You may have heard about someone looking after their elderly parent’s finances and affairs using a Lasting Power of Attorney (LPA), but there are other occasions when it makes sense to have an LPA in place.
We insure against catastrophic lifetime events and critical illness, and a business LPA provides a reassurance that if you are unable to operate your business as a result of such an event, your appointed attorney will be able to look after it for you.
As a business owner, it’s important to consider what would happen to your business if you were unable to make decisions. This may be for example if you were abroad on holiday or for business, if you were to have an accident or if you were to have a medical condition that incapacitated you.
In such circumstances, who will authorise the payment of bills, sign cheques, service a business loan or pay salaries?
Business LPA’s allow you to appoint a suitable attorney to make decisions in connection with your business interest when you are unavailable, or lack mental capacity.
In your personal capacity you can make an LPA for property and finances as well as for health and welfare. However, the attorney you appoint for your personal affairs may not have the skills or authority required to make business decisions, and there may be a conflict of interest between the roles.
If you lose capacity without having made an LPA and you are a sole trader, a partner or a company director, your business could be at risk, with nobody authorised to operate the bank account or enter into contracts.
Without a business LPA in place, your family or business colleagues may face a lengthy and costly application to the Court of Protection for the appointment of a Receiver, potentially causing loss to the business in the meantime, as well as considerable distress.
A business LPA is a straightforward document and can keep the business running smoothly with the minimum of disruption at what could be a difficult time.
To avoid disruption, it should be part of any business owner’s continuity plan and crisis management strategy to consider making a business LPA.
What happens if you don’t make a business LPA?
If you do not have a business LPA in place and you become unable to make business decisions in the future, it may become necessary to make an application to the Court of Protection for the appointment of a deputy to act on your behalf. The process can be expensive, and there’s no guarantee that the Court of Protection will choose someone you would have chosen. It could also take more than six months before a deputy is appointed, during which time your business may be vulnerable and at risk.
How we can help you put a business LPA in place
Our specialist legal advisors at Crombie Wilkinson will be more than happy to assist you with any queries you may have regarding the topic of business LPA’s. Please feel free to contact a specialist in our Private Client Team in York, Selby, Malton or Pickering for help and advice relevant to you and your business.