Many small businesses are hugely dependent on one person – the business founder or managing director, say. So what would happen to the company if its key person was unable to perform his or her duties for an extended period – because of a serious accident or ill-health, for example? And what if that person doesn’t even have the capacity to take decisions or issue instructions?
If the worst happens, your business will be in much better shape if you have set up a lasting power of attorney (LPA). This is a legal document that gives power to a named individual who you trust to act on your behalf if you lose the capacity to do so for some reason.
There are two types of LPA: health and welfare LPAs empower someone to make decisions about your health and medical treatment if you’re not in a position to do so, while financial LPAs confer powers over your financial and business affairs. Both documents are important, but from a small business perspective, it’s the second type of LPA that can prove particularly crucial.
Without such a document in place, anyone stepping into the breach to look after your business for a period is likely to find life very difficult. They’ll be unable to deal with your business’s bank, for example, which could mean wages and other bills go unpaid, or that customers’ unpaid invoices are never chased. Most other institutions – from the local council to utility providers – are not legally allowed to discuss your affairs with anyone else unless you have an LPA in place.
That could rapidly prove disastrous for your business, which may spin into terminal decline simply because no-one is able to take charge of its day-to-day affairs – even if there are people who can do the work that the business delivers, you need someone with the power to run the enterprise.
In theory, it is possible for relatives to apply to the Court of Protection for special powers in the event that you suffer a loss of capacity without having set up an LPA. In practice, however, this can take months to arrange and it is an expensive option.
Too few small business owners and managers have set up LPAs. Any freelancer, sole-trader or small business owner or operator should think carefully about what would happen to their business if they became unable to make decisions through accident or illness, and what this would mean for them and their employees’ financial future.Having an LPA would also alleviate most of the stress and cost to family members.
For more information on putting Lasting Powers of Attorney in place contact Gary Taylor Director Progressive Wills Ltd.on 07543238543 / 01254 813744 or email him at progressivewills@gmail.com
