In addition to testamentary dispositions, powers of attorney are always among the most important documents in the area of succession planning. A power of attorney authorizes the agent to perform legal acts, such as entering into or terminating contracts. If granted in a comprehensive manner, it is referred to as a general power of attorney. This distinguishes the general power of attorney from a health care proxy, which exclusively governs the principal’s financial and/or personal affairs.
Ideally, the principal grants the authority under a general power of attorney in notarized form. This allows the agent, depending on the scope of the authority, to represent the principal even in legal transactions requiring notarization, such as the sale of real estate. In addition to concluding legal transactions, the power of attorney typically also includes representation before government agencies, banks, and courts.
If a (managing) partner dies or is unable to perform their duties for an extended period due to illness—especially in the midst of a business succession—the surviving family members are often overwhelmed. Valuable time can pass before a certificate of inheritance is issued or an administrator is appointed—time during which important business decisions must be made on short notice. Banks often accept handwritten wills as proof of the authorized representative’s authority only in conjunction with a death certificate or insist on the presentation of a certificate of inheritance, the issuance of which is time-consuming and costly. As a result, the surviving family members are initially denied access to bank accounts and safe deposit boxes in particular.
If the family business is already in the process of being transferred or sold, the unexpected death of the (sole) owner can bring the entire sales process to a standstill, with potentially significant consequences for the business transaction and for the company itself.
It is not uncommon for the sale process to fail entirely, or for the original asking price to remain unrealized. This creates the risk of a company without leadership or of protracted disputes within the (business) family, which in the worst-case scenario could lead to the family business’s insolvency.
If the deceased has granted a (notarized) general power of attorney, the authorized representative may, within the scope of the power of attorney, make and receive declarations of intent and continue to operate the business. Existing legal restrictions—particularly those under corporate law—must be taken into account, such as when delegating duties and rights as a managing director.
It is also conceivable to divide or limit the power of attorney to the management of the business itself or to business matters, and to grant a (separate) power of attorney for the administration of private assets. In principle, the power of attorney expires upon the grantor’s death. However, since the power of attorney is often intended to serve its purpose and is needed only after the death of the (sole) shareholder, it is advisable to ensure that the general power of attorney remains valid beyond the grantor’s death. Furthermore, the more detailed and specific the power of attorney is drafted, the narrower its scope of authority. A limitation on the scope of authority that is initially desired may unduly restrict the attorney-in-fact in retrospect and make it more difficult to continue operating the business.
It is also advisable to file the power of attorney with the Central Register of Advance Directives maintained by the Federal Chamber of Notaries. This ensures that, in the event of an emergency, the power of attorney can be located in its unaltered form, thereby avoiding disputes regarding the appointment of the agent and the scope of their authority. Ideally, the general power of attorney—as part of a “business emergency kit”—should be coordinated with all existing testamentary dispositions to ensure a binding framework for the authorized representative’s responsibilities and areas of authority.
