A “power of attorney” is a widely recognized legal tool, yet not everyone knows that there are different types of powers of attorney that have different purposes. For example, you can execute a general power of attorney or a limited power of attorney, each with its own terms and limitations. Every individual or family has unique needs that should be considered in estate planning. Therefore, it is important to understand the differences in types of power of attorney instruments. With that understanding, an individual can be sure to create the plan that best fits their own personal needs.
What Is a Power of Attorney in Fayetteville Arkansas?
Basically, in Arkansas a power of attorney is a legal document that gives the person known as the “agent” power or authority to act on behalf of the other person, known as the “principal.” In Arkansas, an agent can also be referred to as the “attorney-in-fact.” The most common reasons a power of attorney is created are to handle legal, financial or medical needs. For example, a power of attorney in Fayetteville can be used to pay bills, manage bank accounts or manage other areas of an individual’s finances. A power of attorney is considered an important estate planning tool. Since there are different types with different purposes, it is important to understand all of your options before having one created for you or a family member.
What is the Difference Between a Limited and a General Power of Attorney?
The key difference between the two types is the scope of authority given to the agent over the principal’s affairs. A general power of attorney, as the title suggests, gives wide-ranging power to the agent, usually relating to certain affairs such as legal, financial or business decisions. Executing a general power of attorney is a good idea in the event that something happens that makes it hard for you to take care of your own financial affairs. At that point, your agent can take over with the authority of the power of attorney. This would allow your business to continue without any concern that future problems cannot be handled. In essence, a general power of attorney gives the agent broad, rather than specific, powers.
On the other hand, a special or limited power of attorney in Fayetteville only authorizes certain choices that can be made by the agent on behalf of the principal. For example, you can execute a power of attorney to allow your business partner to handle certain aspects of the business you would normally handle. Another example would be a limited power of attorney for the specific purpose of authorizing your spouse or other family to sell particular real estate on your behalf. Once an agent completes the tasks set out in a limited power of attorney, the powers are revoked and the legal document is no longer in effect. In sum, a limited power of attorney only authorizes the agent to carry out a particular task or transaction.
The requirements for creating a power of attorney, whether general or limited, differ by state. Arkansas’ law setting out the acceptable statutory form for a general power of attorney is found at Ark. Code Ann. § 28-68-301. Although there are various do-it-yourself power of attorney forms available online and in libraries, it is always a better idea to ask an attorney to draft this legal document specifically for you. One size does not fit all when it comes to most estate planning instruments. Contact an Arkansas estate planning law attorney for assistance.