You may have considered putting in place a Lasting Power of Attorney (‘LPA’) which relates to your personal financial and property affairs, but have you considered how this might work in relation to your business? Would you be comfortable with your personal Attorneys being in control of your business interests?
An LPA is a powerful document in which you appoint people of your choosing to make certain decisions on your behalf if you were unable to do so (your Attorneys). There are two types of LPA: one for your property and finances; and one in relation to your health and welfare.
If you are a business owner, it is important to consider who should deal with any decisions in relation to your business if you were unable to do so, either because you were away, or because you had had an accident or were suffering from an illness.
You may feel that your personal Attorneys have the necessary/appropriate skills (or business acumen) to deal with your business for you, in which case you could have one financial LPA in place, with an accompanying letter of wishes as guidance to your Attorneys.
Alternatively, you may not wish the same Attorneys who you have appointed in your personal life to oversee your business affairs and it might not be the case that someone will automatically be able to take on any responsibilities in relation to your business for you. It is possible to put in place a further, separate, LPA appointing different Attorneys to deal solely with your business affairs if this would be more suitable for you and your business.
It is important to distinguish between different types of business, as what powers your Attorney has over your business interests and how things operate, will vary depending on the structure.
Your business is unlikely to have a separate legal entity to you; usually you are the business which would mean the business could come to a grinding halt if you were to lose capacity. Having an Attorney in place who can step into your shoes and make decisions in relation to your business for you could be invaluable.
Partnerships and LLPs
Your partnership/LLP may be subject to the terms of a Partnership/LLP Agreement, alongside relevant legislation. Your Partnership/LLP Agreement may include provision relating to the loss of capacity of one of the partners but it would still be advisable to have an LPA in place alongside the Agreement to deal with your personal financial affairs.
If you are the director of a limited company, you should check the position in relation to removal of a director in the event of incapacity. A director’s appointment is personal and cannot be delegated to another unless special articles specifically authorise this. If you are the shareholder in a company, and in particular a majority shareholder, it is vital that you have appointed an Attorney to act on your behalf if you become incapable of doing so.
Another consideration is to have a side letter in place alongside your business LPA explaining the appointment of your Attorneys and setting out how they should carry out their role to ensure your business affairs are properly taken care of. You can use this side letter to set out any specific instructions as to how your business should be run.