It is never an exciting time when thinking of your own humanity.  As we age we realize that we are less and less indestructible every year.  Our knees and backs begin to hurt.  We can’t land that jump shot the way we once did.  However, with age comes wisdom.  We are wiser with each passing year.    So, as a business owner, the wise decision is to always plan ahead.  Planning ahead ensures that you and your affairs are taken care of to your specifications.  Hence, the purpose of this article:  The three most important documents every business owner should have on file with his/her attorney:

1. Health Care Proxy – A Health Care Proxy (“HCP”) is a specific type of Power of Attorney (“POA”). In general, a POA gives someone the legal authority to act on behalf of another.  New York Health Care Proxy law allows you to appoint someone you trust to make health care decisions on your behalf if/when you are no longer able to make those decision yourself.  Hospitals, doctors, and other care providers must follow your agent’s decisions as if they were your own. Please note:  Health care means “any treatment service or procedure to diagnose or treat a physical or mental condition.”  If you are outside of New York and your state does not have a specific health care power of attorney, a general power of attorney will have to same authority.

Limitations to a HCP:

The agent holding a HCP can have unlimited and indefinite authority or you can limit the authority of the agent and/or the duration of the HCP.   A HCP is valid indefinitely unless revoked orally and/or in writing, or limited to a specific date/ certain event (ie: hospitalization).  In other words, you have the ability to limit the authority of the agent and the time period in which the HCP will can be valid.

Effectiveness of a HCP:

The HCP can be effective immediately upon execution or it can become effective based on a specific occurrence (noted above).  If you are already showing signs of mental impairment, I would suggest it be effective up the signing of the documents.  The alternative is to allow your doctor to make the determination of when you are no longer able to make health care decisions for yourself.

Requirements:

All competent adults (18 years of age or older) can be appointed a health care agent by signing a HCP form.  Notaries Public are not required for the execution of the document.  However, 2 adult witnesses must be present and must sign as attesting witnesses.  Please note that the agent and alternate agent cannot act as both a witness and agent.  Two disinterested parties would be ideal to act as witnesses.

Important Notes:

The HCP agent is not financially responsible for any of your financial obligations relating to your health care.  In addition, the executed HCP must be kept in an accessible place.  Please DO NOT store the document in a safe or lock box where those who need it do not have access to it.  Give a copy to the agent, her primary doctor, family members, close friends and attorney.

2. Power of Attorney (“POA”) – A POA is a legal document that gives one person the authority to act for another person.  There are typically 2 reasons why someone would use a POA:  1.  To manage  -financial matters or in some states; or 2. To manage the health care of someone who is otherwise unable to make health care decisions (known as a Health Care Proxy in New York State).

Requirements:  The NY law requires that a POA be:

• Typed or legibly hand written using 12pt font. In the alternative you may use a form version.
• Be signed and dated by the principal (elder/ incapacitated) when the principal is of sound mind.
• Be acknowledged by the principal when the principal is of sound mind in the presence of a Notary Public.
• Be signed and dated by the agent in the presence of a Notary Public.

Important Notes:

A POA agent must sign as follows, for example:

• Sam Smith, by Jill Jones under POA;

OR

• Jill Jones, Attorney-in-fact for Sam Smith.

Duties of a POA Agent:

A person who acts under a power of attorney is a fiduciary.  A fiduciary has a duty to act prudently and in a way that is fair to the person whose affairs he/she is managing.  An attorney-in-fact (POA Agent) who violates those duties can face criminal charges or can be held liable in a civil lawsuit.

POA agents must be mindful to avoid exceeding his/her authority.  In addition, he/she must remember to always sign document as directed above. 

3. Living Will – A living will is a legal document outlining the distribution of assets while the you are still alive. This document is generally drawn up by your attorney and details how your assets are to be distributed amount your loved ones, charity, etc.  Having a will in place will ensure that your family is taken care of should anything occur.