Many people will have heard of “Lasting Powers of Attorney” (LPAs), which were introduced in 2007. LPAs are used to make provision for ill health or mental decline, by authorising someone while you are still fit and well to deal with your finances in the future.
They are most commonly used by clients in retirement or who have recently been diagnosed with a serious medical condition. Therefore, they are (somewhat inaccurately) viewed as something only elderly clients need consider.
There is, however, an alternative use for these forms, which applies to anyone owning and running a business.
While it is most common for clients to sign a single LPA covering all of their financial affairs, those with business interests should consider signing several LPAs, appointing different persons to deal with different aspects of their affairs.
A common arrangement is to appoint the spouse to deal with personal finances, whereas business affairs may be dealt with by professional advisors, business partners or other relatives who they consider more adept or knowledgeable in that field.
Similarly, spouses often wish to have nothing to do with business affairs, as they may feel out of their depth or uncomfortable in an environment in which they may have had little or no participation to date.
The complexity of running a business and the background knowledge and skills required to ensure that operations continue without any unnecessary delay, mean that a specific appointment in this regard would be most sensible.
Business owners (no matter how fit and well they may be currently) should consider signing LPAs making specific separate provision for their business to guard against a sudden accident or unexpected ill health. Their fellow business partners may appreciate this provision being put in place, so as to avoid their own interests being adversely affected by such events.
Without an LPA in place an application to the Court of Protection for the appointment of a Deputy to take decisions on that person’s behalf can sometimes be required, which would typically take around six months to complete, potentially leaving the business in limbo in the meantime.
If you do not have a well-drafted Shareholders’ Agreement, as well as adequate insurance cover and associated Cross Option Agreements, then ill health or accidents may leave your business rudderless, while these issues are tackled retrospectively.
Sutton McGrath Hartley is a multi-disciplinary firm of chartered accountants, financial advisers and lawyers offering comprehensive financial expertise for all business, personal and family interests. Our specialist Wills & Probate department can help with wills, trusts and estate planning. For further information please contact Tom Rodgers on 0114 266 4432 or firstname.lastname@example.org.