As part of Dementia Action Week (17th to 23rd May), the firm’s Wills, Trusts and Estates Team have been running sessions to raise awareness of dementia and to discuss different ways that we can help a person living with dementia to live well. The importance of putting in place Property and Financial Affairs Lasting Powers of Attorney (LPAs), both for your personal affairs and business affairs, was highlighted.
Managing a business can be challenging at the best of times. Imagine what would happen if you became unable to action or make decisions in relation to your business because of practical reasons, or, due to a loss of capacity.
If this past 12 months has taught us anything, it is that we do not know what is around the corner. Accidents and illness may affect you or your fellow business owners. Likewise, for practical reasons, such as holiday or unplanned absences from work, you may be unable to action certain business functions but still be able to make the decisions yourself. Without having put in place an LPA appointing someone to act on your behalf (your “attorney”), your business could come to a halt or actions could be delayed to the detriment of you and the business.
Whilst and LPA cannot transfer directorial responsibilities, it allows a business to continue to operate or for business plans to be followed through. The below examples highlight the importance of LPAs in the business context.
“I acted for a window cleaner, H, who operated his business as a sole trader. Due to an accident, H was in hospital for 3 months and unable to manage the day to day finances of the business. Not because H couldn’t (mentally) make those decision, but because (physically) H was unable to sign cheques and access his banking facilities. H had put in place a LPA and his attorney was able to pay the staff’s wages and contractors to ensure that the business could continue to operate in his absence.”
“P owned a dental practice. He was 55 and in the process of selling his practice. A buyer had been found a price agreed. P then had an accident leaving him with a brain injury. P did not have capacity at that time to complete the sale of the practice. However, because of the fact that P had made a LPA, P’s attorney was in a position to ‘stand in his shoes’ to complete the sale of the practice on his behalf.”
It is strongly recommended that all business owners, however big or small, consider putting in place a LPA. Your LPA must be prepared whilst you have mental capacity. If you later become unable to manage your business affairs and do not have a LPA in place, no-one will have power to assist you and this may cause difficulties. In these circumstances, for a person to make decisions on your behalf, an application for a deputyship order may need to be made. This process is time-consuming and can be more expensive when compared to the preparation of LPAs.