In the second of two articles about Lasting Powers of Attorney, Laura Colville, Associate Solicitor at our Chichester Office, explores how business leaders must not overlook planning for what happens with their commercial assets should life throw a nasty surprise.
It is likely that you will have heard of Lasting Powers of Attorney (LPAs) which are legal documents that allow a person (the Donor) to appoint a person or people they trust (the Attorney(s)) to manage their personal affairs should they lose the capacity to make decisions for themselves.
For Donors who are business owners, the Attorneys that they choose to appoint under an LPA might be different when considering personal affairs versus business interests. For example, in many circumstances, a Donor may choose their spouse and children to be their Attorneys for personal matters but would those family members be the right people to manage a business in the event that the Donor loses capacity?
A separate Business LPA should be put in place to ensure that a suitable Attorney is appointed to make decisions about the business interests and to avoid certain risks that can arise. For example, a business bank account can be frozen if one bank account signatory loses capacity which could leave accounts, wages, and other expenses unpaid. Further, if the right Attorney is not in place, there could very well be delays to the usual running of the business or, indeed, a failure to fulfil contracts.
A business that is unable to pay its debts or carry out its contracted work is very quickly going to lose custom and suffer reputational damage.
If there is no Business LPA in place then, once a business owner has lost capacity, it is too late to make a Business LPA and the alternative would be to make an application to the Court of Protection for a Deputy to be appointed. This route is time-consuming as it takes months for an Order to be granted. In that time, the business could be in very poor shape.
It is usual for a business to have in place a crisis management plan and, as part of that, it would be very sensible to have Business LPAs drawn up for each of the business decision-makers. It will depend upon the type of business that is in place (e.g. sole trader/ partnership/ limited company) as to whom should have the Business LPAs and a specialist Solicitor will be able to advise on this.
Protect your Business Interests today – to discuss your situation, speak to Laura on 01243 787899 or email firstname.lastname@example.org for an initial discussion.