Why do I need a Business LPA?
If you are a shareholder, partner, sole trader or director and become incapacitated through illness or injury, your business is at risk if you don’t have a Business Lasting Power of Attorney.
The concept of personal LPAs for both property and financial affairs and health and welfare is well known but a business owner should have a separate Business LPA for their financial affairs to deal specifically with their business.
You need to plan, prepare and protect your business by putting in place a Business Lasting Power of Attorney to appoint someone to act on your behalf in connection with your business so that fundamental business operations can continue if you become incapacitated.
Why do I need a Business Lasting Power of Attorney?
If a business owner becomes incapacitated without a Business LPA the implications can have a detrimental impact on the business including:
• the running the business son a day to day basis
• the management of the business finances
• the business decisions
• the banks may freeze the business account
• loans can be called in by the bank
• the mechanism for decision making can be frozen
• contracts may not be entered into or valid
• business insurance may be affected
Your business could be in breach of its regulatory obligations if a key business owner is incapacitated and measures are not in place. It could bring your business to a grinding halt.
As a business owner you should make strategic plans for the future of the business and as part of this you should put measures in place to deal with your absence from the business in the event you are incapacitated.
A Business LPA is the cornerstone of an effective business continuity plan.
Who should I choose as my Business LPA attorney?
You will need to appoint an attorney or attorneys who you trust and are confident that they could do your job in the way you would wish during your incapacity. You may wish to appoint someone who works in your business and is therefore already familiar with how your business runs and how you would want it to run. For these reasons, appointing your spouse, relative or friend as you may do in your personal LPA, it is not necessarily appropriate for your Business LPA.
You can appoint more than one person to make decisions for you such as a business colleague plus the business accountant. You can appoint them to either act jointly or jointly and severally. Jointly means that they must always make decisions together and agree. Jointly and severally means that they can make decisions independently of each other.
Once in place the Business LPA will allow your business attorneys to manage the business and run the business in your place.
What if I don’t make a Business LPA?
If you don’t have a Business LPA (or indeed a personal LPA) and become incapacitated, then a Deputy will need to be appointed by the Court of Protection on application.
A Deputyship application is a costly exercise and can take around 6-9 months to be processed – could your business wait this long without decisions being made? Additionally, you do not get to choose who the Deputy is and therefore you will not know who the caretaker of your business is and how they will manage those interests.
What is the cost of a Business LPA?
A Business LPA is specific to your particular situation and your business so we will require full details to provide you with an accurate quote but the cost of a Business LPA is tax deductible.
If you are a business owner then contact Dagmara Kulczykowska on 01908 689341 to discuss how a Business LPA can protect you and your business.
Dagmara Kulczykowska | Partner