If you want to authorize someone to take a specific action on your behalf with the effects of that action legally binding to you, you can do so via a special power of attorney.
This document is a type of power of attorney, which is why it's important to understand how a special power of attorney is used and how it differs from general, financial, or health care power of attorney.
Stay with us as we uncover the answers to these and many other questions that are essential for your legal needs.
What is a Special Power of Attorney?
A special power of attorney (POA) is a legal document that allows a principal to appoint someone, known as their agent or attorney-in-fact, to handle a specific task or transaction on the principal's behalf.
One of the key elements of a special power of attorney is that the principal authorizes the agent to undertake a specific, limited action. This means the document does not give the agent broad authority, like with other types of power of attorney, but instead, the agent’s powers are strictly defined, and they cannot act beyond those limits.
If the agent oversteps their authority, they could cause damage to the principal, in which case they will be held liable for any damage. Abusing the special power of attorney authority could also affect the principal’s and agent’s reputations and create legal issues for them and third parties as well.
That’s why it’s crucial for both the principal and agent to understand that the special power of attorney is a formal document with clearly defined boundaries that must be respected. To better understand the purpose and impact of a special power of attorney, let’s look at an example.
Let’s say you have a savings account with a specific bank in the U.S., but you’re traveling in Europe for six months. If you need someone to access that account to make a withdrawal or transfer funds for a particular purpose, you can grant them a special power of attorney to complete that single transaction without giving them control over your entire financial portfolio.
Additionally, special power of attorney purposes can vary, such as managing real estate, representing you in legal matters, or before tax authorities.
For example, a special power of attorney for property allows your agent to handle a single real estate transaction, like buying or selling property. Similarly, a special power of attorney for legal representation can authorize a lawyer to represent you in court or handle a specific legal issue.
Special Power of Attorney vs. General Power of Attorney: Main Differences
The main difference between a special power of attorney and a general power of attorney lies in the scope of authority that you give to your agent. With a special power of attorney, the agent is given the authority to handle a specific task or transaction. Once that task is completed, the special power of attorney ends, and the agent has no further authority.
On the other hand, a general power of attorney gives the agent broad authority over your personal, financial, medical, or legal affairs, so an agent can perform many tasks that you would normally handle by yourself.
Also, the general power of attorney remains in effect until it is revoked or you become incapacitated unless it’s a durable POA.
However, in both types, a power of attorney after death is no longer valid. Once the principal passes away, the agent's authority ceases, and an executor or personal representative will make any decisions on the principal's behalf.
When to Make a Special Power of Attorney
The timing for creating a special power of attorney is based on the individual needs of the principal—when they need someone to act on their behalf for a specific matter.
Generally, creating a POA is particularly important in urgent situations that require immediate action.
For example, if you are facing legal deadlines that could result in losing certain rights and you lack the knowledge, time, or ability to handle the matter yourself, appointing an agent can be crucial. Also, keep in mind the agent you choose is obliged to act according to your instructions and in your best interest.
A special POA is also beneficial when the principal prefers to delegate specific tasks to a trusted individual. By clearly naming the agent and outlining the actions they are authorized to take, the principal ensures their interests are represented and necessary actions are carried out promptly.
When considering other tools, such as advance directives, living wills, and POAs, the first two can address specific decisions regarding healthcare. However, only with a power of attorney can the principal be assured that these decisions are legally covered and will be respected.
Benefits of Having a Special Power of Attorney
Deciding to create a special power of attorney (POA) unlocks several key benefits that can greatly improve your ability to manage specific tasks and responsibilities.
Here are some of those advantages:
Having Special Power of Attorney Advantages
Timely action. A special POA enables quick action when needed and helps resolve specific matters without delay. Without this document, individuals would need to be present at all times to address urgent issues, leading to potential delays in business and requiring them to step away from other important responsibilities.
Expertise and guidance. With a special POA, everyone can appoint someone with the necessary knowledge and skills to handle specific issues requiring expertise. This person can explain their actions and guide you on proceeding, ensuring that your interests are protected.
Personalized control. A significant advantage of a special POA is the clear definition of the agent's authorized actions. The document sets strict boundaries for the agent, allowing them to act only within those specified limits. At any time, the principal can expand the agent's authority or revoke certain powers, ensuring that control remains firmly in their hands.
Reduced stress. Another important benefit is that delegating responsibilities to someone else alleviates the burden of those tasks. This delegation allows you to focus on your own priorities and manage your time more effectively, thereby reducing overall stress during busy periods.
How to Make a Special Power of Attorney
To make a special power of attorney that will be clear, legally valid, and meet your needs, you should use our power of attorney builder and follow these tips.
First, think about why you need a special power of attorney. This means that you should identify the specific task you want the agent to handle. It is crucial to be clear and precise about the agent’s duties, whether they are managing property, financial transactions, or handling legal matters.
The next step is to choose the right agent. The best person to be your agent is an individual whom you completely trust, who is reliable, and who has knowledge in the matter you’re delegating. An agent could be your family member, close friend, or attorney.
Once you’ve decided on the scope and chosen your agent, you can draft the document. Generally, the special power of attorney is a straightforward document, so you don’t necessarily need a lawyer to create it. You can find a lot of forms available online, but it’s important to ensure that the document follows the legal requirements of your state.
So, if you are not sure about legal requirements or your situation is more complex, then you should consult a lawyer to ensure the document is properly drafted.
Finally, once the document is completed, signed, notarized, or signed in front of witnesses, whose requirements can vary from state to state, you should make two copies and hand one to your agent.
If a special POA doesn’t cover everything you need, you might also want to look into a financial power of attorney, a health care power of attorney, or a general power of attorney for broader authority. You can easily get these forms using our Contracts.net power of attorney builder.
For example, regarding healthcare proxy and power of attorney, the first functions as a special POA focused solely on medical decisions, whereas a general POA can cover a wide range of non-medical responsibilities.
Requirements for Making a Special Power of Attorney
Creating a special power of attorney involves several essential requirements that the principal needs to follow to ensure the document is legally valid and enforceable.
Here are the key elements to consider:
Competence of the Principal
The principal must possess the mental capacity to grant this power, meaning they should be of sound mind and at least 18 years old.
If there are concerns about the principal’s mental capacity, it's crucial to determine their awareness of the implications and consequences of this legal act. This assessment may involve extra steps to check if they understand the powers being granted.
Written Document
The special power of attorney must be a written document, as this format is crucial for clearly outlining the specific powers granted to the agent. This written record effectively defines the agent's authority, serving as proof if there are ever questions about what the agent is permitted to do.
Identification of Parties
The document must clearly identify both the principal and the agent (an attorney-in-fact) by including their full names and addresses. This clarity ensures that all parties are fully aware of who is granting the powers and who is authorized to act on the principal's behalf.
Signatures
Another vital requirement is the principal's signature. By signing the document, the principal confirms their agreement with all the terms outlined—the specific powers granted and the agent's identity.
Depending on local laws, the agent may also be required to sign an acknowledgment of their acceptance of the role.
Notarization and Witnesses
Many jurisdictions mandate that the special power of attorney be notarized and/or witnessed. This additional step enhances the document's credibility and helps prevent potential disputes in the future.
Therefore, it is essential to check local laws for specific requirements regarding notarization and witnessing.
Final Thoughts
Whether you're dealing with a busy schedule or unexpected circumstances, having a special power of attorney offers peace of mind and assurance that your interests are being managed effectively.
The straightforward process of creating a special power of attorney and its numerous benefits make it an ideal choice for anyone looking to address their legal needs.
So, by simply naming your agent, clearly outlining the powers granted, and signing the document, you ensure that important decisions regarding specific matters can be made on your behalf, in your best interest, and without requiring direct involvement.
Special Power of Attorney FAQ
An example of a special power of attorney is authorizing someone to sell your car while you’re abroad. The agent’s authority is limited to completing that specific transaction only.
The cost to set up a special power of attorney typically ranges from $50 to $200, depending on state laws, complexity, and whether you use a lawyer or online legal service.
Risks include the agent acting beyond their authority or mishandling the task, which could cause financial or legal damage. These potential risks can be minimized by choosing a trustworthy agent.
If the principal becomes incapacitated, a special power of attorney becomes invalid unless it is specifically drafted as a durable special power of attorney, which remains in effect even after incapacity.
Yes, a special power of attorney can authorize an agent to handle specific financial matters, such as completing a single real estate transaction.
Yes, the powers granted in a special power of attorney are strictly limited to the specific task outlined in the document.
