Business Succession: The Business Power of Attorney
Imagine these two scenarios:
Scenario 1, David…
David works with his father in a family-owned business. His father suffers a stroke and is unable to work or participate in any business-related decisions. David finds himself without a trusted partner and facing multiple business and legal decisions involving the present and future of his company.
David’s father’s Power of Attorney entrusts his stepmother with all legal authority to act on his behalf if he’s disabled. Although she does not know or understand the business, she starts making decisions that are not in the best interest of the company.
Scenario 2, Alice…
Alice has run a successful small business for the past 30 years. Along with financial success, the company’s prosperity has enabled it to grow and add several employees. One of these “key employees” is Sandy, who Alice trusts and hopes will one day take control of the business.
One day Sandy gets hurt on the job and is unable to work or engage in the executive decisions Alice has entrusted to her. Sandy’s spouse, who is her personal Power of Attorney, calls Alice and starts asking questions about how her company operates and Sandy’s role in the business.
What should David, Alice, or any business owner do to protect the future of their business?
Get a Business Power of Attorney
- A Business Power of Attorney authorizes a partner, employee or trusted advisor to act on your behalf with respect to business or legal matters involving your business.
- On the other hand, a personal Power of Attorney authorizes a spouse, family member, or significant other, to handle your personal financial and household matters.
- The Power of Attorney must be signed by an individual who is mentally competent and the signature must be notarized.
- If there is any question regarding competence, it is best to obtain a physician’s written opinion that the individual understands the document and the consequences of signing the document. It is also advisable to review any competency issues with your lawyer.
- The witnesses must be adults and cannot be the Agent, the Agent’s spouse or children, or the notary public.
- Before signing a Power of Attorney, you should consider its consequences. You are providing another person with the power to handle business and legal matters on your behalf. Any such action undertaken by that person within the scope of the Power of Attorney document is legally binding upon you.
Reasons to Update
- A change in your relationship with the current Agent.
- The death or incapacity of the Agent.
It’s in your best interest to discuss the topic of Business Succession with your trusted partners. Getting a Business Power of Attorney is one of many measures you can take to ensure successful continuity of your business and peace of mind for all involved.
This is a guest post by Colin M. Quinn, Esq., Managing Partner, Law Offices of Colin M. Quinn LLC
Mr. Quinn practices in the areas of general civil litigation, business law, and commercial litigation. He provides business succession planning for all his corporate and individual clients. His business law practice involves the representation of companies in all types of business matters. His practice is based out of River Edge, NJ.