Why is a power of attorney critical for your business? Having a POA in business can remedy a serious oversight that affects many companies every year.
Your business is thriving thanks to your foresight and ability to adapt. You are probably understandably hesitant to think about what will happen to your business—who will make decisions for its future—after you are gone.
Whether you plan to sell your business when the time is right or see yourself building it until your last breath, you still need to plan for the unexpected: who will make decisions for your company if you die or are incapacitated?
What Happens if You Die or Are Incapacitated without a Power of Attorney?
When you neglect to name a power of attorney, you put any business partners and family members involved in a difficult situation. One of the reasons having a POA in business is so critical is that it can bring things to a halt.
If your operating agreement or shareholder agreement requires you to make a decision and you are unable to communicate your wishes, your business partners could be forced to halt everything until a resolution.
Neglecting to name a power of attorney could also force your family to make a difficult choice about who should make decisions for the company moving forward.
Is a POA in Business Enough?
While it is critical for your business to have a power of attorney in the event of your death or incapacitation, you can do a lot more to protect your interests and the interests of your company.
Having a POA in business, though effective in the short-term, is not enough.
Do you know who will run the day-to-day operations when you are no longer able? Who will have ownership? You can answer these questions now by devising a business succession plan as part of your estate planning strategy.
Like an estate plan, a business succession plan develops over time, so it is important to start the process as soon as possible. It can take years to come up with a plan that fits your business perfectly, and over time, things can change, so you must continually revisit the plan with your attorney to make sure it is up to date.
Business succession planning typically addresses concerns such as the following:
- Who will take on your direct responsibilities?
- Who will inherit your ownership of the business?
- How will the business handle taxes upon transfer of ownership?
It is critical not only that you put your plan in writing but also that you communicate your wishes to those who will inherit responsibilities or assets upon your death. Whoever you choose to continue your work, make sure that they understand your vision.
Put Your POA in Business in Place Today
Are you curious about what steps you need to take to ensure your business continues after you are gone? Get in touch with the attorneys at Casal & Moreno today.