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Home / Powers of Attorney / What Is the Difference between a General and a Limited Power of Attorney?

What Is the Difference between a General and a Limited Power of Attorney?

May 22, 2019

Powers of Attorney

Power of AttorneyGiven how common they are, you may have already executed a Power of Attorney (POA) and/or been named as the Agent under a POA executed by someone else. Unfortunately, a Power of Attorney is also one of the most frequently abused legal documents. One reason for that is that all too often the person creating the POA does not truly understand the power and authority conveyed in the document.  If you plan to incorporate a Power of Attorney into your estate plan, you need to understand the difference between a general and a limited Power of Attorney.

Power of Attorney Basics – What Is a Power of Attorney?

At its most basic, a Power of Attorney is a legal document that allows you (referred to as the “Principal”) to grant another person (the “Agent”) the authority to act on your behalf in legal matters and transactions.  The type and extent of the legal authority you grant to an Agent depends on the type of POA you execute.  Failing to understand the extent of the authority granted in a POA is a common, and potentially very dangerous, estate planning mistake.

How Much Power Do You Need to Give Your Agent?

When it comes to a POA, more is not always better. On the contrary, your first consideration when creating a POA should be how much authority or power your Agent really needs. The answer to that question will determine whether you need to create a general or limited Power of Attorney.

A general Power of Attorney grants your Agent almost unfettered power to act on your behalf in legal matters. Consequently, your Agent may be able to do things such as withdraw funds from your financial accounts, sell or encumber property and assets owned by you, and even enter into contracts in your name.  Although the law places some limits on the actions of an Agent with a general POA, you should operate under the assumption that an Agent can do anything you can do once granted a general POA.  Given the sweeping power granted to an Agent under a general POA, they are usually only used by spouses, a parent and adult child, or other familial type relationships.

A limited Power of Attorney only grants to your Agent the limited, and specific, authority enumerated in the POA. For example, you might grant an Agent the limited power of attorney to sell a boat you have listed for sale while you are out of the state for several weeks. Another common use for a limited POA is granting a caregiver the authority to consent to medical care for a minor child while the parent is away. With a limited POA, the Agent’s authority is limited to a specific time and/or to a specific transaction.

When deciding between a general and limited POA, consider who the Agent is and whether a limited POA is sufficient to accomplish your goal.  Never use a general POA when a limited POA will accomplish your objective. Furthermore, be very careful when considering the grant of a general POA given how much power you are granting to the individual.

Should Your POA Be Durable?

You also need to know the distinction between a traditional and a durable Power of Attorney. Historically, the authority granted to an Agent in a POA automatically terminated upon the death or incapacity of the Principal. As you may well imagine, however, the possibility of becoming incapacitated is a common motivation for executing a POA.  In other words, many people create a POA specifically to ensure that their Agent named in the POA has the authority to act on their behalf if they suffer a period of incapacity. That doesn’t work, however, if the POA terminates upon the incapacity of the Principal. To resolve this problem, the concept of a “durable” POA evolved. When a POA is made durable it simply means that the Agent’s authority survives the incapacity of the Principal.

Contact Missouri Estate Planning Attorneys

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about which type of Power of Attorney you need, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.

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Paul Gantner
Paul Gantner
I am an owner of Amen, Gantner & Capriano, Your Estate Matters, L.L.C. I have been able to bring my business and legal education and experience into a firm that has for many years provided comprehensive estate plans that meet clients’ needs and expectations.My passion has been creating and constantly pushing AGC’s mission of “Helping Families Secure their Legacies by Embracing them into the Law Firm Family through Long-term, Personal Advisory Relationships.”
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About Paul Gantner

I am an owner of Amen, Gantner & Capriano, Your Estate Matters, L.L.C. I have been able to bring my business and legal education and experience into a firm that has for many years provided comprehensive estate plans that meet clients’ needs and expectations. My passion has been creating and constantly pushing AGC’s mission of “Helping Families Secure their Legacies by Embracing them into the Law Firm Family through Long-term, Personal Advisory Relationships.”

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