Power of Attorney for business owners – in the case of physical incapacity
You may think of Power of Attorney as being something that only affects your domestic life. However, it is also vitally important for business owners to consider this issue. If as a business owner you become physically incapacitated, who would take over the running of the company?
As a business owner, the type of arrangement you need to consider is a ‘property and financial affairs lasting power of attorney (LPA)’. This will allow your appointed attorney the right to access company bank accounts, make payments, renew insurance policies and agree contracts for services with other parties.
You may feel that there is no need for an LPA as it is generally understood who would take over if you were unavailable. However, if you leave things to chance in this way, firstly there is the risk of arguments as different people claim the right to run the company. Secondly, whoever takes over may not have the legal right to conduct transactions and access bank accounts.
If you don’t affect an LPA and become incapacitated, then an application would need to be made to the Court of Protection for a formal order authorising someone else to take control of the company. Given that this process can be expensive and time consuming, then this really is best avoided, given that it may not be possible to pay your employees or complete business transactions in the intervening period.
Think carefully about who you want to be your attorney – obviously it needs to be someone you trust to run the business effectively. You can name more than one person as attorney on the LPA, and you can also choose to give people the right to act jointly in certain circumstances and to act separately in others. Make sure your appointed attorney (s) fully understand the responsibilities they will take on should you become incapacitated.
It is also possible for a Power of Attorney to be activated should you leave the country on business – you don’t necessarily need to be seriously ill or injured for it to take effect.
If you would like to know more about a Power of Attorney for business purposes, then contact Courmacs Solicitors today.