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Protective powers of attorney

We all need to think about what will happen when we are no longer here, or no longer capable of managing our personal or business property.

Two types of power of attorney have been created to deal with these situations: the power of attorney for future protection, and the posthumous power of attorney.

  • The power of attorney for future protection

    • The power of attorney for future protection also enables business owners who want to secure their companies’ continuity to appoint one or more attorneys to be responsible for both protecting themselves and managing their business property.

    • Because managing a business requires decisions to be made rapidly and often requires instruments of disposal to be drawn up (sale of operating resources, pledges, renewal of commercial leases, etc.), it is advisable to have the power of attorney notarised, because only a notarial instrument applies immediately and gives broader powers through which these objectives can be achieved. An authentic act is also subject to external supervision, thereby offering better protection.

    • If the business is run as a company, the attorney simply replaces the principal without limitations, attending shareholders' meetings, voting and managing the company, etc. However, the business owner may want to provide for checks on the principal’s powers and include them in the wording of the power of attorney.

    • Attorneys may act on an unpaid basis, but when a power of attorney relates to business property, payment should be provided for, thereby making attorneys accountable for the results of their management and liable for any default.

    • The Law of 28 December 2015 on the adaptation of society to aging provides for the publication of the future protection mandate in a special register. 

  • Posthumous power of attorney

    • Ordinary powers of attorney end on the death of the principal. In response to repeated demands from notaires, French legislators have devised the posthumous power of attorney which is mainly intended for business owners and comes into effect on the day the ordinary power of attorney expires.

    • Entered into force on 1 July 2007, the posthumous power of attorney enables people to plan for the transfer and administration of assets by a trusted person after their death.

    • The attorney may be an heir , another individual or a legal entity such as a company. The attorney must be physically fit and not be subject to any prohibition on managing business assets.

    • The power of attorney must be granted and accepted in a notarial instrument. It is granted for a two-year period that can be extended once or more times.

    • If it is granted due to the incapacity or age of the heir or the need to manage business assets, it may be valid for a term of five years that can be extended without limitation.

    • During their lifetime, business owners can therefore appoint the person they consider most capable of managing their business in the event of their death while waiting for a division or sale.

    • The way this type of power of attorney is framed will depend upon whether the business is run by a sole trader or operates as a company.

    • When the attorney is appointed by a sole trader, the attorney represents the heirs and manages the company on their behalf. Particular attention needs to be paid when the power of attorney is drafted in order to provide the heirs with legal certainty.

    • Unless agreed otherwise, the posthumous power of attorney is free of charge. It may, however, include provision for payment.

    • The attorney is not liable for operating debts, for which the heirs have sole liability.

    • The attorney may, however, be held liable for proven errors of management. The company profits are taxed in the name of the heirs.

    • When the business is run as a company, the posthumous power of attorney only applies to the principal's rights in the company.

    • Provided the attorney meets all the conditions for attending shareholders' meetings, the attorney will have limited powers to administer and manage the assets that make up the deceased 's estate.

    • But the power of attorney should also enable an attorney to take over the management of the company which will require them to attend shareholders' meetings in their capacity as the new managing director. This Will have to be done promptly to prevent the company from grinding to a halt. Certain provisions in the articles of association will have to be amended.

  • Find a notaire

    • Notaires are concerned every day with helping their clients to take timely measures to ensure legal certainty and the continuity of their assets.

    • Contact your notaire who will be able to advise you and draw up powers of attorney suited to your particular situation.

Frequently asked questions