Heather Lally, Associate Solicitor, Trust and Estate Practitioner and fully accredited member of Solicitors for the Elderly from FDR Law, considers the next stages for Owners and Manging Directors to ensure their businesses are completely covered when planning for the future.
So, you have done your succession plan, you have the right legal documents in place covering your commercial and personal affairs, you have a Shareholder cross option agreement, key man insurance, you have reviewed your Will, what else is there?
Now it’s time to think about a Lasting Power of Attorney to cover your business affairs.
A Lasting Power of Attorney allows you to appoint an Attorney or Attorneys over your financial decisions for your business which will continue if you lose mental capacity in the future and are unable to run your business finances. How is this different to a Lasting Power of Attorney to cover your personal finances?
You may have a different person in mind to run your business finances from your personal finances, someone you trust with the knowledge of your business, who has the necessary skills and abilities to make business financial decisions if needed. Without a Lasting Power of Attorney in place if something happens such as an accident or injury meaning that you are not able to run your business, this can have serious consequences for your business, your income and your livelihood. Without the right Attorney in place, your business may not survive despite all your other planning.
A Lasting Power of Attorney document allows you to decide if you have more than one Attorney in place whether they are to act together, independently of each other or together for some decisions and independently for other decisions. Attorneys would act as signatories to enable creditors and employees to be paid, the tax to be dealt with and all other financial business matters. They would be able to formally retire an incapacitated business owner to ensure the continuation of your business.
It is important that if you are appointing more than one Attorney that they do not have conflicting interests and to also consider any possible conflicts between your personal and business Attorneys. It is possible to appoint Professional Attorneys to act solely or alongside your trusted Attorney or as a replacement.
Covid-19 has taken crisis management planning to a new level for some businesses that may well have already had measures in place covering floods, cyber-attacks, terrorism and such like, but the simple fact of accident or injury leading to lack of mental capacity may ironically have been forgotten along the way.
By making your business Lasting Power of Attorney, you take control, you avoid the need for someone (that someone not necessarily being who you would have chosen) to have to apply to the Court of Protection to be appointed as a Deputy over your finances. The Court of Protection route is more expensive and time consuming and you do need to think, whether your business would survive if there is potentially a 6 month wait for a Deputy Order to come through and for that Order to be registered with all concerned?
FDR Law can assist in advising on both business and personal Lasting Powers of Attorney, General Powers of Attorney and Deputy applications.
For more information, please contact Heather Lally on 01928 739300 or email Heather.Lally@fdrlaw.co.uk