Lasting Powers of Attorney (LPAs): Taking care of business
All good entrepreneurs plan for disaster and Lasting Powers of Attorney (LPAs) should form an essential part of your plan.
Innovative young tech entrepreneurs may make the common mistake of believing that losing capacity is only something that happens later on in life due to illnesses such as dementia. In reality, you could temporarily or permanently lose capacity at any time as a result of a serious accident or a mental or physical illness which could have a devastating impact on a business that you have worked hard to establish.
What are they?
LPAs are documents nominating people you trust (attorneys) to make decisions on your behalf if you are unable to do so. They are usually put in place for your personal assets but can also be used to make sure your business runs smoothly while you are unable to make decisions.
Before it can be used, an LPA must be completed correctly and registered with the Office of the Public Guardian (the public body responsible for overseeing LPAs).
You have three types of LPA to choose from – one for health and care decisions, one for your personal finances and one for your business. The documents should be carefully drafted so that they work alongside one another.
Why do I need one?
Without an LPA, an application for a deputyship order to the Court of Protection is necessary. This is expensive and can take months while your business struggles to survive.
Without an authorised signatory to manage the business account, your company may have difficulty paying creditors, suppliers, staff or tax liabilities and the bank could freeze the account when they find out you have lost capacity. Contracts entered into when you had capacity may become unenforceable and investors may pull funding. If you lose capacity at a time when are planning to sell your business, the sale cannot go ahead without you unless you have an LPA.
If you have an LPA, your business can trade until you are able to take the helm again. If your condition is permanent, your attorneys can retire you from the business or sell your share for you to protect the business you have built up – disaster averted!
For more information on Lasting Powers of Attorneys for entrepreneurs, please contact Francesca Sassoli at email@example.com or on +44 (0)1892 506 354.
For more blogs from Francesca and her colleagues in our Private Client team click here: https://www.crippspg.co.uk/blog/wills-tax-probate/
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