Definition of Limited Power of Attorney

By River Braun, J.D.

Definition of Limited Power of Attorney

By River Braun, J.D.

When you create a limited power of attorney, you are granting an agent the legal authority to act on your behalf. Under a general power of attorney, your agent has the authority to act on all matters. A limited power of attorney, on the other hand, limits the scope of your agent's powers to a specific action or set of actions.

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Limited Power of Attorney Scope and Time Limits

People create powers of attorney for a variety of reasons. Some create powers of attorney specifically for times of incapacity, others for times of unavailability. A limited power of attorney enables you to have a trusted person, your “agent" act for you on a specific matter, such as signing a contract when you are unavailable to do so yourself.

A limited power of attorney (LPOA) is also handy for more complex matters, like selling property or handling investments. In those situations, you would grant your agent the powers to make decisions and execute documents on your behalf. In fact, it is common for investment advisors to have their clients sign an LPOA granting them the authority to manage their investments.

In addition to restricting an agents power to act on certain matters, a limited power of attorney can restrict the timeframe that the agent is allowed to act. For example, you may be out of the country on vacation for a month, but wish to have someone back home able to sign business documents on your behalf. You would create an LPOA just for that month.

Creating a Limited Power of Attorney

In a well-drafted LPOA document, you, as the principal, lay down the specific powers that you grant to your agent. You can also define those powers that you wish to retain for yourself. The more complex the transaction, the greater detail that is required in the document. A careful balance must be struck between being overly detailed and under-detailed, so as not to hamstring your agent or keep them in the dark.

Every power of attorney document must be signed, dated, and witnessed either by another person or notary, depending on the state and circumstances. For example, in California, a power of attorney granting an agent authority to sell real property needs to be notarized so it can be recorded. Be sure to check with the laws in your state regarding the formalities required when drafting an LPOA.

Limited Power of Attorney Types

There are basically three types of LPOAs to cover any eventuality. These are:

  • Springing Power of Attorney: this LPOA only becomes effective upon the occurrence of a specific event. They are commonly used in conjunction with a will or trust. For example, a springing LPOA can be triggered at the time that you become unable to make decisions for yourself (incapacitated) or at your death. Until either of these events occur, the agent has no authority to act on your behalf.
  • Durable Power of Attorney: a durable LPOA gives your agent the authority to act on your behalf for specific matters for an unlimited amount of time—even after you become incapacitated or die.
  • Non-Durable Power of Attorney: unlike a durable LPOA, a non-durable LPOA expires when you die or become incapacitated.

A limited power of attorney is a convenient tool to allow you the flexibility to grant a trusted agent powers to act in limited situations, without giving up your own power to manage the rest of your affairs.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.