An authorization with legal validity, Limited Power of Attorney (LPOA) lets a portfolio manager carry out some activities for an account owner. Typically, it lets a manager conduct an investment strategy that has been previously agreed on and deal with the regular business with no contact to the person who holds the account. Before signing such kind of a power of attorney form, a client needs to have a proper idea about the particular functions that have been assigned to the manager of the portfolio – or the attorney-in-fact, given that the client – the principal – still stays liable for those decisions. Find out how a LPOA form works.
How Does a Limited Power of Attorney Function?
It lets an attorney-in-fact take routine decisions with no contact to the person who holds the account. The account holder can mention some other exceptions to the LPOA. The portfolio manager cannot change the beneficiaries or draw any money out of the account.
When compared to a general power of attorney, a limited power of attorney limits the powers of an appointed person – or attorney-in-fact, to a particular domain. In such cases, the attorney-in-fact has the authority to conduct an investment strategy, just as it has been agreed on with the account holder. By using an LPOA, a portfolio manager can have the power to deal with various important forms, pay fees and sell as well as purchase assets.
Some vital activities can still be handled by only the account holder, such as changing a beneficiary or withdrawing cash. It can clearly be stated by a principal which other types of authorities he / she would like to retain while setting up an account.
Types of Limited Power of Attorney
A few variations of a Limited power of attorney can be used in particular situations, such as:
Durable and Non-Durable LPOA
With Durable LPOAs, an attorney-in-fact can continue to have the power to carry out specific activities even when the principal gets incapacitated or dies. Most of the Limited power of attorney agreements happen to be non-durable. In other words, when the principal gets disabled or is dead, these can get void or are no longer in effect.
An LPOA with springing powers can only get active upon being triggered by a particular event, generally due to the incapacitation or demise of the owner of the account. Typically, it is used along with a family living trust or a will.
Generally, a POA form is completed by a principal while opening up an account with an attorney-in-fact. In case of most forms, principals can get the option to make a choice between a full power of attorney and an LPOA. The principal needs to appoint an attorney in fact – generally the portfolio manager. Other portfolio managers who might be taking decisions about investment for the principal also need to mention their own details – name, address etc. – in the form. The form, once completed, needs to be signed by the principal as well as the attorney-in-fact. In case of multiple attorneys-in-fact, each one should sign the form and include own details. You may download power of attorney in California template online from this website.
If a principal is uncomfortable or not sure about the kind of functions being authorized, he / she might like to have a qualified lawyer get the LPOA reviewed prior to signing it.