In your per­son­al Pow­er of Attor­ney doc­u­ment, you may nom­i­nate an Attor­ney who will be respon­si­ble for man­ag­ing finan­cial deci­sions on your behalf should you lose capac­i­ty.

The ques­tion is, if you are a sole direc­tor or direc­tor of a com­pa­ny or trust, can your per­son­al Attor­ney make finan­cial deci­sions relat­ing to these enti­ties on your behalf?

The answer is, no.

 

An indi­vid­ual Pow­er of Attor­ney does not give rights to your Attor­ney to take on the role as direc­tor or make any deci­sions relat­ing to the com­pa­ny. They can, how­ev­er, make finan­cial deci­sions for you as a share­hold­er.

This is why it is of extreme impor­tance to have a com­pa­ny Pow­er of Attor­ney so oth­ers in your com­pa­ny can con­tin­ue to make deci­sions, be paid and con­tin­ue the com­pa­ny after you lose capac­i­ty.

 

The impor­tance of a com­pa­ny Pow­er of Attor­ney

A com­pa­ny Pow­er of Attor­ney is an essen­tial estate-plan­ning tool for those run­ning a com­pa­ny or trust and should be set up when the com­pa­ny is first estab­lished.

Com­pa­nies and trusts can exe­cute a Pow­er of Attor­ney (gen­er­al­ly speak­ing), pro­vid­ed the board of direc­tors sign a for­mal deed.

The board of direc­tors can choose how exten­sive the doc­u­ment is and can choose if it is for a cer­tain length of time, for a par­tic­u­lar event or events or for a par­tic­u­lar prop­er­ty.

The Pow­er of Attor­ney can be giv­en to one or more per­sons who may or may not be involved with the com­pa­ny.

 

What if the sole director/shareholder dies?

The Cor­po­ra­tions Act 2001 under sec­tion 201F(2) pro­vides that if a company’s sole direc­tor and share­hold­er dies, the deceased’s “per­son­al rep­re­sen­ta­tive” may appoint a per­son as the direc­tor of the com­pa­ny to car­ry on its busi­ness.

The Cor­po­ra­tions Act in sec­tion 201F(4) spec­i­fies that a per­son with that pow­er of appoint­ment under sub­sec­tion 2 of sec­tion 201F may appoint them­selves as direc­tor.

But when a sole direc­tor of a com­pa­ny dies with­out leav­ing a will the com­pli­ca­tions and dis­tress can have an even greater impact. The death will usu­al­ly leave the com­pa­ny with­out any per­son prop­er­ly autho­rised to imme­di­ate­ly man­age the com­pa­ny.

If you do not have a com­pa­ny Pow­er of Attor­ney in place and be a sole direc­tor with no for­mal Will, those left run­ning your com­pa­ny could be exposed to weeks or months with­out a Direc­tor in place as admin­is­tra­tion of the estate of the sole direc­tor will take time for The Pub­lic Trustee steps in to man­age the estate or the Supreme Court grants Let­ters of Admin­is­tra­tion to some­one to admin­is­ter the estate.

 

The team at Dono­van Oates Han­naford have years of expe­ri­ence in Estate and Busi­ness Plan­ning.

We offer a refresh­ing approach to legal advice that is eas­i­ly under­stood and is pro­vid­ed in a time­ly man­ner. Should you require any fur­ther infor­ma­tion, please con­tact us on (02) 6583 0400 or info@dohlaw.com.au.

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