Lasting Powers of Attorney (LPA) are not only for personal use. If you’re a company director, partner, or sole trader, it’s in your best interests to ensure you’re protected, if – for whatever reason – you can’t make certain business decisions. Business LPAs are essential to the function of a business and sadly are often overlooked. However, at Nicholls Law, we have an expert team available to ensure you have the relevant protections in place to protect your business, your livelihood, and your family.
Many different instances impact an individual’s ability to make business decisions, for instance:
These all leave your business exposed to risk. To protect your interests, those of your company, and your family, you should consider making a Financial LPA for your business. All businesses should have Lasting Powers of Attorney in place, if not and you lost capacity you would need a Deputy appointed which can take several months to arrange. How will your business survive during those months with no one able to decide on your behalf?
There is a myriad of possible things that could go wrong if you lose capacity. But some of the more obvious ones are listed below:
– Bank accounts may be frozen causing cash flow problems
– It may not be possible to obtain or extend overdrafts
– Loans, overdrafts, or mortgages may be called in
– There may be no one to authorise payroll leading to the loss of the workforce
– Winding up proceedings or litigation may be brought by creditors for breach of payment obligations
– There could be a problem servicing existing contracts, leading to a loss of revenue and possible litigation
– The opportunity to enter new contracts could be lost
– There could be a variety of regulatory and/or statutory breaches
– And so on …
Importantly, no two cases are the same. There will be different considerations for different businesses, operating in different sectors, and adopting different structures. But the problem can be reduced to one common denominator: the inability to manage without a Financial LPA or deputyship order in place.
The question to ask yourself is this: As a director, is my business protected if I or a fellow director were unable to make decisions? If you can answer yes, then maybe a Financial LPA is not for you. If the answer is no, or you’re not sure, then you should investigate making a Financial LPA to protect you, your business, and your family.
