Written by Benjamin Kingsley

Do you have questions about or need assistance with a power of attorney? Please click here to email us at contact@legalandme.com.

Do you need a power of attorney form? We make a do-it-yourself power of attorney: finance power of attorney or healthcare power of attorney.

A financial power of attorney is a powerful legal document that grants someone (the agent) authority to manage another person’s (the principal’s) financial affairs. However, it is important to understand that this authority is not unlimited. There are several important limitations on the powers granted by a financial power of attorney:

First and foremost, the agent has a fiduciary duty to act in the principal’s best interests at all times. The agent cannot use their authority for their own personal gain or benefit. They must manage the principal’s finances prudently and in accordance with the principal’s known wishes and preferences. Any actions that breach this fiduciary duty could potentially expose the agent to legal liability.

Additionally, the powers granted by a financial power of attorney are limited to financial and property matters only. The agent does not have authority to make medical or healthcare decisions for the principal unless a separate healthcare power of attorney is also in place. The financial power of attorney also does not grant authority to make changes to the principal’s will or estate plan.

It’s also important to note that many financial institutions and other third parties may have their own internal policies regarding powers of attorney. They may require the power of attorney document to be on a specific form or to contain certain language. Some may even refuse to honor a power of attorney that is more than a certain number of years old. This can create practical limitations on the agent’s ability to carry out their duties in some cases.

Finally, the principal can place explicit limitations on the agent’s authority within the power of attorney document itself. For example, they may prohibit the agent from selling certain assets or making gifts above a certain dollar amount. Any such restrictions must be clearly spelled out in the document and will be binding on the agent.

Do you have questions about or need assistance with a power of attorney? Please click here to email us at contact@legalandme.com.

Do you need a power of attorney form? We make a do-it-yourself power of attorney: finance power of attorney or healthcare power of attorney.