WHY BLPA?

If you have a business and you became ill, or have a major accident, you might find that your absence makes it difficult for your business to operate efficiently. Who would carry out your role?

Who could you trust to look after finances, such as paying staff & invoices, and to make decisions on your behalf if you were in hospital ? Worse still if you lost mental capacity you and your business would be at the mercy of the Court of Protection, who would appoint a Deputy to run your affairs, which would not only be costly but take months to set up. Would you want your affairs run by a stranger, and would your business still be in a sound financial position?

• Firstly, it’s perfectly legal to operate your business without a business LPA. However, should you (or one of your business partners) become incapable of making decisions, or indeed carry out your directorship responsibilities, then it is illegal for somebody else (even a fellow owner/director) to act on your behalf without an business LPA in place.

• Like most insurance products, taking out a businessLPA is a decision you can choose to make freely. However, the consequence of not having one in place has far reaching negatives that could have an effect on your business (and partners).

• Remember, Business Lasting Power of Attorney is just as essential as:

­ Public Liability Insurance

­ Professional Indemnity Insurance

­ Keyman Insurance

­ One big difference is that this a ‘one off cost’ , not something paid/renewed annually

No one is legally appointed to run your business or undertake your duties as a Director (other Directors cannot simply assume your role and accountabilities); equally nor can partners or relations (in the case of sole traders).

• Banks can and are freezing bank accounts, calling in loans and ceasing overdraft facilities.

• Business Owners/Directors can be held to have not exercised due diligence in not setting up an LPA by others, such as shareholders and ‘sleeping partners’.

As with personal LPAs the only option for a business would be to place it at the mercy of the Court of Protection. (often referred to as ‘The Secret Court’).

• The Court of Protection would appoint a Deputy (often a professional Deputy) to run a donor’s affairs pertaining to the business, which would not only be costly on an ongoing basis, but often can take months to set up (plenty of time to go under).

• This would be an ongoing situation that would probably only cease when the business stopped trading or was sold (if the Deputy agreed to such actions).

• This person could be a stranger to the business and would have no consideration

• for other people involved — just the person who has lost capacity.