transactions in an ethical manner.
With limited power of attorney, agents can perform nearly any kind of transaction a person would normally do on their own. A few of the more common uses include granting permission to manage personal or business banking transactions; buying or selling real estate, motor vehicles, or investment products; custodial care of minor children; debt collection; or issues involving personal or business taxes.
While people can establish limited power of attorney forms without hiring a lawyer, it’s smart to at least have an attorney review forms to ensure they are legally binding. Lawyers typically charge a nominal fee to review or create these forms and the price is worth the investment to ensure problems don’t arise.