Lasting Power of Attorney and why you need one
According to the Federation of Small Businesses (FSB) there are 5.5 million family owned businesses and SMEs in the UK, a figure that has more or less doubled since 2000. On top of that an extra 84,000 sole trader businesses are created every year. From experience many of these small businesses do not have a contingency plan in place should the owner suffer medical problems.
Without a contingency plan your business’ long term prospects could be at risk, let alone the run of the mill everyday decisions that would need to be taken whilst you cannot work.
Fortunately there is a legal solution, and it’s called a Lasting Power of Attorney (‘LPA’). This is a legal document that allows a business owner to choose an authorised person, known as an attorney, to make business decisions on their behalf.
This is an area of law that puts many people off, partly because some think it morbid to think about what would happen to one should one fall seriously ill, and partly because until recently the law around LPAs was based on Victorian era definitions around the central question of capacity. Thankfully recent reforms have brought the question of capacity into the 21st century, and do now reflect modern work practices and lifestyles. On the not-wanting-to-think-about-the-worst point, the people who suffer the most when a business owner who has not put an LPA in place and who falls ill, are the loved ones, who on top of dealing with the tragedy also have to deal with the business problem, or even worse the Court.
At least with an LPA in place there are process and procedures in place should the worse happen. Another misconception with LPAs is that it would be permanent. It would not, and it would actually be empowering because at least with an LPA you decide who runs the business, as opposed to the Court of Protection.
Therefore having an LPA is a practical and realistic contingency. We all hope it will never have to be used, but if the worse does come to bare, at least the tragedy is not made even worse.
Written by Bruno Rodrigues. If the contents of this article interested you and you would like to discuss it or any other legal issue, please do not hesitate to contact us.