When you own a small family firm, it is important to plan for the unexpected. Many times, people don't think of preparing the necessary legal documents ahead of time. Then, when their family member becomes stricken by a debilitating illness (e.g. Alzheimer's or a stroke), they find themselves unable to make critical decisions. The court then becomes in control of appointing a representative to act on the principal's behalf. These choices could be financial, medical, or both. They could also involve having a stranger make decisions about their family business.

These circumstances can often happen when people fail to have legal documents prepared ahead of time. If you haven't already done so, consider consulting with a legal professional soon. These documents need to be altered according to your individual needs, so there are a number of general questions you may want to ask.

What is a power of attorney?

A power of attorney appoints another individual as a representative to handle your affairs in case you become incapacitated. It allows the designated party to be in control of the situation.

Do powers of attorney differ according to personal state of affairs?

Powers of attorney contracts come in several forms, according to your individual needs. For example, a general power of attorney authorizes your chosen representative to make decisions for financial purposes. Of course, it is carried out only if you become mentally or physically disabled. A limited power of attorney allows the agent to carry out a specific task within a specific period of time (ei. the person could help you buy or sell an asset). Another kind of document is a health care power of attorney, which authorizes your representative to make choices for medical purposes.

If I have not yet executed a power of attorney and I become ill, what are my alternatives?

If you develop a serious illness or disability that prevents you from managing your personal affairs, the court will appoint someone as your agent. This procedure can become involved. Not having a power of attorney can become a difficult situation. To illustrate, if you happen to need life support and you do not have this contract in place, the hospital may keep you on life support regardless of your condition. Your family will have no decision rights.

If I presently have a living will, do I still need a health care power of attorney?

A living will provides guidance for the family when handling affairs, while a power of attorney allows them to carry out their decisions. However, a living will does not take away the need for a health care power of attorney. They usually are co-mingled. In fact, lawyers frequently put them together in the same papers when they are making a basic will.

Is it normal to have my spouse as my representative?

Yes. It is typical to give your significant other the power of attorney, but in certain circumstances it is wise to have an alternate individual who you can trust instead. Because, if both spouses should become incapacitated (and this can happen), it could cause a difficult situation.

It is apparent that power of attorney contracts are necessary to execute in case you or one of your loved-ones becomes debilitated. Secure your peace of mind and draw-up the contracts as early as you can. Start the process and consult with your legal and financial advisors. The future of your family business depends on it.