A general power of attorney grants broad authority over legal, financial, and personal matters while a specific power of attorney is more limited to certain tasks or decisions.
Table of Contents
Different types of power of attorney (POA) documents confer different authority to an agent or attorney-in-fact to act on behalf of the person granting the authority, also known as the principal. There are power of attorney documents for financial affairs and for health care decisions. This article addresses only power of attorney documents concerning financial matters, not medical decisions.
When preparing your power of attorney document, you should carefully consider what authority you are granting and the length of time the authority is valid. Therefore, you should decide whether to use a general power of attorney or a specific (limited) power of attorney.
What Is a Power of Attorney?
A power of attorney is a legal document that gives authority to another person to make financial decisions and take action on your behalf. You permit the other person to make your decisions. The person giving the authority is a principal. The person receiving the legal authority is the agent or attorney-in-fact. The agent’s authority varies from broad authority for all financial and legal matters to narrow and specific authority for a single transaction. The authority given to the agent can also range from a short time period to an ongoing duration until the death of the principal.
In this article, we will focus on the difference between a general and specific power of attorney, while also providing information on other powers of attorney that relates to both.
General Power of Attorney (General POA)
A general power of attorney confers broad, sweeping authority to the agent to act with full authority on almost any of your legal and financial matters. This authority means your agent can make decisions as if you are making them. Note, however, that an agent does not have the power to create or amend your will, nor can you grant this authority to an agent.
When Is a General Power of Attorney Used?
A general power of attorney is a common estate planning tool to use while you are alive and to prepare for incapacity. If you are getting older and want to appoint someone you trust to take care of your affairs for convenience or because you feel overwhelmed with these tasks, then a general power of attorney is a good choice.
If you want your agent to retain authority even if you become incapacitated, then a durable power of attorney (durable POA) is appropriate. The “durable” concerns the length of time the authority continues and means that the authority endures even if you become incapacitated. If you want the authority to cease upon your incapacity, then it is a non-durable power of attorney. In most cases, a power of attorney should be durable.
What Powers Can You Grant With a General Power of Attorney?
You decide what powers you want to give your agent. Here is a list of typical decision-making authority an agent can have under the authority of a general power of attorney:
- Pay everyday expenses and bills
- Open and manage bank, retirement, and investment accounts
- Buy, sell, and manage real estate and other assets
- Access your safe deposit box
- Manage your business
- Handle retirement accounts and benefits
- Pay taxes
- Engage legal counsel
- Obtain insurance and pay premiums
- Manage online accounts and digital assets
- Obtain government benefits on your behalf
You can and should clearly define the authority you give to the agent under a general power of attorney because only those defined powers are granted to the agent. In other words, if the power of attorney document does not confer authority to handle your real estate transactions, then the agent may not do so.
A general power of attorney ceases on a specific date that you state in the power of attorney document unless it is durable, then authority ceases upon your death. You can revoke a general power of attorney at any time as long as you are competent to do so. Once you become incompetent, you cannot amend or revoke a power of attorney.
Specific Power of Attorney
A specific power of attorney, also called a limited power of attorney or limited POA, is used to give authority to an agent for a particular purpose or period of time, after which the authority terminates. For instance, if you have a real estate closing that you cannot attend, you can limit your agent’s power to sign and perform the functions to close the real estate transaction. After the real estate closing is complete, the authority ceases. This is commonly done among married couples when one spouse cannot attend a closing, so the other spouse is given authority under a specific power of attorney to sign all the real estate documents at closing.
A specific power of attorney typically has certain time parameters that relate directly to the particular task. However, it is possible to have a durable specific power of attorney that continues even if you become incompetent. For instance, if you have a specific power of attorney for someone to manage only your real estate rental property, you can specify that it continues if you become incompetent and is therefore a durable specific power of attorney.
A specific power of attorney terminates when you specify, or upon your death if it is durable. You can amend or revoke a specific power of attorney if you are competent to do so.
Explore DIY options through our partnership with Quicken Willmaker & Trust by Nolo
Springing Power of Attorney
A springing power of attorney takes effect, or springs, upon an event that you specify. For instance, you might want a power of attorney that only takes effect in the event of your incapacitation. You may further require that your personal doctor determine your incapacity. In this event, the springing power of attorney would take effect when your doctor determines that you cannot handle your own affairs.
Create Your Own Estate Plan
If you want to create your own estate plan, trusted online estate planning documents comply with state law and are designed to be easy to use. You can create your last will and testament, financial power of attorney, and health care directive with confidence that you are taking care of your estate for your loved ones.
