There is a general misconception that Lasting Powers of Attorney (LPA) can only be used for personal use. This is certainly not the case.
Whether you are a company director, partner or sole trader; as a businessperson, you will have invested a lot of money, time and effort into your business and, so you need to ensure that your business is well protected.
Most prudent business owners may already have insurance policies in place such as ‘Key Person’ insurance to cover any death related risk to their business but very few have considered protecting the business in the event of not being able to make decisions whether temporarily or long time.
Business life is very time consuming and so planning is key to ensure that your business runs smoothly. If you were unable to make decisions or carry out pertinent actions due to mental or even physical capacity issues, wouldn’t you want to have a plan in place to ensure that the day to day operations of your business is not disrupted in your absence?
Just like Key Person Insurance, a Lasting Power of Attorney is an important part of contingency planning to ensure that you put in place people and measures of your choice to run your business.
Another misconception is that people tend to think of lack of capacity as a gradual process linked with old age; however, this is not the case.
You may not be able to make certain decisions if you are out of the country, have had a serious accident, or have become unwell, mentally or physically, which incapacitates you.
In these circumstances, unless you have appointed an attorney to deal with finances, the risk and disruption to your business could be enormous. Your business may be left vulnerable without an authorised person to deal with the business bank accounts. This could result in customers/clients not being attended to, staff wages not being paid on time, third party suppliers not being paid, business loans/mortgages not being serviced…the list goes on.
In today’s climate, many business owners also act as personal guarantors for the business loans and leases. If your business were to go into liquidation, your personal assets including your home will as well be at risk.
A Financial LPA gives you the opportunity to prepare for any unexpected situations by allowing you to appoint someone who will step into your shoes and make essential business decisions on your behalf, should you become unable to do so. This should be a trusted person, who you trust is qualified enough to take on the reins of your business and make decisions. The type of financial decisions your attorney can make includes:
• Accessing your business bank accounts;
• Opening and closing bank accounts;
• Dealing with business property;
• Investing your assets;
• Dealing with tax affairs.
A Financial LPA will put you, your staff and loves ones’ mind at ease knowing if things were to go wrong, even if for a short period, their livelihood and lifestyle does not have to be affected negatively.
As with a personal LPA, a Financial LPA can be used as soon as it is registered with the Office of the Public Guardian and can also be revoked if you retire or sell your business – as long as you still have the capacity to revoke it. The LPA can also be structured in a way that it can only be used if you lose mental capacity (instead of physical capacity).