Business owners should plan for the future with a business Lasting Power of Attorney and consideration of the probate situation in respect of their enterprise.
A Lasting Power of Attorney (LPA) is a document that gives legal authority to a nominated attorney to act on your behalf, should you ever be unable to manage your own affairs.
If you were ever to become unable to deal with business matters yourself, for example through accident, illness or incapacity, then it might mean that your organisation could not be run efficiently. For instance, if no-one is able to access bank accounts, then it may be impossible to pay salaries or purchase stock.
Your family or business partners would need to apply to the Court of Protection to have a deputy appointed, which could be complex and time-consuming, meaning that your business interests could be damaged in the interim.
There is also the risk that the court will not appoint the person whom you would have liked to act on your behalf.
Making a business Lasting Power of Attorney
Buy putting a business LPA in place, you can choose the right person to deal with affairs on your behalf. In the event that you were to be incapacitated, this could be used straight away, meaning that business could continue uninterrupted.
It is also possible to tailor an LPA so that it can be used for particular transactions, for example, in the event that you were out of the country for a period.
Choosing a business attorney
You should choose someone who you trust implicitly but whom you also believe has the knowledge and understanding to step in
and manage your business affairs if needed. It is advisable to discuss the situation with them beforehand to ensure that they are willing and able to act.
This should be done as part of your business risk management strategy, to ensure that if a problem arose, your operation could carry on as seamlessly as possible.
Probate and estate administration
When someone dies leaving an operational business, decisions will often have to be made immediately. Depending on the way the business is structured and the contingency plans that are in place, someone else involved in the business will usually be able to step in to run the organisation.
Business assets form part of an estate in the same way that other assets do. Where the deceased was a sole trader, their business would usually be sold or wound up.
Where the business is run by a partnership, the partnership agreement may set out the agreed procedure to be followed in the event of a death.
If the deceased was a company director, then their shares in the company will be dealt with in accordance with the terms of their Will. There may also be an agreement in place requiring first refusal on the sale of shares to be given to other directors.
Making plans for future eventualities is part of good business practice. By putting a Lasting Power of Attorney in place and ensuring that your Will adequately deals with your business interests, you can ensure that your enterprise can keep running smoothly whatever happens.