Individuals need to make a limited power of attorney whenever they want to grant permission to someone else to perform specific tasks for them.
These normally include things like taking care of personal finances and buying or selling real estate, motor vehicles, and investment products.
Limited power of attorney limits the type of duties that can be undertaken. This document is often confused for other kinds of POA forms such as durable or general power of attorney.
These kinds of forms give agents broad powers that allow them to engage in multiple duties for extended periods of time.
Every kind of power of attorney form involves at least two people and includes the Principal and Agent.
Principal refers to the person making the document, and agent refers to the person(s) authorized to perform the transaction.
Limited POA can be made to let agents conduct nearly any kind of transaction.
For instance, if the Principal owns investment real estate that is used as rental property they could establish this document to let their agent handle all aspects of managing the property.
This could include collecting rent, showing the home to prospective tenants, or evicting tenants for lack of payment.
Agents are only allowed to perform duties that are described in the limited power of attorney. Once they complete the task the powers are revoked and the form is no longer in effect.
The amount of time allowed to perform duties is also included in the power of attorney form. The form should state if powers expire on a certain date or when the duty is completed.
If Principals want to change designated agents after the form is effective they will need to make revocation of powers form to terminate privileges granted and create a new POA form to appoint a new agent.
The process for making a limited power of attorney differs by state, so Principals ought to obtain legal counsel to make certain they follow proper protocol. While it’s not necessary to have a lawyer create the form it is recommended to at least have legal counsel review the document.
Every type of power of attorney document must be witnessed and signed by two people that are not relatives of the Principal. Witnesses are required to sign the form in front of a notary public, as well as signed and stamped by the notary.
Careful consideration should be given when selecting an agent to manage personal finances. For apparent reasons, agents need to be trustworthy and dependable. The person selected should be capable of carrying out duties in an ethical manner.
Limited power of attorney forms can be used to authorize agents to carry out transactions that the Principal would usually conduct on their own.
Some of the most popular reasons for setting up this form include: taking care of business and personal banking; paying bills; debt collection; custodial care of minor children; situations surrounding business or personal taxes; and buying or selling titled property like cars, realty, and financial investment products.