Limited Power of Attorney (LPOA)

Limited Power of Attorney (LPOA)

Key takeaways

• An LPOA authorizes a designated person (attorney-in-fact) to perform specific financial or investment tasks on behalf of an account holder.
• It is limited in scope—common powers include buying and selling securities, paying fees, and completing routine account paperwork.
• Critical powers, such as withdrawing cash or changing beneficiaries, are typically reserved for the account holder unless explicitly granted.
• Variations include springing LPOAs (effective only after a triggering event) and durable LPOAs (remain effective if the principal becomes incapacitated).

What is an LPOA?

A Limited Power of Attorney (LPOA) is a legal authorization that lets someone else—often a portfolio manager or registered investment advisor—handle defined tasks for an account owner. Unlike a general power of attorney, an LPOA restricts the agent’s authority to a specific sphere, such as investment management.

The account owner remains legally responsible for decisions made under the LPOA, so it’s important to understand exactly what powers are being delegated.

What an LPOA typically authorizes

Common functions granted under an LPOA include:
* Executing a pre-agreed investment strategy (buying and selling assets).
* Signing and submitting routine account forms.
* Paying account fees or fund expenses.
* Communicating with custodians or brokers about the account.

Common limitations

Most LPOAs prohibit the agent from:
* Withdrawing cash or transferring account assets out of the account.
* Changing the account’s beneficiaries.
Account holders can specify additional exceptions or retain specific powers when the LPOA is drafted.

Types of LPOA

• Springing LPOA: Becomes effective only upon a specified triggering event—commonly the principal’s incapacity. It is often used alongside wills or living trusts.
• Durable vs. Non-durable:
• Durable LPOA remains effective if the principal becomes incapacitated (it generally terminates at death).
• Non-durable LPOA becomes void if the principal becomes incapacitated.

Forms and execution

When opening an account with a portfolio manager, clients are usually offered a POA form that lets them choose a limited or full power of attorney. Key steps:
* Designate an attorney-in-fact (the individual or firm authorized to act).
* List any other authorized portfolio managers if applicable.
* Sign the form; the attorney-in-fact must also sign.
* Keep copies and record the scope and any conditions in writing.

Practical advice

• Review the exact powers being granted and any exceptions before signing.
• Consider limiting authority in writing to specific transactions or time periods.
• If unsure, consult an attorney to review the POA form and ensure it matches your intentions and protects your interests.

Conclusion

An LPOA is a useful tool for delegating specific account-management tasks to a trusted professional while retaining control over major decisions. Careful drafting and clear limits help balance convenience with protection of your assets and rights.