An overview of Business Lasting Power of Attorney
No one wants to think of the worst happening to them, but it’s why we have certain insurances in place; for the home, our car, our life. But what about protection for your business? Most people will assume their spouse, business partner or other trusted advisor will seamlessly take over and be able to help with any major decisions – but how do we know that they’ll do what’s best for your business?
Getting a business lasting power of attorney (LPA) can have many benefits to you and your business but will give you the peace of mind that your business is in safe hands. If something happens to you, where you lose mental capabilities or have an injury where you develop or may develop an illness where you can no longer make decisions for yourself, then having people acting on your behalf to keep the business going or sell assets as you want is so important. They also need to be aware of their roles and responsibilities in relation to the power of attorney.
There are two types of power of attorney, but we’ll focus on the business property and financial one and why this is an important discussion to have with your accountant, they will be one of the people who will have most of your financial information so it’s a good idea to speak to an accountant and solicitor regarding business LPAs.
What is a business LPA?
LPAs are certain documents that are drawn up to enable you to appoint people you trust, called Attorneys, to make important decisions for you in the case that you are incapacitated and can no longer make informed decisions on your own. Business LPAs are often made nearer to retirement age, but as long as you are over 18 and of sound mind – you can get an LPA filed and registered. To enable your chosen Attorney(s) to make sure your LPA wishes are fulfilled, it will need to be filed with the Office of Public Record.
Having a business LPA does not mean that you will lose control of all decisions to do with your business – whilst you have the mental capacity to do so, your Attorney will run all and any decisions past you. Don’t forget that they are acting in your best interest, so they will still discuss things with you until it becomes clear that you can no longer make decisions.
If you do not have a business LPA in place, you will be more at a disadvantage of getting people who can help as and when needed and this can even need a court order with the Court of Protection. It’s not just about getting suppliers paid, it’s about your staff, business banking, your business insurance and all the little details that go into the day-to-day running of your business.
Is a business LPA like a will?
In a nutshell, no. A will is purely for when you’ve passed away and what to do with your assets. An LPA helps protect your business and finances and your health and welfare whilst you are still alive. An Attorney’s authority stops upon death, which is when the executors of your will, will take over.
However, having an LPA can help during various different scenarios such as:
- Becoming seriously ill overseas and unable to come home due to the seriousness of the illness.
- Developing an illness that can lead to or become a serious brain injury.
Why should you have one?
It’s a worthwhile investment, and whilst we don’t always like thinking of anything bad that may happen in the future, it’s a good idea to invest in that future for the ‘what ifs?’. It can help secure your business and financial assets, so that property can be bought or sold as necessary, bank accounts can be accessed, and any tax issues dealt with before they become a problem. When creating your LPA, you will need to give the Attorney all the details relating to assets and your wishes regarding any care.
It is also worth noting that it is about what is appropriate for your business – whilst your spouse or family member can take care of various personal affairs and some business ones, it’s important to be aware of what your business needs are. It needs someone who can handle the running of your business without the emotional attachment.
Knowing that you have an LPA in place if anything does happen to you, will ensure that you and your business are taken care of and that your interests are looked after. We recommend having in-depth conversations with them and picking people you can trust with your health and business, or having separate Attorneys for health and finances.
If you wish to speak to Daniel about how we can help you prepare an LPA, please contact us on 01302 613 515 or email email@example.com