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The Scoop on Enduring Power of Attorney (POA)

Most aspirational business owners would recognise the impact of a serious health event on their business.

This is especially the case in the New Zealand SME business sector where the owner is immersed in all aspects of the business, where the team is small and often authority to act is not clearly defined. Anecdotally, often a lot of the business IP is retained in the business owner's mind and not documented for others to access.

There are two types of enduring POA.

First, there is a property EPA (Enduring Power of Attorney) which allows you to appoint someone to manage your financial affairs. The second is a personal care and welfare EPA which allows you to appoint someone to make decisions about your personal health and well-being in the event you are unable to make those decisions yourself. Your lawyer is usually best placed to guide you through the process for both.

These can be the same individual or different, but importantly, they have to be ready, willing and able to do what is expected of them in the event they are required to act.

An Enduring Power of Attorney (EPA) is a documented legal formality that grants someone the authority to make decisions on your behalf, particularly where you become incapacitated or unable to make decisions for yourself. For business owners, an EPA is a crucial aspect of responsible business management that helps protect business continuity.

First and foremost, an EPA ensures that your company's business affairs are taken care of when you are unable to do so yourself. As a business owner, you are no doubt responsible for numerous critical daily decisions ranging from sensitive financial matters to key operational concerns. In the unfortunate event of an unforeseen illness or injury, having someone designated to step in and manage these affairs is essential to the continued operation and success of your business.

Without an EPA in place, the process of managing the company's affairs in your absence can be complex and time-consuming. In some cases, it may even require court intervention, which inevitably will lead to delays and additional stress for your loved ones and employees. By proactively designating a trusted individual to act on your behalf through an EPA, you can streamline this process ensuring that your business continues to run smoothly even in challenging circumstances.

Moreover, an EPA provides peace of mind, not only for you, but also for your family members, business partners, and employees. Knowing that there is a plan in place for the continued operation of the business can alleviate concerns and uncertainty. Just as importantly, it also demonstrates your commitment to responsible business management and ensuring the interests of all stakeholders are protected.

When creating an EPA as a business owner, it's important to carefully consider who you designate in this capacity. This individual should be someone you trust implicitly and who has the skills and knowledge necessary to effectively manage your business affairs. Depending on the nature of your business and your specific circumstances, you may choose to designate a family member, a close friend, a trusted advisor, or a professional with relevant expertise. It comes down to who is the best fit for your specific circumstances and position.

In addition to selecting the right POA, it's also important to clearly outline and document the scope of their authority. This may include specific instructions or limitations regarding financial transactions, contracts, personnel decisions, and other key aspects of business management that require attending to in your absence. By providing clear guidance upfront, you minimise the potential for misunderstandings or disputes down the line.

Procedurally, it’s important to have a clear trigger for the POA to be started. This includes having an “ICE” (In Case of Emergency) on your person and with your close network in case the unexpected happens.

In conclusion, an Enduring Power of Attorney is an important tool to have in your business owner toolbox, to help ensure the continuity of business operations in the face of an unexpected event. By proactively planning you can protect your business interests and provide peace of mind to those who depend on you.

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