Archive / Investment Adviser (Level 2) / Concepts in Taxation

nism-series-xb-power-of-attorney-general-vs-special-durable[ INVESTMENT ADVISER (LEVEL 2) ]

What is the key legal difference between a 'General Power of Attorney' (GPA) and a 'Special Power of Attorney' (SPA) in wealth advisory?

[ A ]A GPA grants broad, comprehensive authority to the agent to act on behalf of the principal across multiple transactions, whereas an SPA authorizes the agent to execute strictly one specific, defined act (e.g., executing a single property sale).[ CORRECT ]

[ B ]A GPA transfers permanent ownership of property to the agent, while an SPA does not.

[ C ]An SPA can only be executed by foreign diplomatic ambassadors.

[ D ]Both POA types become invalid immediately after 24 hours.

Takeaway

Option A is correct: A GPA grants broad, comprehensive authority to the agent to act on behalf of the principal across multiple transactions, whereas an SPA authorizes the agent to execute strictly one specific, defined act (e.g., executing a single property sale).

Derivation

The core distinction between the two instruments is scope, not duration or legal force. A General Power of Attorney delegates wide, standing authority across a broad range of matters — banking operations, property management, litigation — allowing the agent to act repeatedly without seeking fresh authorization for each transaction. A Special Power of Attorney, by contrast, is deliberately narrow: it authorizes the agent to complete one clearly defined act, such as signing the sale deed for a single specified property, and the agent's authority under it expires once that act is executed. Both instruments delegate agency to act on the principal's behalf; neither transfers ownership of any asset, and both terminate on revocation or the principal's death or incapacity.

Why the others fail

B — A GPA transfers permanent ownership of property to the agent, while an SPA does not.

Neither a GPA nor an SPA transfers ownership title of any property; both merely delegate the agent's authority to act on the principal's behalf.

C — An SPA can only be executed by foreign diplomatic ambassadors.

SPAs are ordinary domestic legal instruments used routinely in property and banking transactions by any individual, not restricted to diplomatic personnel.

D — Both POA types become invalid immediately after 24 hours.

A POA remains valid until it is revoked by the principal or terminated by the principal's death or incapacity; it does not lapse automatically after 24 hours.