Do business owners need Lasting Powers of Attorney?

You know all about the ups and downs of running a business.

So much to think about. Marketing, staffing, generating business, networking, payroll, advertising, social media, lead generation… the list seems endless. Then there’s the multitude of insurances we need to cover public liability, professional indemnity, buildings insurance, critical illness, cyber threat, or key person cover— necessary expenses and a relief to have in place if needed.

One critical need you may have overlooked as a director or sole trader is the impact on your life’s work if you were unable to run your business because of long-term illness or a serious accident. If you’re out of action for longer than your normal annual leave, who would pay your invoices or raise yours? Would your staff get paid; would you?

An accident or illness could knock your business back years in a heartbeat. Your canny accountant and your savvy financial adviser will already have impressed on you the need for a Will for a tax-efficient way to deal with your business or business shares, but that’s when you’re gone.

Shouldn’t you be planning long-term for a gradual succession - where you leave someone you trust to deal with the day-to-day, without relinquishing control if you’re fit and capable?

What is a Business Lasting Power of Attorney?

A Lasting Power of Attorney for business is a property and financial affairs LPA tailored to your business need, appointing appropriate professionals or team members to take control if needed. It can give professional - such as your accountant or financial adviser - the authority to charge for their services. If the people you want to manage your business are not the same people who would manage your personal finances if you had an accident or serious illness, a separate business LPA is essential.

A Business Lasting Power of Attorney is also essential if you’re a pragmatic realist, a planner, a forward thinker. We hope you never need to use it, just like your PI insurance and your critical illness cover. You can read more about the benefits in our simple guide. Preparation is everything.

All entrepreneurs know about and understand risk; some of us are risk-takers, others more risk-averse. Whichever you are, make your decisions based on facts, knowledge and understanding. Check your Articles of Association.

If a company has adopted the model articles without altering them, the Mental Health (Discrimination) Act 2013 amends these by saying a director may not be removed by a court if he has mental health concerns, which may include incapacity... if an LLP member or a director who is 'person with significant control' lacks capacity, Companies House should be informed, which may have consequences." [emphasis added]

Craig Ward, Lasting Powers of Attorney (Published by The Law Society, 2019)

Drop a DM to one of the Carisma team or use our website contact form and we’ll send you our guide to download and share with your team.

[This blog comes from experience and personal insight of the need for a business lasting power of attorney, regardless of age, health and fitness. If you want to know more, this is a blog I wrote back in 2011-2012 about a serious accident that had a devasting impact: Road to Recovery]

Please note that information provided on the Carisma Wills website:

• Does not provide a complete or authoritative statement of the law;

• Does not constitute legal advice by Carisma Wills;

• Does not form part of any other advice, whether paid or free.