As a business owner, you may have a continuity plan in place for various disaster recovery scenarios. However, the most important scenario can often be overlooked. What would happen to your business if you were unable to make decisions?
A simple solution is for you to make a Lasting Power of Attorney (LPA) and appoint someone to look after your financial affairs and act on your behalf.
Even if you have an LPA in place already, you may still require a separate business LPA as your attorneys who would deal with your personal affairs might not be appropriate. Under the Mental Capacity Act Code of Practice it specifically states ‘An attorney should have the skills and ability to carry out the necessary tasks.’ In view of this, your attorneys should have the skills necessary to deal with your business affairs for example; income tax management, investment planning, be aware of needs and interests of employees, be able to promote business reputation and act within authorised parameters of a regulated body.
- Shareholders, partners and sole traders can all benefit from appointing an attorney in this way.
- An LPA can enable day-to-day management when you are not available – such as if you are abroad or incapacitated following an accident but are able to give instructions to your attorney. It also safeguards for a more serious situation, where you may lose mental capacity and are unable to make decisions, at which point your attorney can stand in.
- While it is a simple process, it is crucial to consider carefully who you are appointing as your attorneys and whether you wish to place any restrictions on what they can agree on your behalf while you are mentally capable. As it can also impact on aspects such as the articles of association in a limited company or partnership agreements, it’s also important to get professional advice to avoid contradiction.
- Once an LPA has been made, it must be registered with the Office of the Public Guardian before attorneys can act. It can then be submitted to any institution such as a bank, enabling the institution to deal directly with the appointed attorneys.
If you do not have a business LPA in place and are unable to make business decisions, it may be necessary to make an application to the Court of Protection for the appointment of a deputy to act on your behalf. This process can be expensive, and there is no guarantee the Court of Protection will choose someone you would have chosen. It is also a slow process and can take up to six months before a deputy is appointed which may have crippling effects on your business.
