What Powers Can Be Limited or Excluded in a POA Document?
Dec. 1, 2025
A Power of Attorney, or POA, is a foundational document in estate planning. It allows you to appoint someone you trust—an agent or attorney-in-fact—to manage your affairs if you become unable to do so yourself.
A POA should reflect your specific wishes, and that means carefully considering which powers to grant and which to limit. An attorney can help you tailor the document precisely, preventing potential misuse and giving you peace of mind. When people think about creating a POA, they often focus on the broad authority it grants. However, it's just as important to understand that you have complete control over the scope of this authority.
At Davidson Estate Law, we have spent over 25 years helping families across the Bay Area create personalized estate plans. We serve clients in Oakland, Walnut Creek, Berkeley, San Francisco, El Cerrito, Alameda, and the surrounding communities.
Our attorney can guide you through the process of creating a POA that reflects your wishes and needs. We prioritize clear communication, attention to detail, and a compassionate approach to create an estate plan tailored to fit your unique situation.
Understanding the Power of a POA
A Power of Attorney is a legal instrument that gives another person the authority to act on your behalf in financial, legal, and personal matters. The person granting the power is referred to as the "principal," and the person receiving the power is referred to as the "agent." This document can be a powerful tool for managing your life, but with great power comes the need for clear boundaries.
There are two main types of POAs:
General power of attorney: This grants your agent broad authority to handle almost all aspects of your finances. They can pay bills, manage investments, and sell property. This type of POA typically terminates if you become incapacitated.
Durable power of attorney: This is the most common type used in estate planning. The "durable" provision means the document remains in effect even if you become mentally or physically unable to make decisions for yourself.
Without specific limitations, an agent could have the authority to make significant decisions. While you should always choose an agent you trust completely, setting clear limits is a wise and prudent step. It protects both you and your agent by defining exactly what they can and cannot do.
Key Powers You Can Limit in a POA
When you create a POA, you are not handing over a blank check. You can customize the document to fit your exact needs. This is where the guidance of an attorney is valuable. We can help you think through various scenarios and add language that reflects your intentions.
Here are some common powers that principals choose to limit or exclude entirely.
Gifting and Transferring Assets
One of the most significant powers an agent can have is the ability to make gifts of your assets to others, including themselves. Without any restrictions, an agent could potentially deplete your estate through gifting. You can set specific limits on this power.
For instance, you can:
Prohibit gifting altogether.
Limit gifts to a specific dollar amount per person per year (often tied to the annual federal gift tax exclusion).
Specify who can receive gifts, such as your children or a favorite charity.
Require that gifts be made in a manner consistent with your previous patterns of giving.
Changing Estate Plan Beneficiaries
You can and should restrict your agent’s ability to alter your estate plan. For example, your POA should explicitly prohibit your agent from changing the beneficiaries on your life insurance policies, retirement accounts (like IRAs or 401(k)s), or payable-on-death bank accounts. These beneficiary designations are a core part of your estate plan, and only you should have the power to change them.
Modifying or Revoking a Trust
If you have a revocable living trust, you generally do not want your agent to have the power to amend or revoke it. Your trust is a carefully constructed document that outlines how your assets should be managed and distributed.
Allowing an agent to change it could undermine your entire estate plan. You can include a clause in your POA that expressly forbids your agent from taking any action to modify your trust.
Self-Dealing
"Self-dealing" occurs when an agent uses their position to benefit themselves personally. For example, they might sell your property to themselves at a below-market price or use your funds for their own expenses.
While agents have a legal duty to act in your best interest (a fiduciary duty), you can add specific prohibitions against self-dealing to make this restriction crystal clear. You might require any transaction between you and your agent to be approved by a third party or conducted at fair market value.
Delegating Authority
You appointed your agent because you trust their judgment. You may not want them to pass that responsibility on to someone else. You can include a provision that prevents your agent from delegating their powers to another person. This keeps decision-making in the hands of the person you originally selected.
How to Set Effective Limitations
The best way to set limits in your POA is through clear, unambiguous language. Vague instructions can lead to confusion or disputes later.
Consider these strategies:
Be specific: Instead of saying "my agent can make small gifts," state "my agent may make gifts up to a total of $5,000 per calendar year to my children."
Use prohibitive language: Clearly state what your agent cannot do. For example, "My agent is expressly prohibited from selling my primary residence located at 123 Main Street, Oakland, CA."
Set a time frame: You can create a "springing" durable POA, which only becomes effective upon your certified incapacitation. This prevents the agent from acting while you are still capable of managing your own affairs.
Crafting these limitations requires a good understanding of legal language and its implications. An estate planning attorney can draft a document that is both legally sound and perfectly aligned with your wishes.
California Laws and POA Limitations
In California, the law provides a framework for how POAs function, but it also gives principals a great deal of freedom to customize their documents. The California Probate Code contains the Uniform Statutory Form Power of Attorney.
This form lists several powers that you can grant to your agent by initialling next to each one. If you do not initially assign a specific power, your agent does not have that authority.
This "opt-in" approach makes it clear which powers are granted. However, the statutory form is very broad. For many people, it grants more authority than is necessary or comfortable. That's why working with an attorney to draft a custom POA is often a better choice.
California law also identifies certain powers that an agent cannot exercise unless they are specifically granted in the POA document. These are sometimes called "hot powers" because of their potential for abuse. These include:
Creating, modifying, or revoking a trust.
Making a gift of the principal's property.
Changing rights of survivorship.
Changing a beneficiary designation.
Delegating authority to a third person.
If you want your agent to have any of these powers, you must state so explicitly in the document. This legal structure is designed to protect you from unintended consequences and highlights the importance of being thoughtful and specific when drafting your POA.
Estate Planning Attorney in Oakland, California
Providing a secure financial future and a clear plan for your loved ones' care is one of the most meaningful actions you can take. For over a quarter of a century, Davidson Estate Law has provided reliable legal guidance and compassionate support to families throughout the Bay Area, including Oakland, Walnut Creek, Berkeley, San Francisco, El Cerrito, and Alameda.
Whether you need to draft a will, set up a revocable living trust, manage a loved one's assets, or handle a probate court matter, we're here to support you. Call now to schedule a consultation.