Stephen Robinson, associate solicitor with Jacksons Law Firm, answers some of the regular questions often raised about a Lasting Power of Attorney and what they mean for business owners…
Q: What is a Lasting Power of Attorney?
A: A Lasting Power of Attorney, known as an LPA, is a legal document whereby you appoint one or more persons, known as attorneys, to deal with your affairs when you are unable to do so, perhaps because of a health condition or medical emergency. There are two types of LPA, one in respect of your financial affairs and the other covering your health matters. LPAs can make an enormous difference for those who depend on you, such as being able to access your bank accounts and avoiding a financial crisis. They are just as important as having a Will.
Q: Who can I appoint?
A: Anyone, provided that they are over 18, are mentally capable and, in the case of a financial LPA, are not bankrupt. It is important to appoint someone who you trust, demonstrates good judgement, knows you well and is willing to look after your affairs. It is possible to appoint more than one person to act as an attorney but take care. For example, attorneys can act on either a ‘joint’ basis or a ‘joint and several’ basis, the latter meaning that they can act independently as well as separately. The ‘joint’ basis may appear attractive at first instance, but it means that every decision must be taken together by the attorneys, which could be administratively unworkable.
Q: I own a business – can I appoint someone to run it for me if I am incapacitated?
A: Yes, but whether it will be effective depends on the legal structure of your business i.e. whether you are an unincorporated sole trader, in an unincorporated partnership, an LLP member or a company shareholder/director. A solicitor who specialises LPAs will be able to help you set up a financial LPA specifically aimed at your business. You also need to carefully consider which personnel you want to authorise to take decisions in your absence and whether to limit their powers.
Q: Can my financial LPA separate my personal finances from my business finances?
A: Yes. You can create more than one financial LPA appointing different attorneys. You could have one LPA for your personal finances and another for your business finances. However, you must take care to ensure that there is no overlap between the two, otherwise this could cause confusion and/or disagreement. You can only have one health and welfare LPA in place.
Q: Is it worth going to see a solicitor to make my LPAs?
A: Definitely. Problems usually arise from home-made LPAs. It is easy to make a mistake but be unaware of its implications until the LPA is needed. Furthermore, if the maker of the LPA no longer has mental capacity, it is impossible to make a replacement. The Courts would have to become involved resulting in significant delay and expense.
In summary, it is much better to have LPAs and not need them, than to need LPAs and not have them, and if you do end up needing them, it will be money very well spent.
Associate solicitor, Jacksons Law Firm