Mitigating disruption and crisis management
We’d recommend always having a contingency plan in place especially when considering business assets. Should you ever be in a situation where you can’t make important decisions who have you appointed to act on your behalf? To learn more about your options when creating a business or personal LPA arrange a consultation with our team today on 01284 767766.
As a business owner, it’s important to consider what would happen to your business if you were unable to make decisions. For instance:
- You were abroad on holiday or for business.
- You were to have an accident.
- You were to have a medical condition that incapacitated you.
In which case(s), you ought to think about who would authorise the payment of bills, sign cheques, service a business loan or pay salaries. It is important not to assume that a family member or a business colleague will automatically have authority to make these decisions on your behalf —this assumption is probably incorrect and could leave your business exposed to risk. It is) in your best interests to protect your business interests by making a Business LPA.
A Business LPA will be appropriate in most circumstances, but it’s important to first consider the type of business you own.
Directors of companies: articles of association
As a director of a company, we would check the company’s articles of association, as these will often provide for the termination of a director’s appointment in the event that the director loses capacity. This is often done to protect the company’s interests. If such a provision is not included in the articles of association, you may want to include such a provision.
Potential conflict (personal and business)
Although it may be possible to have just the one LPA appointing attorneys to manage your personal assets and your business assets, it may not be appropriate for the same person to make both personal and business decisions, either because they wouldn’t be suitable qualified or due to potential conflict of interests. You should always bear in mind that this could create confusion as to the true scope of the attorneys’ powers, and it’s been known for the Office of the Public Guardian to reject an LPA on this basis.
Depending on how you wish your separate assets in each case to be dealt with and by whom, you may wish to put a different attorney in place for either Business or Property. You may like to keep your business affairs separate from their personal affairs.
If you’re considering making two LPAs, each should contain specific instructions limiting the scope of the attorneys’ powers — for example, a personal LPA should specify that your attorney will have general power in relation to your personal affairs, except for the relevant business assets in respect of which you have executed a separate Business LPA. Your business LPA should contain specific instructions in this respect, too. Your attorneys will then be clear about their powers and won’t encroach on each other’s responsibilities and decisions.
Who to appoint
It’s possible to appoint more than one attorney, and specify attorneys to act jointly in some matters, but separately in others. For example, a trusted business associate (ideally being one who is aware of the ins and outs of the business) could act on your behalf alongside a family member, to negotiate contracts independently of the second attorney, but only access bank accounts with the approval of the second attorney.
In the same way as with the Property and Health LPAs, before your attorney accepts their role, you should ensure they fully understand their responsibilities in acting on your behalf. It may be appropriate to set out some guidance in a separate document.
Implications if no business LPA in place
If you’re unable to make business decisions in the future, and haven’t made a Business LPA, it’s can be necessary to make an application to the Court of Protection for the appointment of a deputy to act on your behalf. This process can be expensive, time consuming and there is no guarantee that the Court of Protection will choose someone you would have elected. It could also take months before a deputy is appointed, during which time your business may be vulnerable and at risk.
It should be part of any business owner’s continuity plan and crisis management strategy to consider making a Business LPA. Our Private Client team have vast experience when dealing with Lasting Powers of Attorney and are happy to discuss your options guiding you through the process to ensure your business assets are protected. We have offices in Suffolk and London acting for clients across the country. Contact our team today to arrange a no charge initial meeting 01284 767766.
© Atkins Dellow LLP 2021
SHAREFor more information and support on the new legislation regarding Inheritance Tax get in touch with our Private Client team today on 01284 767766.In January 2022 new legislation came into effect which the government says will give most people reduced inheritance...
SHAREFor more information on how we can support you in the recovery of a trade debt contact our company commercial Law team today on 01284 767766.Most, if not all, businesses will need to pursue an unpaid invoice at some time. This checklist highlights the advantages...
SHAREBe in control of what happens to you. Want to create a Lasting Power of Attorney? Contact our Private Client team today to arrange a no charge consultation 01284 767766.An LPA is a legal document that lets you (the ‘donor’) appoint one or more people (known as...