LASTING POWER OF ATTORNEY
What is a Lasting Power of Attorney?
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Under the Mental Care Capacity Act 2005, if any of us lose our capacity, whether this is permanent or temporary, nobody is legally able, not even your husband or wife, let alone your children, to make decisions on your behalf.
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Should the time come when you are unable to make your own decisions, a Lasting Power of Attorney (LPA) is a legal document that allows you (The Donor) to appoint people you trust to make them for you (Attorneys). The Attorney(s) you choose can be a relative or a trusted friend. Your chosen Attorneys can act on health matters and for your financial affairs. You remain in total control today, whilst making it possible for your family or friends to help you in the future should you lose capacity.
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What Happens if I Don't Have One?
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If you lose capacity without an LPA in place, your family must apply to the Court of Protection to have a Deputy appointed to deal with your affairs. This is a slow and expensive process, costing thousands of pounds. Bank accounts and investments could be frozen, preventing direct debits and bills being paid.
If you’re married or have joint bank or building society accounts, do not assume that your spouse will be able to deal with things for you, as this is quite simply not the case. Without a valid LPA in place, under the law, they simply do not have the authority to do so.
Do I Need a Lasting Power of Attorney for my Business?
While many people understand the importance of a Lasting Power of Attorney (LPA), the idea of putting a business LPA in place is not as familiar.
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When would I need a business LPA?
A business LPA could be used if you lost the capacity to act or if you were temporarily unable to deal with your business affairs, for example if you were involved in an accident or if you were overseas and unavailable to sign documents and make important decisions.
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Why put a business LPA in place?
If you do not have a business LPA in place and for any reason you were not able to deal with your business transactions, then there is a risk that your business could suffer. With nobody able to make decisions or having the authority to access funds, your business could be left unable to function. There is also a possibility that the bank could freeze your accounts if you were not able to operate them yourself. In this situation, a family member or employee could not simply step in to help unless they had written legal authority to do so. Again, your next of kin would need to make an application to the Court of Protection to appoint a deputy. This is a lengthy and expensive process and is much harder than registering an LPA.
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Do I need a business LPA if I already have a personal one?
Generally speaking, you should consider appointing a different attorney for your personal and business LPAs. The person you trust to deal with your own financial affairs might not be able to deal with your business, while you might not want your business attorney to also have control of your personal finances. In addition, there could be a conflict of interest between your business and personal situation, which could make things difficult. It is also open to you to appoint different attorneys in respect of different businesses if you own more than one.
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Choosing an attorney
You should make sure that the person you choose to act as your attorney will be able to cope with the role, should they be called upon. It will need to be not only someone you trust implicitly, but someone you believe can carry out the same function as you within your business. You should also consider whether your employees will be able to accept your attorney’s authority.
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Granting power to your attorney
You can tailor your business LPA to give your attorney specified powers, for example, the authority to deal with a single issue could be granted if you needed them to deal with a transaction while you were overseas. You can also leave non-binding instructions as to how you would prefer them to act.
Conflict Management​
When making a business LPA, our team at The Will Partners will ensure it does not conflict with provisions that may already be provided in, for example, a partnership agreement (for partnerships) or articles of association (where you are a director of a company).