It is difficult to comprehend that you would ever lose the ability to manage your own business affairs, but mental and physical incapacity can happen to anyone at any time. As a business owner, it is important to consider what would happen to your business in the event you were unable to make business decisions.
In a situation where you were abroad or in a serious accident or if you were to ever became mentally incapable, who would authorise the payment of bills, sign cheques, service a business loan or pay salaries? It should not be taken for granted that a family member or business colleague will be able to deal with such matters. In many cases, they will not have the required authority to deal with your business affairs.
A business Lasting Power of Attorney (LPA) can assist you by ensuring you are able to choose those individuals you trust and who have the requisite knowledge and skills to manage your business affairs in the event you became incapacitated.
If you are unable to make business decisions in the future and have not put a business LPA in place, depending on the type of business you own, it may become necessary for a family member or another individual to make an application to the Court of Protection to be appointed as a deputy. This application can be expensive and there is no guarantee that the deputy appointed would be the person you would have chosen to deal with your business affairs. It is also a time-consuming application and could take more than six months before a deputy is appointed, which would leave your business exposed to risk.
Making a business LPA should, therefore, be part of any business owner’s continuity plan and crisis management strategy in order to avoid unnecessary business disruption in the future.