If you own a business and lose mental capacity – perhaps because of a serious accident or physical or mental illness then in the absence of a Lasting Power of Attorney no one in the first instance will be able to make decisions concerning your business. Think how quickly your business could be damaged or even lost in this situation. The bank might freeze business accounts or the business may not be able to survive a crisis. Ultimately, the Court of Protection can intervene to appoint a Deputy to manage the business – but this appointment can easily take months and you may not be happy with the choice of Deputy appointed.
The solution is to create two Lasting Powers of Attorney. The first to manage your personal financial affairs, and a second business Lasting Power of Attorney to appoint a suitable individual (perhaps a senior manager) to manage business interests.
If a businessman is a sole trader or partner in an unincorporated business the business is not a separate entity to the individual. In cases of Directors of a limited company, the company has its own constitution and it may be sensible to amend this to make it clear that a Director may appoint a “proxy” in the form of his Attorney. We can advise you about this.
The Attorney’s job is to make business decisions (for example authorising bank lending and withdrawing from unprofitable areas of business) not the day to day matter of dealing with specific customer requirements.
A business Lasting Power of Attorney may be unconditional or it may contain restrictions, for example limiting discretion to acquire or dispose of assets, hiring or dismissing employees or winding up the business.
In deciding who to appoint as your business attorney you should consider:-
- Their experience and knowledge or your field of business
- Their degree of business acumen and administrative abilities
- Understanding of the legal responsibilities involved in becoming an attorney
- Their knowledge and understanding of your wishes
- Whether they have the available time and commitment
We are able to provide specialist advice. Please contact Holly Maxwell-Gumbleton, Sarah Barry or Jackie Alexander.