Business Lasting Power of Attorney: How it Could Save Your Business
SMEs account for at least 99% of businesses in the UK and a lot of small business owners are sole traders. While in more recent times more and more people have caught on to the need to appoint an Attorney to handle their affairs in the event they become unable to make decisions for themselves, very few business owners actually consider how it would affect their business should they lose capacity and are unable to make decisions or run their business.
If you are in business, have you ever considered the devastating effect it could have on your business if you suddenly lost capacity and become unable to function, or if you were involved in an accident or became very ill and could not make any commercial decisions? Contracts could be left unperformed, placing the business in breach of contract, with all the consequences that would follow, the banks would very quickly freeze the business accounts and with no one being able to access funds, this could actually cripple your business.
If you have a personal Lasting Power of Attorney, you might be tempted think problem solved, surely your Attorney would simply step into your shoes and run your business. Well it might not be so straight forward.Firstly, your personal Attorney might not know the first thing about running a business and in particular your business and when you consider that most people appoint family members, usually children as their Attorney, this would most likely to be the case.Secondly having the same Attorney handle your personal affairs and your business affairs could actually create a conflict of interest that would render the Lasting Power of Attorney ineffective.
A Business Lasting Power of Attorney or LPA as it is commonly referred to, prepared by a qualified Solicitor could be the solution to the problem. The LPA is a legal document which allows you to appoint someone or an entity you trust, to take over the day to day running of your business as soon as they are required to do so.Without an LPA in place, the Court of Protection would have to be approached for a Deputyship Order, which is a very lengthy process lasting up to nine months and also a very expensive process. Crucially it would also leave the business un-operational as it would mean on one could make important decisions while the application is pending. Apart from the cost of the application itself, the business would also need to consider the other losses that would accrue simply due to the fact the business could not function.
The business owner cannot rely on employees or even family members to step in as they might not have the knowledge and the required authority to make relevant decisions. When considering who to appoint, it is imperative you appoint someone you can trust and who has the knowledge and skills required to run your business. Also take into account the type of business. The needs of a Partnership or Company would differ to that of a Sole Trader.
Do not leave your business to chance or allow everything you have worked so hard for come to a premature death simply because you failed to take necessary action. Some people are sceptical about appointing an Attorney because they think it makes them lose control. This is a misconception. An LPA actually empowers the business. Daniel Francis Solicitors offers specialist legal advice and assistance in the preparation of a Personal or Business Lasting Power of Attorney. Contact us on 01622 669460