# Special Power of Attorney Explained: Key Differences and Uses

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> **Definition**
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> A special power of attorney grants someone authority to make specific legal or financial decisions for another person under defined circumstances.

## What Is a Special Power of Attorney?

A special power of attorney is a legal document that allows an individual, called an agent or an attorney in fact, to make specific legal or financial decisions on behalf of another person, known as the principal.

Also known as a [limited power of attorney (LPOA)](https://www.investopedia.com/terms/l/limited_power_of_attorney.asp), it applies only under specific, clearly laid-out circumstances that may be limited by time frame or scope. Unlike a general power of attorney, it is used for particular needs, such as real estate or financial transactions, and typically requires precise terms and may need notarization.

### Key Takeaways

*   A special power of attorney allows an agent to act on behalf of a principal in specific legal or financial matters.
*   Unlike a general power of attorney, a special power of attorney is limited to clearly defined actions and circumstances.
*   A durable power of attorney remains in effect even if the principal becomes incapacitated, unlike a standard special power of attorney.
*   It's critical to clearly outline the agent's powers in the special power of attorney document to avoid misunderstandings.
*   Power of attorney documents must be carefully stored, and copies should be given to relevant parties like banks and attorneys.

## How Special Power of Attorney Works

A [power of attorney](https://www.investopedia.com/terms/p/powerofattorney.asp) refers to an agreement between two individuals that allows one individual to act on the other's behalf. For example, you might want a power of attorney if you are out of the country and unable to carry out a business transaction yourself, or if your abilities are limited by a medical condition. The person who initiates a power of attorney, whether in oral or written form, is referred to as the grantor or principal. The authorized individual named in the agreement is referred to as the [attorney in fact](https://www.investopedia.com/terms/a/attorneyinfact.asp) or agent. In the case of a special power of attorney, the actions that the agent can take are limited to very specific circumstances.

Because this type of power of attorney is limited to what has been laid out in the signed document, it is particularly important that the principal is very clear about the powers that they want the agent to have. Additionally, the principal may create more than one special power of attorney, naming a different individual in each one.

## Comparing General and Special Power of Attorney

While a special power of attorney gives the agent authority for a limited set of actions under a restricted set of circumstances—such as buying or selling a home, withdrawing money from an account, or running a business—a general power of attorney is more broad.

A general power of attorney grants the agent the legal right to make all financial and legal decisions on behalf of the principal. An individual who will be out of the country for a year may give an agent extensive powers to carry out transactions such as personal and business financial transactions, bill payments, life insurance purchases, charitable donations, real estate management, and the filing of tax returns.

> **Important**
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> A special power of attorney may need to be notarized to have legal authority.

## Important Considerations for Special Power of Attorney

A power of attorney becomes invalid if the principal dies or can’t act due to injury or mental illness. However, a special power of attorney can still be made durable.

A [durable power of attorney](https://www.investopedia.com/terms/h/hcpa.asp) is one that authorizes the agent to continue acting on behalf of the principal even after the principal becomes incapacitated, for instance, due to a head injury or Alzheimer’s disease. In a durable power of attorney, the agent's authority continues until the principal dies. If a person lacks a durable power of attorney and can’t make a special one, the court may appoint a guardian.

A special power of attorney ends when a person dies, and their [will](https://www.investopedia.com/terms/l/last-will-and-testament.asp) takes over.

## How Do I Get a Power of Attorney?

The steps you need to take to get a power of attorney (POA) may vary according to the state you live in and the type of POA you need. But here is the general process:

1.  Decide what [type of power of attorney you want](https://www.investopedia.com/articles/personal-finance/101514/power-attorney-do-you-need-one.asp)—besides a special power of attorney, there are healthcare and financial POAs. You'll also need to decide whether it should be limited (only in effect if you are mentally sound) or durable (in effect even if you are incapacitated).
2.  Determine what responsibilities the agent should have. An estate planning attorney can help you with this.
3.  Choose your agent carefully. You should discuss with them their responsibilities and your expectations. More than one agent can be named in a POA, either with the authority to act separately or jointly.
4.  Obtain a POA form from an attorney or get a template online; states often provide free POA forms online. It's also important to understand your state's requirements—for instance, whether the form needs to be signed in front of witnesses or notarized.
5.  Make physical and digital copies of the completed form and store them somewhere safe, such as a safety deposit box. Give your agent a copy and consider giving copies to your bank, attorney, doctor, or other interested parties.  
    

## Are There Risks in Giving Someone a Power of Attorney?

There can be. Given that you are entrusting someone to make decisions on your behalf, sometimes financial ones, it is critical that you choose an agent who is trustworthy. If they are not, and they run off with your money or property, it may be very difficult or even impossible to get it back.

You are bound by an agent's actions, even if they are misguided. For example, if they sign a contract for you to purchase property, you generally will have to pay for it. (If the agent breaches their duty or doesn't act in your best interests, however, they may be liable for damages or you could sue them.) It behooves you to choose your agent—and the powers you wish to give them—very carefully.

## How Much Does It Cost to Set Up a Power of Attorney?

The cost depends on the type of POA, its length, and it complexity. At the low end, for a simpler POA, you may be able to obtain a template online, fill it out, and only pay for the cost of notarization if it's required by your state. You can also purchase a POA from an online service like LegalZoom, which offers financial powers of attorney for $39-$49.

At the higher end, you may need a lawyer to prepare the POA, with an average cost of $300. Lawyers may charge by the hour, with the average hourly rate for a family or probate lawyer ranging from $250 to $350.

## The Bottom Line

A special power of attorney (POA) lets a designated agent act for the principal under specific, outlined circumstances. Clearly define the scope to prevent misuse and ensure it reflects the principal's intentions.

Some states require notarization for it to be binding. Unlike a general POA's broad authority, a special POA is limited. It ends when the principal dies or is revoked, but can be made durable to remain effective if the principal becomes incapacitated. Choose a trustworthy agent and consider consulting an estate planning attorney for guidance.

> **Article Sources**
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> 1.  Cornell Law School Legal Information Institute (LII). "[General Power of Attorney](https://www.law.cornell.edu/wex/general_power_of_attorney)."
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> 2.  LawHelp.org/DC. "[Frequently Asked Questions About Powers of Attorney](https://www.lawhelp.org/dc/resource/frequently-asked-questions-about-general-powe)."
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> 3.  MetLife. "[How to Get a Power of Attorney (and Why It's Important)](https://www.metlife.com/stories/legal/how-to-get-power-of-attorney/)."
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> 4.  LegalZoom. "[Protect Your Family With a Financial Power of Attorney](https://www.legalzoom.com/marketing/estate-planning/power-of-attorney?)."
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> 5.  National Council on Aging Advisor. "[What Is a Power of Attorney (POA)?](https://www.ncoa.org/adviser/estate-planning/power-of-attorney/)"
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> 6.  LawDistrict. "[How Much Does a Power of Attorney Cost?](https://www.lawdistrict.com/articles/how-much-does-a-power-of-attorney-cost#:~:text=Many%20lawyers%20charge%20a%20set,the%20%24250%20to%20%24350%20range.)"