One of the most important aspects of running a successful business is mitigating any risks the business could face. This requires business owners to adapt and plan effectively for the future.
Unfortunately, this often means that California business owners must consider worst-case scenarios. For example, what if something happens that leaves a business owner incapacitated? Who will take care of their responsibilities to the business?
Powers of attorney can help
When people think of powers of attorney, they often think of healthcare agents. While powers of attorney can allow individuals to make medical decisions on behalf of an incapacitated loved one, that is not their only function.
A general power of attorney – also known as a financial power of attorney – gives someone the ability to:
- Make financial decisions for the business;
- Operate the business in an owner’s stead;
- File business taxes; and
- Manage other transactions.
Business owners can be as specific as they wish when designating responsibilities to their agent.
Having an agent in this situation is helpful for both small business owners and partners in large corporations. Small business owners can delegate a family member they trust to ensure the business runs smoothly in the event of their incapacitation. And business partners in large corporations can ensure their voice is heard, and that they comply with the contract or operating agreement without facing legal risks.
What if business owners have a succession plan in place?
Business owners might wonder – if they have a successor prepared to take over the business, do they need a financial power of attorney?
A succession plan is an important estate planning tool for business owners to establish. However, designating financial powers of attorney, in addition to a succession plan, can offer even more protection for the business owner and the business. This helps to ensure businesses survive emergencies and the long run. That is why it is often beneficial to have both of these tools in place.