Most people are aware of the existence of a Lasting Power of Attorney (LPA), a legal document which enables an individual to nominate someone to take decisions on their behalf if they become incapacitated in some way.
Understanding the benefits of an LPA and finally arranging one are two entirely different things however, and many will bury their head in the sand until an LPA becomes a necessity.
Whilst the benefits of an LPA for an individual are widely appreciated, less well known is the ability to put an LPA in place for a business.
A sensible precaution
As a business owner, if you become unable to make decisions for any reason, it could severely impact on a vast number of people and ultimately the fate of your business.
The benefits of having an LPA in place for your business are therefore apparent; every person your business comes into contact with, from suppliers and creditors to clients and employees, could benefit from you having a trusted individual nominated to keep things running should you become incapacitated for any reason.
The people closest to you can also take peace of mind from knowing that there are measures in place to ensure the continuity of income from the business (from its continued operation) should the worse happen.
So why are LPAs for businesses so uncommon? Lack of awareness seems to be a key reason, with many business owners simply unware this is an option.
Some people fear that even a temporary period of mental incapacity may lead to them permanently losing control of their business interests; the Mental Capacity Act 2005 deals with this concern however, requiring the attorney you appoint to “…so far as reasonably practicable, permit and encourage the person to participate, or to improve their ability to participate, as fully as possible in any act done for them and any decision affecting them.”
Others are content that in circumstances where capacity is lost, the Court of Protection will appoint a deputy. Whilst this is true, it unfortunately comes with a number of potential issues.
Appointing a deputy can take several months. During this time the decision making processes and daily operation of a business, without leadership or direction from the top, can fall apart.
The appointment of a deputy is also an expensive process. The combination of the long timescale and costs can make a significant impact on a business.
Putting a business LPA in place on the other hand ensures that a person you know and trust will take the reigns immediately, and can begin to deal with the usual running of the business without delay or unnecessary costs.
Make the arrangements now
A business LPA can be straightforward to organise. A Form LPF1 has to be completed and signed by a witness, the chosen attorney and a ‘certificate provider’. The form is then registered with the Office of the Public Guardian (OPG).
At time of writing the fee for registering a business LPA is £82. If you arrange a personal LPA alongside a business LPA, then your personal LPA should stipulate that it does not cover your business affairs. Your business LPA must state that your nominated attorney has power only over your business affairs.
The choice of attorney to be appointed requires a lot of careful consideration. Our experienced legal advisors can offer support in making this decision, and the factors to consider.
If you require any assistance with preparing a Lasting Power of Attorney for your business or personal affairs, or would like further information, please contact Sarah Nash, Associate Director in our Wills, Probate and Estates team. Sarah can be contacted on 01543 267981 or email firstname.lastname@example.org
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