For a business owner an injury or unexpected loss of capacity, even if only temporary, can have a significant impact to the day to day running of the business. To ensure that a business continues to operate successfully in these circumstances, all business owners (sole traders, partners and company directors) should consider putting a lasting power of attorney (LPA) in place for property and financial affairs, which is specifically tailored towards their needs.
A LPA is used to appoint someone (known as an attorney) who is trusted to step in if the circumstances require.
What if I don’t have a Lasting power of attorney?
In the context of a business, without a business LPA being in place, it could mean that no-one is authorised to sign cheques or make payments on the business bank account which has a knock on effect for the likes of suppliers, staff and creditors. The business would be put under a huge amount of unnecessary strain and could, in certain circumstances, “go under”.
Who to choose as a Lasting power of attorney?
For business owners specifically, it is important to choose someone who is familiar with the business to step in, they will need the authority to make the necessary decisions and have a “business mind”. In addition to a business LPA, company directors should also review their company’s articles of association. This will advise as to what happens upon the loss of capacity of a director as the LPA. The articles of association need to work alongside one another.
What about my personal affairs?
It is entirely possible for a business owner to have a LPA in place to deal with property and financial affairs which are not connected with their business (i.e. for personal finances), but the two LPAs need to be carefully drafted so that the business and personal LPAs work effectively. It is often the case that the attorney of a personal LPA is a family member or other person of trust.
A business LPA is essential for a business owner no matter what the size of the business. It should be seen as essential as insurance or keyman insurance which is there to be used if required. Without one, if the business owner was to become incapacitated, an application would need to be made to the Court of Protection in order for someone to be appointed as Deputy. This is a costly and time consuming exercise and the business is likely to suffer as a result.
The T&E Private Client Team are experts in acting for business owners and directors. We can ensure that an appropriately worded business LPA is put in place to run alongside a personal LPA so that the ongoing succession of the business is better protected. For more information, call our team on 0114 218 4000, email us at firstname.lastname@example.org or complete this form.