Table of Contents
- What Is a Special Power of Attorney?
- Key Takeaways
- Understanding Special Power of Attorney
- General Power of Attorney vs. Special Power of Attorney
- Important Note
- Special Considerations
- How Do I Get a Power of Attorney?
- Are There Risks in Giving Someone a Power of Attorney?
- How Much Does It Cost to Set Up a Power of Attorney?
- The Bottom Line
What Is a Special Power of Attorney?
Let me explain what a special power of attorney is. It's a legal document that lets you, as the principal, give someone else—the agent or attorney-in-fact—the power to make certain legal or financial decisions for you. This is also called a limited power of attorney (LPOA), and it only applies under specific circumstances that you clearly define, possibly limited by time or scope.
Key Takeaways
Here's what you need to know right away. As the principal, you can authorize an agent to make legal decisions on your behalf, but only in specific, clearly defined situations. This is narrower than a general power of attorney, which lets the agent handle all your legal and financial matters.
Understanding Special Power of Attorney
A power of attorney is basically an agreement where one person acts on behalf of another. You might need this if you're abroad and can't handle a business deal yourself, or if a medical condition limits you. You're the principal or grantor, and the person you choose is the agent. With a special power of attorney, their actions are restricted to exactly what you specify in the document.
That's why you have to be very clear about the powers you're granting. You can even set up multiple special powers of attorney, each with a different agent for different tasks.
General Power of Attorney vs. Special Power of Attorney
A special power of attorney is limited—maybe just for buying or selling a house, pulling money from an account, or managing a business under certain conditions. In contrast, a general power of attorney gives the agent full rights to handle all your financial and legal decisions. For instance, if you're out of the country for a year, they could manage your finances, pay bills, buy insurance, make donations, handle real estate, and file taxes.
Important Note
Remember, a special power of attorney might need to be notarized to be legally valid.
Special Considerations
A power of attorney stops working if you die or become incapacitated, like from an injury or mental illness that prevents you from granting authority. But you can make a special power of attorney durable, meaning the agent keeps their powers even if you become incapacitated, say from a head injury or Alzheimer's. This lasts until your death.
If you don't have a durable one and lose capacity, a court might appoint a conservator or guardian. When you pass away, the power of attorney ends, and your will takes over.
How Do I Get a Power of Attorney?
The process can vary by state and type of POA, but here's the general approach.
Steps to Get a Power of Attorney
- Decide on the type—special, healthcare, financial—and whether it should be limited or durable.
- Figure out the agent's responsibilities; an estate planning attorney can assist.
- Pick your agent wisely, discuss expectations, and note you can name multiple agents to act separately or together.
- Get a form from an attorney, online template, or your state's free resources; check requirements like witnesses or notarization.
- Make copies, store them safely, and distribute to your agent and relevant parties like your bank or doctor.
Are There Risks in Giving Someone a Power of Attorney?
Yes, there are risks. You're trusting someone with your decisions, often financial ones, so choose someone reliable. If they misuse it and take your money or property, recovering it could be tough or impossible.
You're bound by their actions, even if they're mistakes—like signing a bad contract that you have to honor. If they breach their duty, you might sue, but it's better to select carefully from the start.
How Much Does It Cost to Set Up a Power of Attorney?
Costs vary based on type, length, and complexity. For a simple one, use an online template and just pay for notarization if needed. Services like LegalZoom charge $39-$49 for financial POAs.
If you hire a lawyer, expect around $300 on average, or hourly rates of $250-$350 for family or probate attorneys.
The Bottom Line
A special power of attorney is a written document outlining when your chosen agent can make legal or financial decisions for you. Family can't override it, but you can revoke it anytime. It ends when you die.
