Business Lasting Power of Attorney – why you need one…
As a Business Owner, Director or Partner it is important to ensure that you have a Business Lasting Power of Attorney (LPA) in place that protects your interests should you become incapacitated in any way.
If you do become incapacitated either through illness or you lose the ability to make decisions, a Business LPA will allow you to appoint a legal representative who can assist with your business dealings and ensure business continuity even if you are unable to work or are absent from the business for any reason.
A Business LPA protects your business from being exposed to risk and it can cover all manner of situations.
Have you ever thought about who would pay salaries, deal with bills, sign cheques, approve and deal with many of the day-to-day activities that you, as a senior member of staff, deal with and take for granted should you be unavailable to do so?
Most Businesses have a Continuity Plan in place that covers essential requirements should something happen that would prevent the business from operating. These might include provisions in terms of computer systems, telephony, networking, and off-site backup, as well as more general areas such as flood, fire and even epidemic. Each business has its own unique continuity plan, but they all have the same goal to ensure the least amount of disruption and ensure the business can continue to operate with the minimum of disruption.
As part of a Business’s Continuity, they may also make provision for what would happen if one of the key decision makers was incapacitated, but this is not always the case.
How would your business continue to function should you be incapacitated in any way? Is this covered in your continuity plan, articles of association or a partnership agreement? Do you need a Business LPA?
Depending on the size of your business and its structure, provision may have been made that deals with incapacity in the Articles of Association. The most common provision in large companies is for the termination of a director’s appointment if he or she loses capacity. If your business does not have this or a similar provision or if you feel it may be discriminatory, a Business LPA could be an alternative to consider which allows you to appoint a proxy should you lose capacity.
As a Sole Director, it is not as straightforward. The loss of capacity of the Sole Director would result in no one in a position to run the business – this is where a Business LPA can help make clear your wishes.
If you are a Partner, your Partnership Agreement may cover what would happen if you were incapacitated – it is always good to check to ensure that the provision is adequate as you may feel that an LPA is needed. If this is the case it is important to ensure that advice is sought to guarantee that any clause included is not discriminatory and that the LPA you wish to put in place does not conflict with the provisions already made in your current agreement.
Limited Liability Partnerships
If you are a Partner in a Limited Liability Partnership (LLP), it may be that you operate under an Articles of Association model. If this is the case it may be worth reviewing your Articles to ensure that any discriminatory clauses are removed and that you and the other partners take legal advice in regard to a Business LPA to ensure the minimum of disruption should any of you be incapacitated.
As a Sole Trader, you run your business as an individual. As such the business is not legally separate from the owner. It is advisable if you are a Sole Trader to put a Business LPA in place to ensure that you do not expose your business to unnecessary risk.
The team at Tollers has experts that can assist with both Personal and Business LPAs and work with companies to ensure that their agreements and articles are robust and cover all that is required currently by law. Having a Personal LPA in place will not necessarily cover your business interests and so it is important to take legal advice to ensure that your business interests are protected.
If you would like to know more about the practicalities and implications of making a Business Lasting Power of Attorney …Talk to Tollers on 01604 258558, and our Wills/Tax and Estate Planning team will be happy to advise you.
Find out more about LPAs here.