A Lasting Power of Attorney can be a useful tool for a business owner. If you own a business it is important to ask yourself what would happen to the business should you ever lose capacity through injury or illness. Having a registered LPA ensures that the person best positioned for looking after your business has the power to do so if the need arises.
You may not be able to make certain decisions or grant authority if you become injured, unwell or are simply out of the country. Your business may become vulnerable if access to bank accounts is denied, which can result in staff and third party suppliers not being paid, contracts becoming compromised and business loans not being tended to. Furthermore, many business owners are personal guarantors for their business loans and there is a risk that you could lose your personal assets and home.
Whilst there may be an informal understanding within the business as to who will take control in such situations, this is not legally permitted and the Court of Protection will instead appoint a deputy to carry out your decisions. Unfortunately, the process of appointment is costly and time consuming, meaning business operations may come to a halt. Alternatively, having a LPA allows your attorney to instantly act on your behalf adding an extra layer of security to your business plan. Once registered, the LPA can be used straight away and, so long as you still have capacity, can be revoked at a convenient time such as if you retire or sell your business.
LPAs allow you to appoint more than one attorney and you can place different restrictions on them. For example, you may like a business associate to negotiate contracts on your behalf but would like a family member, who knows about your business, to approve bank transactions. It is also possible to have two property and financial LPAs; one for your personal finances and one for your business.
There are a number of benefits of a business owner having a LPA. Many people are misunderstood in thinking that LPAs are for the elderly and are solely for health and welfare decisions. A property and financial LPA can add a layer of certainty and reassurance to your business plan and will help protect your business’ vulnerability should you lose capacity.
This briefing was posted on 12 December 2017