Many business owners give thought to succession planning and how to pass their business on, whether to their children or indeed to somebody else. Part of that is often considering what would happen if they were to die, and whilst that is an extremely important consideration something that is often overlooked is what might happen in the event that the business owner or director is unable to make decisions whilst they’re still alive.
This might be due to illness or lack of capacity, perhaps as a result of an accident, but equally the business owner may be out of the country and unable to return. Current issues surrounding the coronavirus, quarantine and self-isolation are simply one example of how this might arise.
One answer to these problems would be to put in place what is known as a business lasting power of attorney. A business lasting powers of attorney enables you to appoint someone to make business decisions, whether for a temporary period or longer term to enable your business to carry on. Without someone to do this, a small business could have problems accessing its own bank account and paying staff, fulfilling contracts and abiding by statutory and regulatory requirements. The lack of a decision maker, even if for only a few weeks, could have a disastrous impact on the business’ capacity to survive.
A business LPA can be used by sole traders, partners and directors of a company.
Clearly the choice of who might manage your business if you are unable to do so is vitally important and the attorney should not only be trustworthy, competent and reliable but they should also have the skills and ability to manage your business.
The sorts of issues the attorney may have to deal with could include contractual obligations, health and safety issues, business insurance, business risk, tax and employment. The chosen attorney doesn’t have to be an expert in all of these areas, but they should have the ability to appreciate these issues and to seek further assistance where required.
Clearly, putting in place a business lasting power of attorney raises important issues and considerations but the potential benefits are clear.
Colman Coyle has considerable experience in acting for business owners and their businesses, and if you would like to discuss the issues raised here, please contact Patrick Green on +44 (0)20 7354 3000 or firstname.lastname@example.org.