How do Lasting Powers of Attorney work with a Business?
Business owners will know there are huge demands on their time and resources and many will have taken steps to ensure that in the event of a crisis, flood, fire, computer hacks etc., they have contingency plans in place to allow the business to carry on functioning as a going concern.
However, very few businesses give the same type of consideration to what would happen if one of the key decision makers was incapacitated; how would a business run if one of the key people was unable to make decisions?
Do family or colleagues have the legal right to make business decisions on behalf of the owner?
You might think you could rely on family members or employees to deal with the running of the business, but they may not have the authority to do this and business colleagues do not automatically gain the authority to make decisions on your behalf.
How can you ensure the right person makes decisions on behalf of an incapacitated business owner?
The solution to this issue is to put in place a Business Lasting Power of Attorney (LPA). These can be used in situations where the business owner or decision maker:
- is overseas or on holiday
- has had an accident that means they are temporarily incapacitated
- has an incapacitating medical condition that means they are no longer capable of acting
What happens if there is no Business LPA in place?
If there is no Business LPA in place an application should be made to the Court of Protection to have a deputy appointed. This may take months or longer, during which time the business is exposed to uncertainty of survival. Therefore, it is always best to have in place a valid Business LPA.
Who needs a Business LPA?
You may have assumed that a Business LPA is only really needed once a company becomes a certain size in terms of turnover, employees and/or assets, but this legal process is actually important for a wide range of workers, with our Business LPA Solicitors able to advise clients including:
- a sole trader
- a person who is self-employed
- a director of a company if a director’s incapacitation is not covered by the articles of association or memorandum of association
- a partner within a partnership if a partner’s incapacitation is not covered by the articles of association or memorandum of association
A person can have a personal financial LPA, a health and welfare LPA and a Business LPA, but should appoint attorneys that are suitable for each one separately.
A business attorney must be able to carry out the role and be someone suitable to undertake the responsibilities of the donor in a business LPA, and the donor should consider giving specific and detailed instructions on what powers a business attorney would hold.
How do I find the right legal advice with regards to a Business LPA?
If you would like further advice on the issue of Business LPA’s then please contact a member of our Private Client team on 01695 574 201 or by email.