Most people tend to assume that powers of attorney are only for the elderly and that the rest of us can manage without.
Whilst the risks of losing capacity may increase with age, any of us can be involved in an accident or experience a medical emergency and the consequences of such an event on business owners can be very problematic says Wake Smith director Suzanne Porter.
“Individuals who own businesses should ensure more than anyone else that they have powers of attorney in place to deal with the situation where they need someone to make decisions on their behalf.
“Whether you are a sole trader, partner in a partnership, company director or shareholder with voting rights in a company and have not already got a power of attorney in place it is important to consider making a property and affairs lasting power of attorney. This ensures that family members or other chosen individuals are able to make decisions and deal with the day to day financial and administrative issues on your behalf in the event of you being unable to do so.
“If an individual loses capacity and has not executed a valid enduring (only possible pre October 2007) or lasting power of attorney, family members or friends will only be able to deal with the affairs of the individual by applying to the Court of Protection for a deputy order.
“This is an expensive process that can typically take up to six months to obtain. Where a business is involved, time delays can create significant issues for the owners in the meantime. Without valid power of attorney, it is possible, for example, that uncomplicated transactions could not be financed. Stock could not be purchased and employees might not be paid.
“When entering into lasting powers of attorney it is necessary to review articles of association or partnership agreements in advance, as these may contain provisions relating to incapacity of directors or partners. It is important to ensure that lasting powers of attorney created do not conflict with these.
“Do not make the mistake of thinking that you do not need a lasting power of attorney because family members can act on your behalf in any case. If you do not have a valid power of attorney your family member will not have authority to deal with your finances or financial decisions.
“Business accounts held with a bank will not be accessible to your spouse. A valid power of attorney needs to be in place to authorise individuals to be able to access your finances on your behalf.
“Another important consideration is to elect someone familiar with your business to act as your attorney, as this might mean selecting different attorneys for business and personal affairs.
“Consideration should be given to which attorney should take which decisions. In certain circumstances the creation of more than one lasting power of attorney may be required.
“Powers of attorney can also be used when you still have capacity, but are out of the country. They can be a very useful facility for business owners who travel abroad.
If you are a business owner contact one of our experienced team to discuss your position and ensure that a power of attorney is in place.
For further information contact Suzanne Porter on 0114 266 6660 or at [email protected]
