Many individuals prepare an enduring power of attorney instrument (“EPOA”) as part of their estate plan. It is a way to appoint a person to deal with your assets on your behalf, and can be used in the event of your mental incapacity.
Business owners should give thought to using an EPOA as part of their business plan. In the event of a loss of mental capacity, it is often unclear who is entitled to step into the shoes of that business owner and make decisions on his or her behalf as a director, officer or shareholder. In the case of a business owner that has prepared an EPOA appointing a family member as part of his or her estate plan, the appointment may not be the best choice to deal with the business. That family member may be uninformed and not capable of dealing with the individual’s business interests. Failure to plan for an incapacity can tie the hands of the company and prevent it from moving forward.
As a business owner, consider preparing multiple EPOAs: a personal EPOA naming a family member such as a spouse to deal with personal financial matters; and a business EPOA naming a business partner to deal with financial matters relating to the business.
If you have any questions about EPOAs or business succession planning, please contact one of our Wealth Preservation + Estate Litigation professionals.