If the owner becomes incapacitated tomorrow, who can run the business?

No single document, by itself, gives one person every kind of business authority. A Texas owner-incapacity plan must separate ownership, voting, management, employment, contract signing, banking, and personal financial authority, then name a lawful backup for each job.

The owner may hold all of those powers today, which makes them feel like one job. Incapacity exposes the legal seams. The person who can vote an LLC interest may not be the manager. The manager may not be an authorized bank signer. The president’s employment duties may end while the ownership interest remains unchanged.

Start with the company’s governing authority

For a Texas LLC, the certificate of formation and company agreement help determine whether the company is member-managed or manager-managed and how a successor is selected. Business Organizations Code Section 101.251 places governing authority in the managers of a manager-managed company and in the members of a member-managed company, subject to the governing documents and statute.

A company agreement can address an owner’s inability to serve, removal, interim authority, quorum, voting thresholds, and successor managers. If the agreement requires action by the incapacitated person to fill the vacancy, the company may have a document but no usable bridge.

Employment titles require a second review. A chief executive may have authority under resolutions, bylaws, an employment agreement, or ordinary agency rules. That does not necessarily give the same person the owner’s vote. Keep the ownership chart, management chart, and employment chart separate.

A durable power of attorney can help within its lane

A Texas durable power of attorney can grant an agent authority concerning the operation of a business or entity. Estates Code Section 752.108 describes powers that may include operating, buying, selling, enlarging, reducing, or terminating a business interest and performing duties or exercising rights under an ownership agreement, when the governing power of attorney grants that authority.

The personal agent still acts under the power of attorney, not above the company agreement. The entity documents, statutory limits, express-authority rules, and third-party acceptance requirements remain relevant. A generic financial power may not answer a company-specific voting or management question.

Timing matters. An immediate power can be available before incapacity. A springing power requires the triggering proof stated in the document. If a physician’s certification is needed, the business needs a lawful interim plan for the period before that certification is obtained and accepted. The article on Texas durable powers of attorney explains that personal-authority document in more detail.

Ownership held in trust follows the trust

If a revocable trust owns the business interest, the successor trustee may exercise ownership rights when the trust’s succession standard is met. The company agreement still controls what those ownership rights include and whether the trustee or another person may serve as manager.

Trust funding is therefore not clerical. The ownership records, tax treatment, lender covenants, transfer restrictions, and company ledger must recognize the trust transfer. A trust that did not receive the interest cannot supply ownership authority over it.

Banking and contracts need their own test

Ask the bank which company records it has on file and what it will require to add or replace a signer. Review major contracts for key-person provisions, notice duties, change-of-control language, licenses, personal guaranties, and consent requirements. Confirm who can access payroll, accounting, tax deposits, insurance notices, passwords, and vendor systems without sharing the owner’s personal credentials.

The communication plan should name the person authorized to tell employees and counterparties what has changed. It should provide accurate contact and authority records without disclosing the owner’s private medical information beyond what the law or a document requires. Silence invites rumor; oversharing creates a different problem.

A useful drill does not announce that the owner is dead. It assumes the owner is alive, unavailable, and unable to sign for 60 days. Then it asks who can perform each necessary act under a document the counterparty will recognize.

Connect incapacity to the ownership plan

Long-term incapacity may trigger a buyout, but the agreement must define the trigger, valuation, buyer, payment, and funding. The article on Texas buy-sell agreements tests those terms. The business-succession practice page describes the wider coordination among company authority, estate documents, and owner continuity.

Primary sources and legal boundary

Reviewed August 19, 2026. Primary Texas sources:

This is general information, not a finding that a particular person is incapacitated or authorized to act. Governing documents, trust ownership, powers of attorney, bank records, contracts, licenses, tax status, and medical proof can change the result. Reading this article does not create an attorney-client relationship.

Run the 60-day absence drill

List the ten acts the owner alone performs today. Put a successor name and source of authority beside each act. A blank line identifies a continuity problem while there is still time to fix it.

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