Who can manage a business and investments during incapacity

Company authority comes from the governing arrangements

In Minnesota, for example, corporate business ordinarily comes under board management, subject to the articles, shareholder management provisions and shareholder control agreements, and other states differ. Shareholders entitled to vote for directors may unanimously take board action.

In this Minnesota example, the chief executive officer has statutory signing duties unless the articles, bylaws or a consistent board resolution change those duties. Another person may hold signing authority by law or express delegation.

For a Minnesota LLC, the operating agreement and applicable member, manager or board structure determine management, with statutory defaults filling gaps. A member may appoint a proxy or agent through a signed appointing record.

Under Minnesota's board structure, designated officers, managers or agents act within their designation. Board action and individual governors' authority remain subject to the statutory exceptions. A personal power of attorney does not itself appoint a corporate officer.

In Nevada, general business operation authority can cover certain operations of a business owned solely by the principal, subject to governing entity or ownership agreements and any contrary power of attorney terms.

Those Nevada powers include continuing, modifying, renegotiating, extending or terminating business contracts made before the power of attorney was executed. They also include receiving operating money and controlling and disbursing it for the solely owned business.

For your company review, gather the operating agreement or corporate documents alongside the owner's power of attorney. Identify the provisions addressing management, delegation and signatures.

Trust property and personal financial authority

In Minnesota, for example, a trustee can exercise powers granted by the trust and, unless the trust limits them, statutory investment, management and distribution powers over trust property without court authorization, and other states differ.

Every exercise of those Minnesota trustee powers remains subject to fiduciary duties. This authority concerns trust property, rather than every asset the owner holds.

In this Minnesota example, an agent may exercise the settlor's trust revocation, amendment or distribution powers only to the extent the trust expressly authorizes them. If the trust is silent about agent exercise, another authorization route is available.

That route requires a power of attorney expressly granting those powers, other than the statutory short form. A conservator needs approval from the court supervising the conservatorship to exercise those settlor powers.

Keep the trust's succession and incapacity provisions available for review. Review those conditions before treating a designated successor as ready to act.

Retirement authority and powers requiring an express grant

In Nevada, a grant of general retirement plan authority can permit selecting payments, withdrawing benefits, making rollovers and contributions, and exercising investment powers available under the plan, unless the power of attorney provides otherwise.

In Nevada, creating, amending, revoking or terminating a living trust, making gifts, and creating or changing survivorship rights or beneficiary designations require an express grant. Another governing agreement or instrument must not prohibit the exercise.

Unless the Nevada power of attorney provides otherwise, an agent who is not the principal's spouse cannot use these powers to create an interest for themselves or someone they are legally required to support.

An express grant is an authorization requirement. It does not settle permissible gift amounts or fiduciary compliance.

Activation evidence and the handoff to financial institutions

In Nevada, a contingent power of attorney may designate someone to determine in writing or another record that its triggering event occurred.

For a Nevada incapacity trigger, the statutory fallback applies when nobody is authorized to determine incapacity or the authorized person is unable or unwilling to do so.

The fallback requires a written or recorded incapacity determination by an advanced practice registered nurse, physician, psychiatrist or licensed psychologist.

CFPB guidance recommends contacting relevant businesses when you need to act, giving them copies of the power of attorney and retaining the original. If acceptance problems persist, speak to a supervisor and then a lawyer.

CFPB also advises agents to keep the principal's property separate, retain title in the principal's name and sign documents to show their representative capacity.

Court protection requires its own findings

In Minnesota, for example, a conservator may be appointed only when the court makes all the findings below about inability to manage, property or support needs, and inadequate alternatives, and other states differ.

Clear and convincing evidence must show inability to manage property and business affairs because of an impairment in receiving and evaluating information or making decisions, even with appropriate technological assistance.

Alternatively, clear and convincing evidence must show inability to manage property and business affairs because the individual is missing, detained or unable to return to the United States.

In this Minnesota example, a preponderance of evidence must also establish either of the following:

• The individual has property that will be wasted or dissipated unless management is provided.
• Money is needed for the support, care, education, health and welfare of the individual or people entitled to their support, and protection is necessary or desirable to obtain or provide that money.

The Minnesota court must also find that less restrictive means cannot meet the individual's identified needs. It must make specific findings particular to that individual explaining why those alternatives do not work.

Those alternatives include appropriate technological assistance, supported decision making, a representative payee, trusts, banking or bill paying assistance, or appointment of a financial agent.

Missing planning documents alone do not establish these Minnesota appointment findings. With appropriate findings, the court may instead enter another appropriate order or dismiss the proceeding.

Whenever feasible, Minnesota conservator powers are limited to demonstrated needs and encourage independence. Appointment or another protective order is not itself a determination of incapacity.

Two related terms

Durable power of attorney: In Minnesota, for example, this means authority intended to remain exercisable despite later incapacity or incompetence, and other states differ. Durability does not establish that every power begins immediately.

Springing power of attorney: In the Nevada example, this is a power whose effectiveness depends on a specified future date, event or contingency. Nevada otherwise makes a financial power of attorney effective when executed.

Common questions