Yes. You absolutely do! The importance of a power of attorney is often greatly overlooked. Here are some reasons to consider it for your business.
We as human beings are bound to slow down at some point – what I mean is, we won’t always have the mental or physical capacity to oversee all our business affairs with finesse. This is especially true for those already diagnosed with certain health conditions that will manifest themselves in the future.
For example, your father may have been overseeing the family business for a very long time. Unfortunately, he is expected to succumb to Alzheimer’s at some point in his life (as per his diagnosis). If he hadn’t thought of a way to deal with that situation, then you should probably learn how to get power of attorney for a parent with dementia.
A power of attorney, specifically for these kinds of situations, can help protect the future of businesses in the long run. They are, however, frequently overlooked and brushed aside to be dealt with later. Here are some reasons why you or your parents should consider giving power of attorney to someone while there’s still time.
Explaining Power of Attorney and Related Terms
First, let’s look at two words that will be used frequently from here on: “principal” and “attorney-in-fact” (AIF).
The principal is used to refer to the original creator of the power of attorney, and the person awarded with the power of attorney is referred to as the attorney-in-fact or AIF for short.
A power of attorney is a legal document that gives the attorney-in-fact (AIF) the authority to do particular things on behalf of the principal. Upon receiving a power of attorney, an AIF will be able to do several things. They can make bank transactions, sell houses, cars, a piece of land, or anything of that sort. The AIF can even sign contracts in the place of the principal.
To summarize, when you give someone power of attorney, you will be able to do things that the principal would normally be able to do but cannot do due to unavoidable circumstances. Anyone over the age of 18 or certain organizations can hold the power of attorney. There are no special certifications needed to achieve this power.
Why Should You Give Someone The Power of Attorney?
We already mentioned one of the reasons, and that was a degenerative disease. However, aside from illness, there are many other reasons to consider getting a power of attorney.
1. They are Quite Cost-Effective
Many people hold themselves back from getting a power of attorney because they think it will cost them hefty sums of money. However, this is far from the truth. Arranging for a power of attorney costs less, if not the same as getting other related documents.
Even though I am reassuring you that it won’t cost you a lot, you should remember that money shouldn’t hold you back from taking this step. After all, it is a matter of your future.
2. Prevents Your Assets from Freezing
When I say that you run the risk of having your assets frozen, I am not talking about temperature. That would be rather unusual, no? Jokes aside, any business-related assets that cannot be converted to cash will end up frozen if you don’t use them.
If you, or anyone, for that matter, are unable to give instructions to the employees in your company, then they can’t move forward with the business. This is where a power of attorney comes into play. If you decide to give it to a trusted individual, then they can give instructions or make decisions on your behalf (as I mentioned earlier).
3. Your Financial and Personal Welfare Will Be Properly Taken Care of
It’s common for wealthy and successful business owners to have more than one business venture. If you are in that position, then you’ll know exactly what I will be talking about next.
Multiple business ventures automatically mean that you will have multiple bank accounts. Let’s face it; it isn’t physically possible for anyone to tend to that many things all at the same time. Similarly, if you come down with an illness, you won’t be able to deal with your personal affairs either.
When giving power of attorney to a person who can be fully trusted, you are making sure that both your financial and personal wellbeing is being taken care of. Moreover, power of attorney can be assigned to more than one person – so you won’t have to worry about stressing your AIFs either.
You have the choice to appoint someone to deal with your personal affairs as well. These include looking after your medical needs, attending events, etc.
4. It is Reversible and Can Be Changed
Situations are always subject to change; illnesses are sometimes temporary, or an AIF ends up violating the terms of the contract. In the event an unexpected change of circumstances arises, you have the right to either revoke or change the terms of a power of attorney.
Suppose your existing AIF ended up misusing the power of attorney you gave them. You can immediately withdraw their rights. This is the biggest advantage of giving a power of attorney. It can easily be taken away, and it can also be changed at your convenience.
5. Secures The Future of Your Business
Everyone wants to live a stress-free, secure life. By getting a power of attorney for your business earlier on, you don’t have to worry about things going out of hand in the future. The person you entrusted your business to will take care of the business when you aren’t able to.
In Conclusion
Although I’ve given you some solid reasons to consider assigning power of attorney to someone, I completely understand if you still can’t decide. Setting up a business is not easy, and it’s basically your life’s work.
This is why I encourage you to take your time to think about it – not only because the future is uncertain, but also because people are too. A power of attorney will, without a doubt, come in handy. Just make sure you choose the right person for the job.
