Lasting Power of Attorney for business - Gerry's story
In last month’s blog, we looked at the question of Lasting Power of Attorney and the perils of not having it in place. This month, we’re looking at a sad, true story which highlights the importance of an LPA if you own a business.
It was just after 2.00 am that Gerry was woken by a noise in his driveway. A quick glance through the curtains confirmed his worst fears. A couple of lads were breaking into his car. Tearing downstairs, he reached the drive, just as they were reversing out. He grabbed the driver’s door handle as they pulled away. They ran over him. Gerry suffered major head injuries and as a consequence, he now has no long term memory. His short term memory is 10 minutes at the most.
As he was the sole director, Gerry’s business was forced into administration and liquidation. Three people lost their jobs. With an LPA in place, all this would have been avoided - the business would have been able to carry on.
A Lasting Power of Attorney (LPA) is a legal document which confers upon a person of your choice the legal power to make decisions for you, should you become incapacitated. An LPA is not only for personal assets. It can also apply to business owners like Gerry.
Shareholders, partners and sole traders are some of the most common business owners who might benefit from appointing an LPA. Imagine you were to suffer Gerry’s terrible misfortune. You’re a business owner and you’re either killed or incapacitated. Is there someone in place who could take over the running of the business and its finances? If not, and your family depends on income from the business, well - just think about how severely their finances might be affected.
Months of delay
Not appointing an attorney could be devastating for your business. An application would have to be made to the Court of Protection to appoint a deputy. This process could take up to nine months and comes with a considerable financial burden. In the meantime, the business could well suffer, with no one in a position to oversee its finances and day-to-day operations. Without the correct legal authority, family members or employees might not be in a position to run the business.
When you appoint your LPA, make sure you appoint someone you can trust - someone you’re confident will run the business in a way that you would wish. You could decide to appoint two attorneys – one to deal with business (perhaps an accountant or an employee) and the other for personal finances (maybe a family member).
Your chosen attorney takes charge
Once in position, the business LPA will allow your chosen attorney to manage the business as and when needed. If you are still alive but temporarily incapacitated, your right to run the business once you feel able, remains unaffected. This type of temporary LPA can be useful if you are a business owner who often has to travel overseas.
Think of a business LPA as the cornerstone of an effective business continuity plan. Regardless of health, all business owners should have an LPA in place to protect their business and family finances.
Here to help
If, for whatever reason, you become unable to run your business, your family will have enough on their plate. Why burden them with the extra worry of a shaky financial future? Consider carefully the option of appointing a business LPA. If you’re unsure about any of the matters raised here, then please do call - 01234 713021 - or drop me an email. I’d welcome the chance to help.