Unfortunately, many business owners do not think about what would happen to their business if they became incapable of running or making important day-to-day decisions either through physical or mental incapacity. Ann Farnill, Head of Wills, Trusts and Probate at Tallents Solicitors looks at how business owners can protect their interests with Lasting Powers of Attorney.
Having invested significant time, effort and money into your business, it is vitally important that business owners plan ahead to keep their businesses running successfully should they be unable to make key decisions due to incapacity.
You may think you can rely on family, friends, or even employees, to temporarily take over the running of the business for you but this really isn’t a satisfactory long-term solution.
You’ve probably spent years building up your business and you need to know that the person left in charge will have the knowledge and authority to make the best day-to-day decisions to keep your business running. That could include paying staff wages, ensuring loans and mortgages are paid on time, dealing with taxation and perhaps negotiating contracts while you are incapacitated.
This is why we recommend that business owners protect themselves and their business by having a Financial Lasting Power of Attorney (LPA). Not only could it save time, it’ll help ensure that everything runs smoothly in your absence.
A Financial LPA enables you to appoint an Attorney to look after your business’s financial affairs if you were to become incapable of dealing with them yourself, either mentally or physically.
You decide on who will deal with your affairs on your behalf and you can place restrictions on and give guidance to your Attorney on how they should deal with your business affairs.
If you are making an LPA in respect of your business affairs, it makes sense to appoint someone who is familiar with the day-to-day running of your business. For example, the partners in a business could appoint each other, or you could appoint someone in your family who knows the business well. You can also choose more than one Attorney who can act jointly or separately from each other.
A Financial LPA must be registered with the Office of the Public Guardian, regardless of your mental capacity, in order for it to be valid. Once that’s done, then you will have peace of mind that should anything happen to you, your Attorney can act immediately on your behalf, if required.
An LPA can be revoked at any time, assuming you have the capacity to do so. However, if you were to become incapacitated without a LPA, an application would have to be made to the Court of Protection in order for someone to be appointed as your Deputy. This process can take months and the costs involved are much higher than those involved in obtaining a Lasting Power of Attorney. And in the meantime, who knows what will happen to the day-to-day running of your business?
It really makes sound business sense to apply for a Financial LPA now but never have to use it. Think of it as an insurance policy that could keep your business running successfully should the worst happen.