Written by Alisdair Liddle, Partner at Spire Solicitors LLP.
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, and 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, with a fee of £82 per LPA. It can then be submitted to any institution such as a bank or utility provider, enabling the institution to deal directly with the appointed attorneys.
The attorneys will have power to enter into any transaction that is within the scope of the LPA, unless you have specifically forbidden it, so they will be able to deal with business decisions and to authorise payments or write cheques. If you are mentally capable, the attorney should only do what you authorise them to do, but if you become mentally incapable and are no longer capable of authorising or consenting to the attorney’s decisions or actions, the attorney will be able to make decisions and do things on your behalf.
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.
To avoid disruption, making a business LPA should be part of any business owner’s continuity plan and crisis management strategy. If you would like to discuss any points in this article or would like to make a business LPA, please contact our team of experts on 01603 677077 or email email@example.com for all your legal needs.