Special power of attorney
| Special power of attorney |
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Special power of attorney (also known as limited power of attorney) - means legally authorizing another person very often called an agent, to act for the principle with regard to specific transaction or a specific action. In finance, this entitles a specific person to take certain actions on behalf of the client on his account.
Limited power of attorney (LPOA) defines the exact areas of oversight, acceptable decision and action and frequently the period of time in which the person will represent you. The limited Power of attorney is used if you need to approve the transaction without the physical presence of the account owner. Through this type of power of attorney, an agent is appointed and can approve and make decisions about transactions of a part of the company. LPOA may also contain forms that allow to decide on finances for a limited period of time. This is one of the most popular types of powers of attorney because as a rule, most representatives precisely define the scope of the agent's rights (L. Ashar 2010).
Types of Power of attorney
Types of power of attorney:
- special (limited) - a limited power of attorney is very much alike to general power of attorney however, the main difference is that it sets authorization limits on the agent that represents company.
- general - a general power of attorney is limitless in scope and allows agent to act as legal representative in relation to the company's legal and financial affairs until revocation or termination of the authorization.
- durable - it may be general or limited in scope. If it is general then it remains in effect after person become incapacitated. Without this power of attorney, if person become incapacitated, no one can represent him or her unless a court appoints a guardian. It may remain valid until death. However, if power of attorney specifically says otherwise, an agent's authority ends if the principal becomes mentally incapacitated. Then we say that it is a limited power of attorney
- healthcare - this is one of the most popular form of power of attorney. Is based on the appointment of a person who will make decisions regarding the health care of a given person. The authorization conferred to the agent can cover any form of health care decision and it also applies even where person is nor terminally ill or permanently unconscious (Durable Limited Power of Attorney 2007).
The difference between General and Limited power of attorney
General power of attorney this is the type of proxy that allows the agent to conduct any type of financial transaction without any restrictions. The document becomes valid after being written off. The general power of attorney must authorize the agent to act for the owner in respect of all of his transactions, obligations and liabilities. The rights granted must be general so they should refer to its entire business activity or a specific part of its business. If these rights are not general, we can not speak of a general power of attorney (A.B. Kafaltiya 2010).
This two types of powers of attorney bring different rights. The Limited power of attorney as the name indicates this type of power of attorney imposes certain limitations on the attorney-in-fact. For example, the agent may manage the company's finances when the owner is absent. On the other hand, General power of attorney gives broad authorizations to the agent.This type of attorney, often called universal allows the attorney-in-fact to perform almost all activities and take most business decisions.
Summarizing the special powers of attorney are more detailed and specify the exact scope of powers that the attorney-in-fact has. It is worth noting that although the general power of attorney gives the agent a wide range of powers, there are still decisions that he can not make. For example, agent can not create a testament and make changes to an existing document, he can not vote in elections or perform certain tasks that require legal consent (M. Robinson 2019).
Examples of Special power of attorney
- Buying or selling a property on behalf of the principal: A special power of attorney grants the agent the authority to buy or sell a property on behalf of the principal. This could include signing the deed, accepting payment, and handling the closing documents.
- Handling financial transactions: A special power of attorney allows the agent to manage the principal’s finances, such as making deposits and withdrawals, managing investments, and paying bills.
- Signing legal documents: A special power of attorney can also authorize the agent to sign legal documents on behalf of the principal. This could include signing contracts, signing tax returns, or signing legal papers.
- Obtaining medical records: A special power of attorney may grant the agent the authority to obtain medical records or other medical information on behalf of the principal.
- Healthcare decisions: A special power of attorney may also grant the agent the authority to make health care decisions on behalf of the principal, such as selecting a doctor or deciding on medical treatments.
Advantages of Special power of attorney
A special power of attorney can be a useful tool in many cases. It offers several advantages, including:
- The ability to grant permission to someone else to take action on your behalf. This is especially helpful if you are unable to take care of business yourself due to a disability, illness, or travel.
- It can be used to limit the authority of the agent, ensuring that they only have permission to take certain types of actions, such as conducting a financial transaction.
- It can help ensure that all legal requirements are met, as the power of attorney must be signed and witnessed by a notary public.
- It can provide a simplified way of managing business or estate affairs when the principal is away or is unable to take care of it themselves.
- It can be revoked at any time, allowing the principal to take back control of their affairs if needed.
Limitations of Special power of attorney
A special power of attorney (also known as limited power of attorney) is a legal document that allows an individual to appoint an agent to take certain actions on their behalf. However, there are certain limitations to a special power of attorney, including:
- It cannot be used for a major financial transaction, such as selling property.
- It is usually limited to a specific period of time or a specific action.
- It cannot be used to make decisions regarding the principal’s health or medical care.
- It cannot be used to grant the agent any powers that the principal does not specifically grant.
- It cannot be used to grant the agent any powers that are not legal or allowed under the law.
- It cannot be used to grant the agent any powers that are in violation of the principal’s fiduciary duty.
- It cannot be used to grant the agent any powers that may be considered to be unethical or fraudulent.
- It cannot be used to grant the agent any powers that are outside of the scope of the document.
Introduction: In addition to the Special Power of Attorney, there are several other approaches related to granting authority to a person to take certain actions on behalf of another person.
- Limited Power of Attorney: It is a document that grants authority to a trusted individual to act on behalf of the grantor in a specific situation for a specified period of time.
- Durable Power of Attorney: It is a legal document that grants an individual the authority to act on behalf of the grantor in financial matters. It remains in effect even if the grantor becomes unable to make decisions for themselves.
- Springing Power of Attorney: It is a type of power of attorney that does not take effect until a certain event takes place, such as the grantor becoming incapacitated.
- Revocable Power of Attorney: It is a type of power of attorney that can be revoked or cancelled at any time by the grantor.
Summary: In summary, there are several approaches related to granting authority to a person to take certain actions on behalf of another person, such as limited power of attorney, durable power of attorney, springing power of attorney, and revocable power of attorney.
References
- Ashar L. (2010), The Complete Power of Attorney Guide for Consumers and Small Business: Anything You Need to Know Explained Simply, "Atlantic Publishing Group", 78 - 79.
- Durable Limited Power of Attorney (2007), [1],"Global Wills Internationa", 5-7.
- Kafaltiya A.B. (2010), Textbook on Pleadings, Drafting & Conveyancing, "Universal Law Publishing", 210.
- Robinson M. (2019), Limited vs. General Powers of Attorney, "Legal Resources”.
- Schneeman A. (2009), Law of Corporations and Other Business Organization, "Cangage Learning".
Author: Hanna Cugier
