The power of attorney is granted to a trusted agent, who will have the permission to act on your behalf. The role of the person granted the power of attorney extends only to the powers you grant him. You can choose many kinds of power of attorney roles for your agent, either to sell your property, to oversee your business, negotiate on your behalf, or even implement the terms of your will posthumously.
The power of attorney clause becomes void when you become incapable of administering to your business affairs. This can happen due to illness, bankruptcy or any other factor.
This article profiles the various kinds of power of attorney, depending on the conditions to be fulfilled and the need for the power of attorney.
Power of Attorney: Duration
Based on when the power of attorney comes into effect, and its duration, there are three kinds of power of attorneys. Non Durable;
The non-durable power of attorney gives the agent the power to act on behalf of the principal during the principal’s lifetime, excluding the time the principal is incapable of taking decisions. Durable;
The durable power of attorney can be invoked during the principal’s lifetime, counting in the time the principal is incapable of taking decisions. Springing;
A springing power of attorney is invoked only when a physician or a competent authority certifies that the principal is not capable of taking decisions. The springing power of attorney is valid only during the lifetime of the person authorizing him.
Choosing the Right Kind of Power of Attorney: If you own a small business, then you need to give power of attorney to someone you trust. After selecting what kind of power of attorney you will use, you need to decide exactly what areas you will open to the power of attorney. In other words, you need to decide the “powers” of the power of attorney.
Power of attorney may be region specific, so you need to look carefully at the statute books to see where your agent can act on your behalf. You can give your agent power of attorney in matters relating to tax, property, legal areas, financing, management, bank accounts, insurance and insurance schemes.
If your business extends to other states, or other countries, or you reside in different places during different points of time, you need to determine if you need different power of attorney documents to be drawn up.
Since the power of attorney issue is a complicated one, and requires a great deal of careful thought on your part, you can take the advice of a legal counsel or a small business advisor before you invest the power of attorney in anyone. They will also help you draw up the power of attorney document, since an improperly drawn out document will do more harm than good to your small business. With careful planning and some foresight, the power of attorney can help you when you cannot be present personally to oversee crucial aspects of your small business.
