You probably spent a significant amount of time making your business into what it is today. You work hard every day to make sure that it continues to thrive. More than likely, it provides a substantial amount of income for you and your family.
As part of your ongoing efforts to make sure the business outlasts you, you may have a succession plan in place as part of your estate plan. However, have you made arrangements for what happens to your business if you become incapacitated? This is where powers of attorney come into play.
What type of power of attorney do you need?
A financial power of attorney allows you to appoint someone you trust to act on your behalf when it comes to your legal and financial affairs in the event of your incapacitation. You may also appoint more than one person to make the decisions together if you would prefer, along with an alternate agent in case the primary cannot or will not serve in this capacity.
In addition, you can decide how much power your agent receives. You could give him or her power to handle only specific tasks, limited tasks or everything. It’s up to you. You could limit the actions that your agent could take when it comes to your business if you want to make sure that your agent doesn’t sell the business, but only takes care of daily operations.
A POA must be executed well before you become incapacitated in order to avoid any suspicions that you were not of sound mind when you executed it. The document must meet similar requirements as your will and other estate planning documents. You need to understand what you are doing and make an informed decision. Beyond that, you may choose to structure your POA in one of two primary ways.
Would you prefer a durable or springing power of attorney?
You could choose your POA to be either durable or springing. A durable POA becomes effective as soon as you sign it. That means that your agent could begin making decisions for you right away. A springing POA does not go into effect until you become incapacitated. You need to specify what incapacitation means for you. Vague language could only delay your agent’s ability to step in for you. It may also make sense to require your doctor to certify your incapacity.
In order to make sure that you fully understand your choices and properly execute a financial power of attorney, you may want to make use of legal resources here in Toledo.