Guarding against collateral damage from Covid19
A Lasting Power of Attorney enables you to appoint someone to act as your Attorney to make certain decisions on your behalf in the event that you are ill or lose capacity to make decisions.
This can take the form of an LPA for:
- Your financial affairs; and
- Your health and welfare.
Lasting Powers of Attorney (Lpa) for Business Affairs
Such an LPA is very important in the case that you are not able to manage your business because you are incapacitated as a result of a medical condition or you are abroad.
This is because a family member or a business colleague would not automatically have the authority to make important or other business decisions on your behalf. These could include payments of bills, salaries, servicing business loans, or dealing with other business transactions. To protect your own interests and those of the business, you should consider making a Business LPA especially in these very insecure times that we are all now experiencing.
If you have a Partnership Agreement in place then it is possible that its provisions may be adequate. However, if you are not certain about the provisions made in the Partnership Agreement then you should carefully consider the option of a Business LPA as well. Please note that care should be taken with the relevant wording in the LPA to avoid conflicts with the provisions in both documents.
Directors of companies
Normally the Articles of Association would provide for termination of a Director’s appointment if he or she were to lose mental capacity. However, with regard to sole Directors this may not be the case and in this instance a Business LPA would be appropriate just in case COVID 19 or some other misfortune were to occur.
If you are a sole trader the likelihood is that your business is not a separate legal entity. Therefore, to make a business LPA would be an effective way of providing for continuity of your business.
LPA for personal finances in conjunction with a business LPA
Quite often we find that Clients prefer to keep their business affairs separate from their personal affairs. Therefore, it is possible to have one LPA for management of finances for personal affairs and another one for business affairs. However, great care must be taken in giving the powers to the Attorneys of the different LPAs to prevent any conflict arising. The Attorneys should be clear about their powers and responsibilities so that they do not encroach on each other’s decisions.
What happens if you do not have an LPA?
In the event that an individual becomes incapacitated for any length of time and there are no LPAs in place, it might be necessary to apply to the Court for someone to be appointed as a Deputy. ANYONE can make such an application and there is no guarantee that the Court would choose someone that you would have chosen. In addition, it takes a very long time for the Court to process such an application during which time (a) your business may be vulnerable and at risk and (b) with regard to personal affairs, your family may encounter difficult financial and emotional situations.
Furthermore, you should also be aware that, when making application to the Court of Protection for the appointment of a Deputy, information about your personal affairs would have to be disclosed in the paperwork and such papers are served under the Court’s direction to certain members of the family and people associated with the management of your affairs. Once again, this could be an undesirable and potentially embarrassing situation whereas, if an LPA is in place, the Attorneys do not have to approach the Court of Protection. Instead they can take over the management of your affairs immediately.
To avoid disruption with regard to both your personal financial affairs as well as business affairs, we would recommend that the appropriate LPA be put in place.
LPA for health and welfare
Basically, this document allows you to appoint an Attorney to make decisions on your behalf in case later on you are unable to make decisions for yourself. The document is limited to health and personal welfare matters and can only be used when you are mentally incapable of making decisions in your best interest. This also gives you an opportunity to set out preferences and instructions which you might like the Attorney to think about when making decisions on certain specific and important matters and this can also avoid possible frictions between members of the family during difficult and stressful times.
Tel: 020 7723 3040
Emails: email@example.com firstname.lastname@example.org