What's the Difference Between a Power of Attorney and a Limited Power of Attorney?

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Have you ever wondered about the difference between a power of attorney and a limited power of attorney? If you’re like most people, the legal jargon can be confusing and overwhelming.

A simple way to consider the difference is that a limited power of attorney grants a limited scope of powers to your agent, whereas a power of attorney with general authority grants a broader one.

But which to choose? If you’re not careful, you could end up granting someone more power than you intended – or not enough.

In this article, we’ll walk you through everything you need to determine whether a power of attorney with general authority or more limited powers is the best fit for you.

Overview of a Power of Attorney

A power of attorney is an estate planning document through which you authorize another person, called your agent, to act on your behalf.

Most people associate powers of attorney with financial powers of attorney, which grants your agent authority to conduct certain financial and property transactions. You can also create a medical power of attorney, also known as a power of attorney for healthcare, which authorizes your agent to make healthcare decisions on your behalf.

This article focuses on financial powers of attorney, but you can learn about medical powers of attorney here.

Powers That May Be Granted in a Power of Attorney

In a Financial Power of Attorney, you can grant your agent acting the authority to enter into most any financial transaction which you yourself are authorized to perform.

To help standardize the classification of those transactions, most states have adopted the Uniform Power of Attorney Act or have laws substantially similar to those recommended in the Uniform Power of Attorney Act.

The following subjects make up the common powers in the Uniform Power of Attorney:

  • Real Property (i.e., real estate)
  • Tangible Personal Property (i.e., cars, boats, jewelry, etc.)
  • Stocks and Bonds
  • Commodities and Options
  • Banks and Other Financial Institutions
  • Operation of Entity or Business
  • Insurance and Annuities
  • Estates, Trusts, and Other Beneficial Interests
  • Claims and Litigation
  • Personal and Family Maintenance
  • Benefits from Governmental Programs or Civil or Military Service
  • Retirement Plans
  • Taxes

Depending on the powers you decide to grant your agent, your power of attorney may be classified as a "general" financial power of attorney or a limited financial power of attorney.

  • General Powers. A power of attorney with general powers grants authority over all the above common subjects
  • Limited Powers. A limited power of attorney grants authority to some but not all subjects, or contains additional modifying language restricting the scope of authority granted under a particular subject.

When creating your financial power of attorney, many estate planning attorneys recommend granting general powers to an agent you highly trust.

When creating your financial power of attorney, many estate planning attorneys recommend granting general powers to an agent you highly trust

Transactions often involve dealing with multiple subjects simultaneously, and by granting only limited powers, you may unintentionally handcuff your agent preventing him or her from doing something you would otherwise be comfortable with.

Special Powers in a Financial Power of Attorney

In addition to the common subjects, you can decide to grant your agent the below special powers in a “Grant of Specific Authority.”

  • Create, amend, revoke, or terminate an inter vivos trust (i.e., a revocable living trust)
  • Make a gift
  • Create or change rights of survivorship
  • Create or change a beneficiary designation
  • Authorize another person to exercise the authority granted under this Power of Attorney
  • Waive the principal’s right to a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan
  • Exercise fiduciary powers that the principal has authority to delegate
  • Access the content of electronic communications

Each of these special powers requires an express grant of authority, as many of them carry an increased risk that the agent might significantly reduce your property or alter your estate plan. In this way, the Uniform Power of Attorney Act intends to emphasize the significance of these special authorities and minimize the risk that any of them be authorized inadvertently.

When you create your Power of Attorney with Just In Case Estates, you’ll note that our step-by-step questionnaire mirrors this special consent.

Whereas you can grant a general authority over the common subjects in just one click, we walk you through each of the special powers individually.

When to Use a Limited Financial Power of Attorney

When you create your estate plan, many estate planning attorneys recommend that you grant a trusted agent general authority to act over all common subjects. In addition to that particular agent, there may be other individuals or entities to whom you may benefit from granting a limited power through a Limited Power of Attorney.

For example, you might grant your accountant a limited power of attorney to represent you and file your taxes with the IRS, or you might grant a lawyer a limited power of attorney to help close on the purchase of a new home.

When creating the optional Limited Pet Power of Attorney in Just In Case Estates’ free pet estate plan, you can authorize your agent and pet guardian the authority to use your credit or finances to pay for emergency pet care up to a specified dollar amount. You might also utilize the additional instructions to limit the authority to a particular time period or transaction, such as granting a lawyer a limited power of attorney over real estate transactions in a 2-week period around the closing date on your new house and specific to transactions concerning that property only.

The Most Important Decision in Creating a Financial Power of Attorney

When creating your financial power of attorney, the most important decision that you’ll face is often not deciding whether to grant a particular power under the General Authority or Special Authority – it’s who to select to act as your agent.

A power of attorney is a “license to sell.” Although the powers under the Special Authority carry heightened power and risk of abuse, even the powers under a General Authority are broad and sweeping and should not be granted lightly.


Just In Case Estates is an online service providing legal forms and information. We are not a law firm and we do not provide legal advice. If you need legal advice, please use our legal expert matching service to connect with a qualified, licensed estate planning attorney near you.