A simple question for Business Owners and SMSF Trustees
Do you run a business under a company structure? Are you the sole director or shareholder? Perhaps you're the sole director and shareholder of a company acting as a Corporate Trustee for a Self-Managed Super Fund (SMSF)?
If you have answered 'Yes' to either of these questions, chances are, you absolutely need a Company Power of Attorney.
Read in this article
Make it part of your Business backup plan
From mild strokes through to heart attacks, Insulin comas, car accidents, head injuries or whatever else life throws at us - if you're the sole director/shareholder of a private company, you must have a backup plan in place for if you lose the mental capacity to continue to make decisions for the company or risk it becoming 'locked' and unable to function.
When that happens, it's usually only a 90 day window before a creditor launches a wind up application - sooner if you employ staff and pay super.
Important: The role of Company Director is one that cannot be gifted to another or transferred through a Will nor can it be exercised under a Personal Power of Attorney document.
We're seeing many requests for business Capacity Statements for businesses tendering or applying to become part of a a bigger supply chain, to verify that the business has a business recovery plan in place - Keyperson Insurance and a Company Power of Attorney for a Sole Business owner/Shareholder, is a standard part of that package.
Make it part of your SMSF backup plan
The same is true for SMSFs that have a company acting as the Corporate Trustee for the SMSF. A single member SMSF/Trustee is an unacceptably high risk if there is no Company Power of Attorney in place. This is because when you have lost the ability to make legal decisions (due to sickness or injury) you cannot legally make the decision to give another person that power.
"At least three to four times a year we're contacted by a distraught family member of a sole Director/Shareholder company, or sole Trustee SMSF, where the director hasn't bothered to put a Company Power of Attorney in place, and 'the company is locked' and facing financial disaster. It's upsetting to tell people, it's too late". Drew Browne Advisor
Failing to have a Company Power of Attorney already in place, for this one of life's eventualities, will leave your company, your SMSF, and your family vulnerable.
Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
