You have a business, but do you have a lasting power of attorney?
What will happen to my business if I do not have an LPA?
Lasting powers of attorney (LPAs) appoint people to make decisions for you if you are unable to do so yourself. These decisions can be in relation to financial or health-based affairs.
However, did you know that you can also have an LPA for your business affairs?
It is often assumed that someone can make business decisions for you, if you are unable to do so yourself. Unfortunately, this is not necessarily the case.
What is a business LPA?
This is where a business LPA comes in. This document acts as a safety net if you cannot make business decisions for reasons such as incapacity, illness or being away on holiday. Your nominated attorney(s) would be able to pay wages, fulfil orders, sign documents and more.
A business LPA can be tailored to the suit all types of businesses e.g. sole traders, partnerships and directorships and works alongside partnership agreements and articles of association.
Business decisions can be covered by a normal financial LPA, but we recommend that you have separate documents to avoid conflicts of interest. After all, decisions in your best interests may not be in the best interests of your business! If you decide to take this step, it is important to choose an attorney who is:
Suitably qualified to make business decisions
Profession-specific – for a law firm, you should consider appointing at least one lawyer to act as an attorney
Choosing the right attorney is vital. Family or friends are good for your personal affairs, but are they the right people to run your business if you cannot do this yourself?
These are key factors to consider not only for your own peace of mind but for the continuity of your business.
What happens if you lose capacity without a business LPA?
Businesses are usually based on partnership agreements or articles of association. These background documents outline what should happen if an owner loses capacity or is otherwise absent. However, if you are unsure of what might happen to your business in these circumstances, it is important to check or seek legal advice.
Without having your affairs in order, an application to the Court of Protection may be needed to appoint a deputy instead.
The court process is often lengthy and costly, and you might find that the court applies restrictions to what the appointed deputy can do. There is also the risk that the court may appoint a deputy that you may not have approved yourself.
This could leave your business in a vulnerable position and so it is well worth considering your options sooner rather than later.
At Walsh West, we can discuss your circumstances and provide the advice that you need to keep your affairs (both personal and commercial) in order should the unexpected happen.
For initial advice about Estate Planning including Lasting Powers of Attorney, Wills, Trusts and Probate; call our team on 0203 488 7503, 01992 236 110 or contact us by email at firstname.lastname@example.org or via our website www.walshwestcca.com and we will help you.