As a business owner if you become mentally incapacitated tomorrow then who would pay your bills or invoices, ensure staff salaries are paid and complete any outstanding work for your customers and clients?
You cannot assume that a colleague or family member will be able to gain the relevant authority to make decisions on your behalf.
Therefore, to protect your business interests, particularly if you are a sole trader or self-employed, you ought to consider a Business Lasting Power of Attorney.
This is a legal document that allows you to nominate people to make decisions on your behalf if you were ever become incapacitated.
Lasting Powers of Attorney (LPAs) do not only cover personal assets but may also cover business assets and interests in a business. As a business owner it may be in your best interests to review your affairs and look to put in place a Business LPA to cover the situation, not only if you were mentally incapacitated, but if you were abroad on holiday or on business, or if you were to have an accident and were unable to attend meetings.
What happens if I don’t make an LPA?
If you have not made a Business LPA and you subsequently lose the capacity to make your own decisions or become of unsound mind, then, if you do not have other arrangements in place (such as partnership agreement or articles of association), it may be necessary for someone to apply to the Court of Protection for a Deputyship order. This process can take between six to 12 months to complete and can be expensive. The appointed Deputy may not be who you would have appointed as your attorney.
If you would like any further information in relation to Business LPAs or a review of your current LPAs or business structure, please contact Sian Lias in the Wills and Probate team or Jack Gardener in our Commercial team at Phillips Solicitors.
This article is current at the date of publication set out above and is for reference purposes only. It does not constitute legal advice and should not be relied on as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.