Building a successful business takes time, dedication and years of hard work. In order to make sure that hard work doesn’t go to waste it is important to plan ahead and ensure that the business could continue to run if you became ill or had an accident and were not able to manage your own affairs. Without a Lasting Power of Attorney (LPA) no one could run the business on your behalf or access bank accounts without applying to the Court of Protection which can be a lengthy and stressful process. In the case of a business, the delay in obtaining an order allowing someone else to manage the business on your behalf can cause serious damage to the business.
Illness or incapacity are often under recognised risks for owner managed businesses. Making an LPA will mean that your chosen Attorney can make decisions on your behalf and keep operations running as normal. Without this, the business may struggle to function if you were to become mentally incapacitated. Simple matters such as paying wages, dealing with suppliers’ contracts and putting transactions through the books may not be possible in your absence.
WHAT IS AN LPA AND HOW DOES IT HELP?
An LPA allows a person to appoint an Attorney to make decisions regarding their business interests and affairs including shares in a company.
If you lose mental capacity and there is not a valid LPA in place business partners or family members may have to apply to the Court of Protection to arrange for a court-appointed Deputy to officially make decisions on your behalf. Applications to the Court of Protection take a minimum of four months and often go on for longer. During this time the business may suffer if it is not able to be run efficiently.
Making an LPA is a fairly simple and cost-effective way of making sure that if you cannot run your business you can choose someone you trust to do so in your absence.
We have many years’ experience advising business owners in relation to LPAs and succession planning for owner managed businesses.