It is often uncomfortable to discuss or think about but it is now more important than ever to consider what would happen to your business if you were to be struck down by an illness or an accident. There are many hurdles that we cannot predict and it is essential to consider obtaining a lasting power of attorney for your business.
A Lasting Power of Attorney (LPA) is an important document that allows you to appoint trusted individuals to be legally authorised to make decisions on your behalf in the event that you are incapacitated. Without this document, there can be disastrous consequences.
Consider a situation where you may become hospitalised or out of action for some months. You have physical incapacity due to your injuries but you also suffer some mental incapacity and are unable to make decisions as you once did. What will happen to your business? Who will run the day-to-day operations, such as signing cheques, authorising customer orders, arranging payroll for your staff? Who will make those bigger business decisions which can only be made by you as a director, shareholder or partner? The list goes on and I am sure that some of you reading this may not know the answer in relation to your own business.
A business LPA will allow your company to continue operating as if you were still able to make those important decisions. It would help to ensure that your business would not suffer as a result of your incapacity. There are two different types of LPA – one which covers your health and welfare decisions and the other which covers your finances. It is possible to have an LPA to cover your business finances and a separate LPA to cover your personal finances.
When considering setting up a business LPA, the most important decision is deciding who to appoint as your attorneys. These need to be individuals who understand your business and have the relevant skills to be able to continue operating your business on your behalf. You may therefore choose to have different attorneys acting for you under your personal finance LPA and your business LPA as these require very different skillsets.
Your chosen attorney also needs to be able to work alongside your shareholders, directors and partners so it is important to consider the impact your incapacity may have on them as well. The power that is given to an attorney under any LPA is very serious and wide reaching. Whilst this is essential to allow your business to continue to operate, it makes your decision as to who to appoint even more important to ensure that their position is not abused.
You will also need to consider how the business LPA will interact with your other company documents such as your articles of association or partnership agreement. This is something that your solicitor will be able to ensure is complimentary, as opposed to contradictory and make sure that they can work in harmony together.
Your business is a part of your family – it provides your children with food on the table and new shoes on their feet. Now more than ever, it is time to ensure that your business has the necessary tools to help it survive any unexpected turn in the road.
Our experienced team of inheritance protection solicitors will be able to talk you through the process of setting up your business LPA. You can ensure the process is under control, giving you peace of mind that your business is being looked off if you are no longer able to run it.