“Don’t leave your
future to chance”
Lasting Powers of Attorney (“LPAs”) are often wrongly thought to be something that only the elderly or frail need to consider.
Many younger people think that LPAs are not for them – yet, sadly, incapacity can occur following an accident, sports injury, surgery or illness.
If an LPA is not in place, an application might have to be made to the Court of Protection for a Deputy to be appointed to manage their finances and property.
However, most people would prefer to nominate someone in advance who understands their preferences.
This can be done by signing LPAs for property and financial affairs and also for health and welfare.
Complications can arise if a business person who is a sole trader, a partner or a director becomes incapacitated through illness or accident.
Even if they have made LPAs appointing someone to deal with their personal property and financial affairs, that person might be unsuitable or unable to manage the business at a time of crisis.
A Business Lasting Power of Attorney (“BLPA”) allows an individual to appoint an attorney to make decisions restricted to their business interests if they lack mental capacity and should be created in addition to the LPA for their personal affairs.
If an individual loses mental capacity, they are legally unable to manage their affairs. If they do not have an LPA, then an application to the Court of Protection (“COP”) will be necessary – and this is not only expensive but can take six to nine months to complete.
During this time, there would be no one available who could lawfully make financial decisions or run the business.
Without a BLPA it may prove impossible to keep the business going and to:
Professional standards and compliance may be overlooked, property or commercial transactions could be affected, or vital deadlines might be missed.
Even where bank accounts are jointly held in the names of business partners or directors, the bank may freeze the account if one of the partners or directors loses capacity to deal with their financial affairs.
For a sole trader, the bank account is likely to be inaccessible and the authority of any other signatories to the account would end.
Following such an event the business may become exposed to failure or winding up.
By having a BLPA in place, the business owner may ensure that someone they trust and understands the business will be able to continue its day-to-day running. An attorney would have every authority needed to keep things going.
Business owners or directors are advised to create three separate LPAs — LPAs to deal with personal property and financial matters and health and personal welfare and a separate BLPA to manage their business interests.
If you are a business owner or company director, get in touch with us for further advice.