LPA’s for business owners
February 13, 2012 Leave a comment
An article in the Guardian newspaper last week highlighted the importance of a highly important, and often overlooked, legal document, the Lasting Power of Attorney, or LPA.
Without going into the legal technicalities, LPAs can prove invaluable in situations where someone becomes unable to look after their own affairs. The LPA replaced the Enduring Power of Attorney (EPA) in October 2007, and existing EPAs still remain valid.
The most common reason given for individuals taking out an LPA is in case of dementia in later life – as my great aunt put it, “in case I lose my marbles” (which she subsequently did)! However, LPAs are not just for the elderly, and we have seen cases where this important and powerful legal document could have proven invaluable. This particularly relates to businesses.
Take, for example, a sole trader. If a sole trader is incapacitated, how will the business continue if he is incapacitated? A Deputyship order can be made to the Court of Protection, but the business could have imploded before the formalities have been completed.
What about small partnerships? With many partnerships the banking mandate often contains a restriction that payments in excess of a certain amount require two signatures. What happens if one of those signatories is incapacitated?
The last example relates to health insurance products such as Income Protection or Critical Illness cover. By definition, the claimant under such plans could be incapacitated, in which case what would happen if they can’t sign the claim form?
There are other examples, both from the business world and for personal clients, where the existence of an LPA could save considerable sums of money. Indeed, I have yet to find a reason why anyone should not take out an LPA!
If you would like to discuss ways of protecting your business and personal assets, including whether an LPA could be right for you, please contact me through our Swansea office on 01792 410115.
Financial Planning Manager
The full Guardian article can be found here.