Owning and running a business
Owning and running a business takes up so much of a person’s time that it can become all encompassing. Unfortunately many people in that position do not think about what would happen if they became incapable of running or making decisions about the business either through physical or mental incapacity or simply because of family circumstances or being out of the country.
What would you do if you couldn’t make the day-to-day decisions?
You may have to rely on family friends or employees to take over the running of the business for you but can they be trusted? Would they be the people you would choose to look after things in your absence? More importantly will they have the authority to make the day-to-day decisions or deal with the bank? If orders need to be fulfilled and wages paid having someone that has the authority to deal with these matters can be essential.
One way to make sure someone can help out if you need it is to have a Lasting Power of Attorney. You can save time and avoid distress for your business colleagues employees and family by making sure that somebody you trust is appointed to deal with your affairs whenever you need them to act on your behalf
Lasting Power of Attorney
A Lasting Power of Attorney (“LPA”) enables you to appoint someone (an “Attorney”) to look after your financial affairs if you were to become incapable of dealing with them yourself.
You decide on who will deal with your affairs on your behalf and you can place restrictions on and give guidance to your Attorney(s) on how they should deal with your affairs. The LPA can be general and can allow your attorney to act on your behalf on all personal welfare or property and affairs matters. Alternatively you can restrict your attorneys’ powers or create specific LPAs which only deal with certain issues such as your business affairs.
Who should be your attorney?
By making an LPA, you make the decision about who acts on your behalf. If you are making an LPA in respect of your business affairs, it makes sense to appoint someone who is familiar with the business. The partners in a business could appoint each other, or you could appoint someone in your family who knows the business well.
If you are making a LPA in respect of all of your financial affairs (not just your business), you could appoint anyone that you know and trust to deal with your affairs, and who knows you.
What decisions can the attorney make in respect of your financial affairs?
The decisions that your attorney can make include matters such as buying and selling property, accessing, opening and closing bank accounts, investing, savings, making gifts on your behalf to friends and relatives in specific circumstances and for tax planning purposes
Your attorneys must act in your best interests and must follow a Code of Practice set up by the Mental Capacity Act 2005. Your Attorney must take into account your wishes, beliefs and views you have expressed in the past. The views of your family and any other attorney you have appointed may also be taken into account. You are involved in all decisions as much as possible.
When can the attorney act?
An LPA relating to your financial affairs can be used as soon as it is registered with the Office of the Public Guardian, regardless of your mental capacity.
Whilst you are still mentally capable, you make decisions regarding your financial affairs yourself. Your appointed Attorney will carry out your wishes if you can not carry them out yourself.
If you have lost the capacity to make the decisions yourself, your appointed Attorney will make and carry out the decisions on your behalf.
As long as you are still able to make decisions on your own behalf, you can revoke an LPA at any time and you do not need to give a reason.
Once the LPA is registered with the Office of the Public Guardian, your Attorney can act on your behalf when it is necessary (e.g. when you are ill or simply away temporarily) and you have a peace of mind that your Attorneys can continue acting on your behalf if you were to lose capacity to deal with your affairs.
An LPA can be registered before or after you lose capacity to make a decision covered by the document. There is a fee payable upon registration. As the Lasting Power of Attorney cannot be used before registration, it is advisable to register immediately after signing the document.
What if I do not make an LPA and I am no longer able to deal with my estate?
Without an Enduring Power of Attorney or a Lasting Power of Attorney, an application would have to be made to the Court of Protection in order for someone to be appointed as your deputy. This process takes longer than obtaining a Lasting Power of Attorney and the deputy would have many more obligations to the Court. In addition, because there is a constant link with the Court of Protection if there is no LPA, the costs can be proportionately higher as well.
What happens to Enduring Powers of Attorney made before 1st October 2007?
It is no longer possible to create new Enduring Powers of Attorney but Enduring Powers of Attorney created before 1st October 2007 are still valid and can still be used in the same manner as before.
Once the donor loses mental capacity the Enduring Power of Attorney must be registered at court before the attorney can continue acting
If you have any questions or would like to discuss this further, please contact Emily Wigg or Donata Crossfield at Ingrams Solicitors
Ingrams Solicitors
10 Great North Way
York Business Park
York
YO26 6RB
01904 520600
emilyw@ingramssolicitors.co.uk
Or use the Contact form
