Do you need a Business LPA?
Lasting Powers of Attorney (LPAs) in their present form have been around since October 2007. An LPA allows an individual to have peace of mind that their personal property and finances, and their health and welfare will be dealt with by those they trust if they ever lost capacity through an accident, illness, or dementia.By Elizabeth Byrne, wills and estate planning solicitor, Napthens.
However, a practical question we often ask our business clients is: who would actually deal with your business – especially if your spouse or family are not actively involved?The usual answer is that the other directors or partners would step in. But, if you are incapacitated and need to exercise voting rights or sign certain documents, your colleagues can’t do this on your behalf without an LPA or a Court Order.
Depending upon your business model, the obvious choice for an Attorney may be a trusted fellow company director or partner, but careful thought must be given before appointing anyone.Remember, they will have obligations to the business, for example, under the Companies Act 2006 and will have to stand in your shoes, be able to fit in and be able to do your job.
Consider the situation where the proposed Attorney is also a director and a shareholder. When the Attorney exercises your voting rights, could this cause problems with decisions made?Similarly, if you are a sole trader, how will your business survive if no-one is formally appointed to act on your behalf? A bank has the authority to freeze a business account after 28 days and then call in loans if it chooses to do so.
Creating a separate Business Lasting Power of Attorney will save time and heartache. It is also tax deductible, as it relates exclusively to your business. I would recommend considering an LPA as part of your business planning process.