Improved life expectancy means that many business owners are having to work longer to fund their lengthier retirements. In this article, we’ll explore the implications of this trend and the heightened importance of Lasting Powers of Attorney to safeguard business operations in the event of a sudden health issue.
How can senior directors safeguard their business?
According to research undertaken by TWM, out of 5.8 million directors in the UK, 7.7% (423,000 individuals) are aged over 70, 1.7% (103,000 individuals) are older than 80, and 0.2% (11,000 individuals) are older than 90 years old.
One of the downsides of this trend is that business owners who are working well past their state pension age could potentially be at greater risk of suffering from a sudden debilitating health issue, which could jeopardise their ability to manage their business.
A power vacuum or a lack of direction can see your business lose value very quickly, which can impact both you and your heirs, as well as your employees, customers, and suppliers.
For company owners working into their seventies, arranging a Lasting Power of Attorney (LPA) is crucial to prevent chaos in their businesses if they lose mental capacity.
What is an LPA?
LPAs are a legal means of appointing an individual to make decisions on someone’s behalf if they lose mental capacity. This could happen through an accident or a medical problem, such as a stroke or dementia.
LPAs can make sure the right person – a family member, a colleague, or a trusted adviser – can take the reins of your business if you’re unable to. The Attorney appointed to manage matters relating to the operation of the family business can be different to the Attorneys appointed to manage more personal financial affairs.
Avoid conflicting arrangements
It is important for owners of family businesses to understand the different responsibilities of directors and majority shareholders in the event of a crisis. Directors of family companies should have the Articles of Association of their businesses reviewed by legal advisors when they arrange an LPA. If the two documents conflict, it can easily result in disputes between a shareholder’s Attorney, other company directors or management.
How TWM can help you
At TWM, our specialist solicitors have a wealth of experience in crafting tailored LPAs to suit the unique needs of each business owner. If you would like to speak to one of our experts about putting an LPA in place, please contact our Private Client team for an initial no-obligation consultation.