As a business owner, you’ll know that running a successful company is all-consuming in terms of time and resources. And, when everything is going well, thinking about what would happen to your business if you become incapable of running or making important day-to-day decisions either through physical or mental incapacity or if you were stranded abroad for any reason is likely to be the last thing on your mind.
You may think you can rely on family, friends, or even employees to take over the running of the business, but this isn’t a satisfactory long-term solution. You’ve probably spent years building up your business, and you need to know that the person left in charge will have the authority to make the best day-to-day decisions.
This is why we recommend that business owners protect themselves and their businesses by having a Lasting Power of Attorney (LPA). Not only will it save time, but it’ll also help ensure that everything runs smoothly in your absence.
What is a lasting power of attorney?
A lasting power of attorney is a powerful legal document that’s often created at the same time as a Will. It enables you to appoint someone (an “Attorney”) to manage your affairs if you become mentally incapacitated and unable to deal with them yourself. Mental incapacity can be caused by an accident or illness and can be temporary or permanent.
There are two types of LPA:
- Financial LPA – gives the Attorney authority to take care of the donor’s financial affairs, e.g., paying any mortgage or rent, managing investments, and buying and selling property.
- Health and welfare LPA – allows the Attorney to make decisions concerning the donor’s health and welfare, e.g. giving medication, deciding whether or not the donor needs to move into a care facility, and what treatment can be given if the donor becomes ill.
Under the Mental Capacity Act 2005, your appointed Attorney is responsible for always acting in your best interests. Furthermore, they can only possess the power to make decisions on matters you permit through the LPA.
What are the advantages of a lasting power of attorney?
An lasting power of attorney ensures that should you become mentally incapacitated temporarily or permanently; someone can step in immediately to manage your personal and professional financial affairs.
One of the most significant advantages of having an LPA is that you decide who will deal with your affairs on your behalf, and you can place restrictions on and guide your Attorney(s) on how they should deal with your business affairs.
Can I have an LPA for my business?
Absolutely. If you’re making an LPA regarding your business affairs, it makes sense to appoint someone familiar with the organisation. For example, the partners in a business could appoint each other, or you could nominate a family member who knows the business well.
You can also choose more than one Attorney who could act jointly or separately from each other. For example, one to manage your business and the other to manage your property and financial affairs. The choice is yours, but it shouldn’t be taken lightly.
How to get the power of attorney in the UK?
Although you can download basic LPA forms online, it’s always best to instruct an experienced professional to draft the document, especially where the appointed Attorney will be given the power to manage your business affairs. A Lasting Power of Attorney Advisor will guide you on the qualifications and experience your Attorney(s) should have and the powers you may wish to grant them.
An LPA relating to your financial affairs must be registered with the Office of the Public Guardian on the gov.uk website, regardless of your mental capacity, to be valid. Once that’s done, you will have peace of mind that should anything happen to you; your Attorney can act on your behalf.
What happens if I don’t have an LPA?
If you were to become incapacitated, then without an LPA, an application would have to be made to the Court of Protection for someone to be appointed as your deputy. This process can take months, and the costs involved are much higher than those associated with obtaining a Lasting Power of Attorney.
In the meantime, who knows what will happen to your business? It makes so much sense to apply for an LPA now and never have to use it. Think of it as an insurance policy that could keep your business running successfully.
Get legal assistance from LawBite
As a business owner, it’s crucial to consider the lasting power of attorney (LPA) as a means to protect yourself and your business. Running a successful business demands considerable time and resources, often leaving little room to contemplate what would happen if you were unable to make important decisions due to physical or mental incapacity.
While it may seem tempting to rely on family, friends, or employees to take over, this isn’t a reliable long-term solution. Building a business takes years of dedication, and it’s essential to ensure that the person entrusted with its operations has the authority to make sound day-to-day decisions. To navigate the legal aspects of setting up a business Lasting Power of Attorney, seeking professional advice is highly recommended.
Our corporate and commercial lawyers can provide valuable guidance and legal advice in relation to LPA. To gain clarity and support in securing the lasting power of attorney for your business, book a free 15 minute consultation with our expert lawyers or call us on 020 3808 8314.