How to Make Limited Power of Attorney [Free Templates]

Limited Power of Attorney (LPOA) is a legal document that allows one person (the attorney-in-fact or a trusted agent) to act on behalf of another (the principal).

The selected agent or attorney-in-fact can have broad legal or limited authority to make decisions about the principal’s finances, medical care, or property. There are various instances where a limited power of attorney can be used. They can be granted to a trusted friend or attorney-in-fact to handle day-to-day decisions such as signing or obtaining documentation on the principal’s behalf if they are temporarily unavailable due to a trip or vacation.

Typical reasons for designating limited powers of attorney to a trusted agent include:

  • Financial or real estate management, especially in the event of the principal’s incapacitation or illness
  • When travelling out of the country
  • To allow an agent to sign or obtain documentation on the principal’s behalf, such as Internal Revenue Service or Social Security Administration. However, note that other financial institutions may require completing other legal forms to finalize such transactions.

Limited power of attorney can also be referred to as the following:

  • Limited Power of Attorney Agreement
  • Special Power of Attorney
  • Specific Power of Attorney
  • Limited P.O.A/Limited POA

How to Create Limited Power of Attorney

Limited power of attorney is usually granted under an agreement with both parties agreeing to what is written in the document. They do not have to be legally enforceable as long as both parties agree. A limited power of attorney will generally expire once the action has been completed or on a future date, as stated on the agreement. To create an effective limited power of attorney, consider following the procedural guide below:

Step 1- Decide the agent’s responsibilities

First, the principal needs to determine what they are authorizing someone to do on their behalf. If the limited power of attorney is for a medical purpose only, make sure to explain this to the agent so that they know their responsibility. If the specific power of attorney is for financial and or property management purposes, make sure to include relevant details in the agreement to ensure that the agent acts only on the tasks needed.

Next, determine the exact duration of the limited power of attorney. If there is a precise starting date and ending date, include this timeframe in the LPOA. In most instances, a limited power of attorney may only be valid for a specified amount of time or upon completion of the agreed-upon task. The date will be documented and agreed upon by both the agent and the principal, or the LPOA can be revoked by the principal at any given time.

Step 2- Choose a trusted agent

Once the principal knows how long the limited power of attorney will last, they will need to identify and choose the right person to act as their agent. This needs to be someone trustworthy, and someone whom the principal believes will make the right decisions. The selected agent should also be a responsible person, especially when handling finances or property management.

Step 3- Write the power of attorney

The third step of creating a limited power of attorney involves drafting the actual document. Different states have specific laws that govern the creation and execution of a power of attorney. Therefore, make sure to comply with the state requirements and laws. When completing the LPOA form, the principal will need to provide personal information such as full legal name, Identification number, phone number, and email address. The principal will also need to supply their agent’s information such as name and National Identification number, describe the agent’s responsibilities under the LPOA, and write the power of attorney start and end dates.

Tip: It is considered good practice to name an alternate agent in the limited power of attorney to protect the principal’s interests if the original agent cannot perform their duties as specified by the limited power of attorney agreement.

Step 4- Sign the limited power of attorney

Step four of creating a limited power of attorney involves executing it. Depending on the principal’s state of residence, he/she may be required to sign and date the limited power of attorney agreement in front of a notary public. If the document allows an agent the power to make financial decisions on behalf of the principal, State laws may require the principal to have witnesses.

The document will also need to be signed by the agent, the witnesses (if any), and be notarized by a recognized notary public to be valid.

Step 5-Using the POA form

Once the document is signed as per the relevant state laws and notarized, it is time to issue it to the agent for their use. It is wise to retain a duplicate of the POA form for personal records.

What is an LPOA form?
A limited power of attorney form, usually abbreviated as LPOA form, is a non-durable document that allows an agent to step in for a specific activity on behalf of the principal. Once the stated task has been completed, the LPOA form can either be voided by the principal or automatically becomes invalid after a given date. Limited power of attorney forms are usually valid for use in every state, but the laws regarding creating and signing the document vary from state to state. To learn more about how to create an LPOA form, click here.

Revoking Limited Power of Attorney

Limited power of attorney can be rescinded at any time, provided that the principal is mentally competent. The revocation should be in writing, and the principal should write the date on which the POA took effect and the date on which it is revoked, then sign the document in front of witnesses and a notary public. The signed document should then be delivered to the agent or attorney-in-fact and any third parties with whom the agent has been in contact, for example, the principal’s bank or insurance company. If the principal recorded their power of attorney at their county recorder’s offices, it is also advisable that they record the revocation in the same place.

A power of attorney can become null due to several reasons such as:

  1. Conventional Powers of attorney lapse when the principal becomes physically or mentally incapacitated.
  2. When the creator dies, a limited power of attorney will automatically cancel itself.
  3. If a court invalidates the LPOA
  4. If the creator of the document divorces a spouse, who happens to be the selected agent
  5. Suppose the agent can no longer perform the outlined responsibilities, for example, if the agent has moved to another country or is careless or untrustworthy. Then, in that case, the principal can revoke the POA and appoint another agent or attorney-in-fact to act on their behalf.
  6. If the POA was created for a specific purpose that is now completed, the POA might be revoked as it is no longer needed. The same applies to situations where the principal is now able or available to make decisions for themselves.

Note: Until an agent’s powers are correctly revoked, they can continue to act on behalf of the principal legally. To rescind an LPOA properly, the principal can create a Revocation of Power of Attorney document or write a new Power of Attorney that indicates the previous power of attorney is revoked.

Important Considerations

When looking to create and execute a limited power of attorney, it is crucial to keep in mind the following essential considerations:

Specify the purpose (s) in detail

First, make sure that the limited power of attorney agreement clearly states the scope and purpose of a power of attorney, and includes sufficient details, to avoid confusions regarding which actions may or may not be taken on behalf of the principal.

Specify restricted transactions

A limited power of attorney can authorize an agent to act on a single transaction or provide several transactions. Therefore, including regulations on transactions or actions that cannot be executed in the limited power of attorney helps protect the principal’s interests.

Indemnification clause

An indemnification clause compensates a party for harm or loss arising from the other party’s actions or failure to act accordingly. In limited power of attorney, the clause protects the principal when the selected agent takes adverse action with the granted authority. Therefore, the principal must include this clause in their POA agreement advising the agent of the validity of their limited power of attorney.

Healthcare insurance portability and accountability Act (HIPPA)

The Health Insurance Portability and Accountability Act is a federal law that was implemented by the US department of health and human services to protect sensitive patient health information from being disclosed to other third parties without the patient’s knowledge or consent. Limited power of attorney created for healthcare purposes usually includes the HIPPA Act so that in the event of the principal’s illness, their health information will not be disclosed to third parties without their authorization.

Ensure the validity of limited POA in a different state

The laws for creating and executing a limited power of attorney may vary depending on the principal’s state of residence. For example, while some states may require signing the document before witnesses (18 years and above) and having it notarized, other states may not. Therefore, in cases of a relocation to a new state, the principal should consult with local attorneys within the state to confirm the validity of their Limited Power of Attorney.

Limited Power of Attorney Templates

Following are some free downloadable limited POA templates for you.

Limited-Power-of-Attorney-Form

    Final Thoughts

    A limited power of attorney is an essential document that allows an appointed agent or attorney-in-fact to act on behalf of a principal. The document is helpful in the event of the principal’s illness, incapacitation, or traveling outside the country as it allows the agent limited or absolute authority to make financial, healthcare, and property management decisions on behalf of the principal. A limited power of attorney should always include provisions about specific decisions that the principal wants to delegate and what to do if the POA becomes ineffective. Individuals who are of or above the required legal age can significantly benefit from this document as it allows them to make decisions for themselves in certain situations and circumstances.

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