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November 3, 2020 7 min read
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As a business owner, you may have seen the term “permanent power of attorney” in several situations. Power of attorney is a strange term because it is not immediately clear what powers a lawyer can have for the company. Some business professionals may need a power of attorney while others can do without one. But what kind of business would benefit most from it? Here we look at what types of powers exist and under what circumstances a business owner needs them.
What is power of attorney?
The Consumer Financial Protection Bureau (CFPB) defines power of attorney as a legal document that gives another person authority to act on your behalf. By signing a power of attorney, the person indicated on the form can conduct their business as if they were you. The person mentioned in the document is referred to as the “agent” or sometimes the “actual lawyer”. The latter term is confusing as the agent doesn’t have to be a lawyer.
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The power of attorney is flexible and a qualified lawyer can help you restrict the things your agent can do. Similarly, your power of attorney may be split among several people, each with their own responsibilities and capable of doing business for you or your company. Each of these powers can operate at the same time and provide you with multiple agents to assist you in performing the tasks your company must perform. There are three main types of powers of attorney:
1. Financial Power of Attorney
Investopedia mentions that the financial authority of lawyers allows a person to deal with the financial responsibilities and functions of the principal (the person who signs the document) when the principal cannot do so himself. You may need financial power of attorney for an agent if you:
Ø You have to delegate the running of your company
Ø Hiring lawyers and having to make decisions on lawsuits
Ø Submit and pay taxes
Ø have to carry out transactions with banks and other financial institutions
Ø have to deal with your investment portfolio and your retirement savings
Ø conclude a contract
Ø Buying or selling real estate or different types of real estate
Ø Use your wealth to pay your living expenses
The financial power of attorneys is flexible about when they start and end. They can come into force the moment they are signed or they may have set start and end dates prescribed by the client. In many cases, business owners sign attorneys’ financial powers of attorney to their spouses when they become incapacitated so they can have someone they trust to manage their finances when they can’t do it themselves. Even if you sign a financial power of attorney to your spouse, many states require you to be incapacitated before the powers of attorney are transferred to your spouse. This particularity ensures that you don’t have to worry about your spouse taking control of your finances unless you can’t.
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2. Special power of attorney
The special power of attorney is flexible but extremely narrow. As a business owner, there may be times when you need to do something on behalf of the company, but you cannot be there yourself due to other responsibilities. A special power of attorney is a document that allows a specific agent to conduct business on your behalf that relates to a specific and well-defined event, such as: B. opening a bank account, settling a dispute or signing a contract. A special power of attorney is also known as a limited power of attorney, according to Yahoo Finance.
3. Power of attorney for healthcare
If you are stuck in the hospital and unable to communicate because you are unable to work, a health care attorney gives someone the opportunity to make medical decisions on your behalf. When choosing someone for your healthcare mandate, it is important that you choose someone close to you who knows your desires when you cannot knowingly get them known. In most cases, it is a close family member or spouse. In other cases, individuals can select a close friend and confidante as a power of attorney for health care.
It is important to note that a power of attorney in healthcare is not the same as a living will. A living will be focused on your medical treatment preferences. These guidelines include when employees are not resuscitated and other religious, oh philosophical beliefs that you may want to respect, even if you can’t tell. The healthcare authority is more flexible and leaves healthcare decisions to the agent. When a will only covers end-of-life decisions, the health care authority applies in all medical situations.
Permanent power of attorney
Usually a power of attorney goes into effect when you become incapacitated and cease to function once you can make your own decisions. However, there are ways to extend a power of attorney to times when you will not be hindered by the inclusion of a clause allowing the agent to make decisions on your behalf, even if you can do so yourself. With this clause you create a permanent power of attorney. A permanent power of attorney is also known as a permanent power of attorney and can be applied to any of the above types. Thus, a permanent financial power of attorney can make decisions on behalf of a business owner that are not incapacitated.
The agent you choose for your power of attorney in a company should be someone you can trust wholeheartedly. You should understand and follow your instructions, and be clear about how the company is to be run in your absence. Your choice should reflect the skills and abilities you already have. For example, it is not a good idea to appoint a family member to run the business if they have never been able to do so in the past.
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The agent must act in your best interests. The Power of Attorney also means that they must keep accurate records and keep both cash and real estate they own separate and independent of what they control. If your agent abuses the power of attorney, you have the option to take them to court. However, it takes a long time to get a ruling against a power of attorney and there is no guarantee that you will receive a refund from the broker if there is no money or property on your behalf. The best option would be to remember that your power of attorney should be someone you trust wholeheartedly and who will not back off you when given the chance. Even so, there is no explanation for the behavior of others.
Do you need a power of attorney?
The whole question boils down to your business structure and how important it is to have someone at the helm to run it properly. When you become incapacitated or pass out, you want someone to be in control of your business so it doesn’t deviate from course. The power of attorney provides a number of protections that can help a company cope with day-to-day operations while you cannot cure the company. If your business is an LLC or a corporation, you may not need a power of attorney for the company but for your own estate planning and administration. You should consider options for any type of power of attorney and have them ready when the unthinkable happens. It is far better to be prepared than to leave things to chance.