What’s the difference between a general and a specific power of attorney? A general power of attorney authorizes the agent to do pretty much anything to manage the principal’s financial affairs. On the other hand, a specific power of attorney is a prepared at a financial institution (like a bank) and authorizes the agent to manage the principal’s financial affairs there only.
For example, if the principal goes to their bank and signs a power of attorney that the bank gives him or her – that document – a specific power of attorney – will only be effective for that one bank. If the agent needs to act at a second bank the power of attorney signed at the first bank won’t be valid. They will need a power of attorney at that second bank in order to act on behalf of the principal.
If, on the other hand, the principal goes to an attorney and prepares a general power of attorney document then the agent can use the document at any banks where the principal has accounts and does business.
It is very important that you understand this distinction. This issue can cause expensive, time consuming situations if not managed properly. If your loved one already has a power of attorney then make sure it authorizes you to manage all of their financial affairs. If it is a specific power of attorney and you rely on that you may find yourself without the proper tool. Pay careful attention in this situation.
The power of attorney is a very important document that gives tremendous power to the agent. It allows for a somewhat seamless transition of power from the principal to the agent when needed. Make sure your loved one has what they need. You can – and probably always should – discuss this issue with an elder law attorney. A good power of attorney costs a little. Not having one when you need it will probably cost a lot.