TRF Wills are delighted to announce that we now have a full-time consultant covering Wolverhampton and its surrounding geographical areas. Therefore, if this is where you are based and you require a business-related Lasting Power of Attorney (LPA), then we shall be happy to help you.
Business Lasting Power of Attorney (LPA)
A business Lasting Power of Attorney (LPA) specifically differs from a personal LPA. It will be tailored according to your business, and can also consider its Articles of Association, Shareholder agreement, Partnership agreement, etc.
You can put an LPA in place for your business in case you subsequently become unable to make decisions due to your unavailability. Reasons for this include holidaying abroad, illness, accident, or simply a loss of mental capacity. The power vested in your chosen attorney(s) would allow them to continue running your business, pay salaries to staff, sign cheques, access the business account(s), or pay bills.
A business can either be run in the capacity of a sole trader, a partnership, or a limited company. Let’s look at each of these in more detail.
Sole Trader
In this instance, it is likely that the business is owned and therefore controlled by you. If you do not have any LPA provisions in place and you become unable to make decisions for any reason, no one else will be able to continue to make important business decisions on your behalf.
Partnership
If the business is set up as a partnership, there may be a partnership agreement in place which determines what happens if you are no longer able to make decisions. It is advisable to check for this before an LPA is drawn up to prevent any conflict between each document.
Limited Company
If you are a director of a Limited Company, there will be Articles of Association in place which again could contain certain provisions with regards to what should happen if you or another one of your co- directors becomes incapacitated.
Again, you should check this first before making an LPA to ensure that each document does not conflict with the other.
How do you Make an LPA for your Business?
You would use an LPA for Property and Financial Affairs, but ensure that this LPA only deals with your business decisions. For example, “My attorneys only have authority to use my business accounts and make decisions relating to my business. They are not permitted to use my personal account(s) or make decisions about my personal finances”.
This means that in your personal LPA you would specify “My attorneys only have the authority to use my personal bank account(s). They are not permitted to access my business account(s) or make any decisions relating to my business”.
This makes it clear where the authority starts and ends for your attorneys. Alternatively, you could have one LPA and say nothing. Provided the LPA does not contain any instructions that restrict the attorney’s power to personal finances only, then they will be able to deal with your personal and business affairs.
Who should Act as an Attorney in your Business LPA?
You may wish to appoint friends or family, but they may not have the expertise, qualifications, or appropriate knowledge to continue making business decisions. Therefore, you could appoint a professional attorney (which will no doubt incur an associated fee), or a business partner if you feel that this is the right decision. Effectively, this needs to be someone you trust, who understands your business, and who shares the same or similar business goals.
It is important that the LPA is registered with the Court whilst you still have the mental capacity to do so.
What Happens if NO LPA has been put in place for your Business?
If you own a business and lose your ability to make business decisions for some reason, if there is no Business LPA in place, then it is likely the bank will freeze the business accounts, which could be disastrous for your business. It also means that the only way forward would be for someone to make an application to the Court of Protection on your behalf and apply for a Deputyship Order. This can take many months and be very expensive. This also has the impact of there being nobody able to make business decisions during the application process.
How will staff be paid?
How will stock be purchased?
Mental capacity can be lost at any time and could be due to an accident, a stroke, or a deteriorating medical condition, so please don’t wait until it’s too late, or your business could be severely disrupted.
If you are based in the Wolverhampton or surrounding areas and wish to discuss your options further WITHOUT fear of consultation fees or obligation, then please Contact us.
TRF Wills (TRF) was created by Michael Cotterill in 2005. He is a member of the Society of Will Writers and registered with the Information Commissioner’s Office.