Running a business and working on your own terms is one of the most rewarding things you can do. But have you thought about the future? If you suddenly become unable to run your business – for example, because you sustain an injury or get ill – you will need someone to step into your shoes.
At Hatten Wyatt Solicitors in Kent, our wills, trusts and probate lawyers are on hand to help you protect the security of your future and safeguard your business’ best interests.
We never think it will happen to us, but every day people discover they have an illness or have an accident that inhibits their ability to work. It is a morbid thought but as a business owner, you need to consider who could support you and your business if need be.
However, things are not as simple as asking someone you trust to help you. If that person is not legally authorised, it is unlikely they will be able to act on your behalf, potentially putting your business at risk. For example, banks will usually only let the account holder, or someone legally authorised by the account holder, to manage their accounts.
That is where we come in. We can help you create a Business Lasting Power of Attorney that appoints someone to take on specific roles and responsibilities in your business now or in case you lose capacity in the future.
We can also provide advice about putting in a place a separate Lasting Power of Attorney to authorise someone to help you with your personal financial affairs and/or health and welfare.
What is a Lasting Power of Attorney?
A Lasting Power of Attorney (often referred to as an LPA) is a legal document by which you can appoint someone you trust (an Attorney) to make decisions on your behalf.
There are two types of LPA:
- Property and Financial Affairs LPA
- Health and Welfare LPA
You can authorise your Attorney under either or both types of LPA.
Using an LPA to protect your business
You can put a Business LPA in place to authorise an Attorney to take over specific aspects of your business in case you become unable to fulfil the role yourself. Reasons you may need someone to provide extra support include:
- If you are diagnosed with an illness or medical condition that incapacitates you
- If you have an accident that incapacitates you
- If you are going overseas for a while
What happens if you do not make a Business LPA?
If you become unable to make business decisions – for example, because you sustain a brain injury or are diagnosed with dementia which affects your mental capacity – and there is no one already authorised, someone will need to apply to the Court of Protection to become a Deputy.
This process is lengthy, expensive, and the Court of Protection may authorise someone you would not have chosen yourself. Court of Protection applications can take around six months to process, in which time your business may have suffered irreparable damage.
Is a Business Lasting Power of Attorney right for you?
Not everyone needs a Business LPA to protect their interests. The type of business you have will dictate how easily someone else can fulfil your role if you unfortunately lose the capacity to do so yourself.
As a sole trader, there is no legal distinction between you as an individual and you as a business. Therefore, if you lose the ability to run the business, you will need someone to step directly into your shoes. A Business LPA is therefore essential to ensure someone you trust is allowed to make decisions on your behalf.
If you are a partner in a partnership, the terms of your Partnership Agreement may set out provisions for what should happen if one partner loses capacity. If such provisions exist, you may not need to make a Business LPA.
However, it is always important to seek professional legal advice on the exact terms of the Partnership Agreement to ensure your interests are fully protected.
If you are the director of a company, the Articles of Association will usually allow for the termination of a director if they lose capacity. However, if you are the sole director, it is unlikely that the Articles will allow for a termination because there would be no one left to run the company. If this is the case, a business LPA is the best option for you.
Can you make one LPA to cover both your personal and business financial affairs?
You can make one LPA. However, to avoid any conflict of interests it is usually better to make separate LPAs to cover your personal financial affairs and business financial affairs.
Advising families throughout Gravesend, Kent and beyond
We can also offer meetings at your home, in hospital or in a care facility, and in exceptional circumstances a telephone appointment can be arranged via skype.