What is Power of Attorney?

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Power of attorney is a legal document that gives a trusted loved one the power to make decisions on your behalf in case of incapacitation. Most often, power of attorney is used when someone falls ill or gets seriously injured and cannot make decisions on their own. Depending on the type of power of attorney you choose, you could enable someone to make financial or medical decisions on your behalf.

If you own a business, creating a power of attorney document is a crucial step in estate planning. If you become incapacitated, designating a power of attorney allows your business to keep running. With a power of attorney in place, your trusted loved one can make business decisions and decisions about your assets to avoid any financial delays. You can also use power of attorney to trust a loved one to make medical decisions on your behalf.

No matter where you are in creating your estate plan, assigning power of attorney is always beneficial. Whether you want to protect your business, manage your assets, or trust a loved one to make medical decisions for you, power of attorney is an excellent option. If you have questions about power of attorney or would like to learn more, call our law firm today at 615-930-3350.

What Are the Benefits of a Power of Attorney?

There are many benefits of assigning power of attorney. For business owners, power of attorney gives you the peace of mind you need to ensure your business keeps running even if you’re unable to make decisions about it. If you want someone to conduct business on your behalf, you must assign power of attorney.

Power of attorney gives someone the ability to do the following:

  • Use your assets to pay living expenses
  • Operate your business
  • Enter into business contracts
  • Buy or sell real estate
  • Handle transactions with banks and financial institutions
  • Handle your investment accounts
  • File and pay your taxes
  • Hire lawyers for your business
  • Make decisions about lawsuits

If you choose to create a financial power of attorney, it can go into effect the day you sign it, or it can have a specific start and end date. For instance, if you have a medical procedure you must undergo, you could assign power of attorney to start when you enter the hospital and end once you’ve recovered.

In many cases, people will assign their spouse as a financial power of attorney. However, you can choose anyone you know and trust if they are over 18 years of age, including your siblings, parents, adult children, or friends.

What is a Business Succession Plan?

A business succession plan is a legal plan to help your business run if you are no longer able to make decisions about it. Creating a business succession plan helps in the event of incapacitation, divorce, retirement, and even death. In your business succession plan, you can leave your company to the person of your choosing, divide responsibilities between children and other heirs, and even transfer ownership of the business outside the family.

There are many ways to create a business succession plan, but common options include:

  • Sale to employees: Selling your business to key employees can be done through a partial sale or a complete sale of all stock options.
  • Management buyouts: Buyouts can include buy-sell agreements or other stock transfer processes.
  • Outside sale: Outside sales are done to sell a business to a new owner or when the business is closing.

What Considerations Should You Factor in When Creating a Business Succession Plan?

There are many factors to consider when creating a business succession plan that’s right for you. At our law firm, we will sit down with you to understand your financial goals, both short-term and long-term, as well as your eventual goals for the business. Then, we will craft a legal strategy to enable those goals and keep your business thriving long after you are no longer involved.

Some critical considerations about business succession planning include:

  • Choosing your successor. Many small business owners choose to leave their business to a child or spouse. However, you can also choose to sell or give your business to a third party.
  • Training your successor. Ensure that your business can run smoothly without your involvement, even if that is years away from now. Refresh your employees and your successor on the goals of the business.
  • Creating your business timeline. If you are preparing to retire, give yourself time to hand the business over to your successor. Our team can advise you on the proper timeline for your retirement.

Can a Business Succession Plan Transfer to Family Members?

Even if you plan to hand your business over to a family member or loved one, creating a business succession plan is still recommended. With the help of our law firm, you can create contracts of employment for the family members who will run the day-to-day business operations and a sales agreement between you and the eventual owner. Business succession plans can also incorporate life insurance plans and any inheritance your children stand to receive.

Should You Consult an Estate Planning Lawyer?

If you own a business or have any business interests, using a power of attorney and creating a business succession plan are both excellent ways to protect your assets. In the event of your incapacitation, retirement, or even death, having legal documents in place will keep your business running smoothly without you there. If you’d like to protect your assets and your business, don’t hesitate to reach out. Contact the Law Office of Chris Thompson today for a free consultation by calling 615-930-3350.

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