Wills, Trusts & Probate

Why accidents are particularly bad news...

 

…for those without a commercial Lasting Power of Attorney.

 

“It’ll never happen to me”

…and that’s what a lot of us think, but sadly accidents do happen.

All the time and often out of the blue. And in a heartbeat, lives can be turned upside down.

Very real statistics tell us that every 90 seconds someone is admitted to hospital in the UK with a brain injury, with traffic or contact-sport accidents being examples of what can go wrong.

Not to mention Stroke which is now the second single most common cause of death in the world, causing 6.7 million deaths each year.

And these awful instances often don’t result in loss of life but in long-term disability, illness and/or loss of mental capacity, the implications of which are huge.

What would happen to you in such a situation? Who would be legally able to not only manage your health and welfare, but your property and finances, your business?

 

Commercial LPA - a critical part of business continuity planning

If you’re a sole trader or a partner in private business, a commercial Lasting Power of Attorney is as important as your Employer’s Liability, Professional Indemnity or Key Person insurance policies.

In the event of any incapacitation due to illness or injury, there is no ‘automatic right’ granted to deal with another person’s affairs. So, despite your contingency plans or verbal agreements with a business partner or spouse, in the eyes of the law no one else has the authority to handle your business affairs.

By putting an LPA in place, you get to choose who you would like to deal with your business affairs (your attorney) should you become unable to do so.

The LPA can cover both your personal and business affairs or you can restrict it to business affairs only (a commercial LPA).

In most circumstances, your attorney (s) can do the following on your behalf:

  • Buy and sell property
  • Organise property insurance and repairs
  • Access your bank statements
  • Open and close bank accounts
  • Invest your assets
  • Deal with your tax affairs

 

What happens if I don’t have a commercial LPA?

If you found yourself in a position in which you were unable to manage your business affairs, ask yourself who would be authorised to pay you, your staff and suppliers? Who could renew business-critical insurance policies? Who could agree new business contracts?

Even in the short-term, if your business cannot continue to operate as normal, the consequences are potentially devastating.

In the absence of a commercial LPA, an application would need to be made to the Court of Protection for an order to appoint someone else (a Deputy) to act on your behalf.

Not only is this process often hugely expensive, but it’s also time-consuming and protracted. And whilst the deputy order is being processed, still no-one has the legal authority to handle any of your financial affairs.

The longer-term implications could be catastrophic and could result in your business (and those who rely on it) suffering irreparably.

 

The real face of putting it off

A common misconception I encounter is that loss of mental capacity only really affects the old and infirm. My answer is always the same: Age doesn’t come into it.

Sadly, I deal with the unplanned-for and unexpected scenarios only too often. I witness first-hand the immeasurable stress, pain and heartache that family, friends and colleagues are experiencing.

Let me tell you about a couple I met a few years ago...

Nick and Sarah* were in their mid-30’s, homeowners and with a young family. Nick owned his own rental business with a strong portfolio of properties and Sarah was a stay-at-home mum. They were both young, fit and healthy.

They came to see me to set up their wills but decided not to take out LPAs – they felt the wills and life insurance policies adequately covered all bases and that an LPA seemed unnecessary.

Fast forward 6 months and tragically Nick was involved in a serious road traffic accident resulting in brain injury and a 12-month coma.

Without an LPA in place, no one could access Nick’s business bank accounts. Not only did the family rely 100% on Nick’s income, which couldn’t be paid, but Sarah also had to personally pay for the ongoing business bills, maintenance and repair of the properties whilst she applied to the Court of Protection. All this on top of her own grief and distress, overseeing her husband’s care and maintaining the normal family responsibilities.

 

A small price to pay

Anyone who’s been involved in setting up, growing and running a business knows the blood, sweat and tears it takes.

So, in the grand scheme of things, setting up a commercial LPA is a small price to pay for peace of mind that if the worst-case happens, everything you’ve worked so hard for is protected.

Your business can safely carry on operating as normal with someone you trust (your attorney) taking responsibility for it (and under the Mental Capacity Act 2005, your attorney must act in your best interests and must follow a Code of Practice).

And if you sell your business or retire, you can simply revoke your LPA at any time.

 

Here to talk you through it

Setting up a commercial Lasting Power of Attorney is a straight-forward process and at Susan Howarth & Company Solicitors, we’re here to help.

If you’d like to speak to us concerning a commercial Lasting Power of Attorney, please contact Natalie Whitmore on 01606 48777 or pop in to one of our FREE Wills & Probate clinics.

 

* Names and identifying details have been changed to protect the privacy of individuals.

This article has been written for your general information only and is not a detailed statement of the law. It should not be used as a substitute for specific legal advice. If you require specific legal advice please do not hesitate to contact us on 01606 48777.

For more information or to speak to one of our experts, please call us on 01606 48777

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