With Covid-19 still very much among us, and with many wide-format print business MDs in the ‘at risk’ category, is now a good time to arrange a lasting power of attorney for your business?
So, you know the benefits of a lasting power of attorney (LPA), which allows an individual to nominate someone to take decisions on their behalf if they become incapacitated in some way. But do you know you can put in place an LPA for a business which, given the current health crisis, could be a smart move.
Sarah Nash, an associate director at Ansons and the head of its wills, probate and trusts team, points out that without a business LPA, the sudden illness of a managing director could have serious ramifications for a business and its workforce, to say nothing of the owner’s livelihood. Instead of having a trusted individual to temporarily take over, the business would have to rely on a court-appointed deputy, which could take a while to decide. Being unable to access business bank accounts or make decisions for months could precipitate a quick demise for many a business.
The benefits of having an LPA in place for the business on the other hand are straightforward - every person your company comes into contact with, from suppliers and creditors to clients and employees, could benefit from the head of the business having a trusted individual nominated to keep things running should they become incapacitated for any reason.
Even if it’s never used, having an LPA in place makes sound sense. For a start, you have peace of mind knowing it’s there should it be required. The person trusted to step up and run the business can oversee the company’s bank accounts, and immediately deal with issues such as invoices, wages and tax matters, as well as assessing and signing contracts.
So why are LPAs for businesses so uncommon? Lack of awareness seems to be a key reason, but also, there’s probably some fear among those who run businesses that even a temporary period of mental incapacity may lead to them permanently losing control of their 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 as already indicated. 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. Plus, the appointment of a deputy is also an expensive process - the combination of the long timescale and costs can significantly impact a business.
If you’re now thinking along the lines of setting up an LPA, know that it is relatively easy 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 was £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.