The benefits of a lasting power of attorney (LPA) have been well documented, allowing an individual to nominate someone to take decisions on their behalf, if they become incapacitated in some way.
However, not everyone is aware that an LPA can be put in place for a business, which given the ongoing health crisis, could be a smart decision for business owners, especially if an unexpected illness threatens the livelihoods of employees.
This lack of awareness is one of the key reasons why business owners do not adopt an LPA, which means that should something happen, the business will have to rely on the Court of Protection to appoint a deputy.
Of course, being unable to access business bank accounts or make decisions for months could lead to a swift demise for many businesses, adding to the owner’s problems.
Therefore, it is best practice to have an LPA in place, even if never used, so it is there as a safety net should something serious occur. In the event of an emergency, the trusted individual can step up and oversee important business matters, so that operations can continue running in the absence of the business owner.
A sensible precaution
As a business owner, if you become unable to make decisions for any reason, it could severely impact on a vast number of people and ultimately the fate of your business.
The benefits of having an LPA in place for your business are therefore apparent; every person your business comes into contact with, from suppliers and creditors to clients and employees, could benefit from you having a trusted individual nominated to keep things running should you become incapacitated for any reason.
The people closest to you can also take peace of mind from knowing that there are measures in place to ensure the continuity of income from the business (from its continued operation) should something happen.
So why are LPAs for businesses so uncommon? Lack of awareness seems to be a key reason, with many business owners simply unaware this is an option.
Some people fear that even a temporary period of mental incapacity may lead to them permanently losing control of their business interests. The Mental Capacity Act 2005 deals with this concern, requiring the attorney you appoint to ‘so far as reasonably practicable, permit and encourage the person to participate, or to improve their ability to participate, as fully as possible in any act done for them and any decision affecting them.’
Others are content that in circumstances where capacity is lost, the Court of Protection will appoint a deputy. Whilst this is true, it can also present some serious issues.
Appointing a deputy can take several months, during which time, the decision-making processes and daily operations of a business, without leadership or direction from the top, can fall apart.
The appointment of a deputy is also an expensive process – the combination of the long timescale and costs can significantly impact a business.
On the other hand, putting a business LPA in place ensures that a person you know and trust will take the reins immediately, and can begin to deal with the usual running of the business without delay or unnecessary costs.
Make the arrangements now
A business LPA can be straightforward to organise. A Form LPF1 must be completed and signed by a witness, the chosen attorney and a ‘certificate provider’. The form is then registered with the Office of the Public Guardian (OPG).
At time of writing the fee for registering a business LPA is £82. If you arrange a personal LPA alongside a business LPA, then your personal LPA should stipulate that it does not cover your business affairs. Your business LPA must state that your nominated attorney has power only over your business affairs.
The choice of attorney to be appointed requires a lot of careful consideration. It is therefore important to consult an experienced team of legal advisors, who will offer support in making this decision, and the factors to consider.
Ultimately, the long-term security of your business and employees is at stake. Without an LPA, you risk jeopardising everything you have worked hard to build over the years.
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