Dying Matters Week: The importance of having a Business Lasting Power of Attorney in place

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As difficult as the subject may be to talk about, making a will and putting a power of attorney in place if you have a business are important.

With this in mind, and ahead of Dying Matters Week, which runs from May 13-19, Ringrose Law has brought together the follow information for making a Business Lasting Power of Attorney and explains the importance of putting one in place if you are a business owner/Director:

What is a Lasting Power of Attorney (LPA)?

A lasting power of attorney (LPA) is a legal document in which you authorise a chosen person or persons (attorneys) to make certain decisions on your behalf, when you require support, for example should you become unwell or lose the capacity to make decisions for yourself.

Why have a business LPA?

For business owners, whether they are partners, sole traders or company directors, unexpected incapacity (even if only temporary) can impact significantly on the business finances, potentially meaning that suppliers are not paid, staff are not paid, stock could not be purchased, business loans may go unpaid and no one else would be authorised to control the business account. You might think you could rely on family members or employees to deal with the running of the business, but they may not have the authority to do this and business colleagues do not automatically gain the authority to make decisions on your behalf.

A business LPA can be used if a business owner:

  • is overseas or on holiday
  • has had an accident that means they are temporarily incapacitated
  • has an incapacitating medical condition that means they are no longer capable of acting

What happens without a business LPA?

If a business owner does not have a business LPA in place and any of the above situations arise, an application to the Court of Protection to appoint a deputy to act on their behalf may be needed, which can prove costly and take a significant length of time, exposing the business to a huge amount of risk.

Who is a business LPA  suitable for?

  • a sole trader
  • a person who is self-employed
  • a director of a companyif a director’s incapacitation is not covered by the articles of association or memorandum of association
  • a partner within a partnershipif a partner’s incapacitation is not covered by the articles of association or memorandum of association

The LPA must be registered by the Office of the Public Guardian whilst the Donor still has mental capacity, to take effect.

A person can have a personal financial LPA, a health and welfare LPA and a business LPA, but should appoint attorneys that are suitable for each one separately.

A business attorney must be able to carry out the role and be someone suitable to undertake the responsibilities of the donor in a business LPA, and the donor should consider giving specific and detailed instructions on what powers a business attorney would hold.

National Dying Matters Week

Every year in May, Dying Matters host a Dying Matters Awareness Week, which reminds us all of the importance of thinking about the sensitive subjects of dying, death and bereavement.

Dying and bereavement are subjects that many people find difficult to discuss, or even think about. However, did you know that every year, around 1 in 3 people die without making a will.

If you would like to discuss protecting your business and your family, Ringrose Law has offices in Newark, Sleaford, Lincoln, Grantham, Boston or Spalding.