DFA Law
What will happen if you lose capacity? Get your aff airs in order now
With the October budget pushing legal aff airs to the forefront of our minds, the new year is a good time to make a diff erent kind of resolution, one to ensure all your legal aff airs are in order. A good starting place is to consider your business, and
in particular how it would continue to run should you lose mental capacity. I frequently fi nd that many business owners have never considered this situation, but if you lost mental capacity and were unable to make decisions for your business, who would then make the important decisions for you, and are you happy with this position? T e common answer is probably no. A business Lasting Power of Attorney (LPA) could assist.
Katie
Nightingale Associate Solicitor DFA Law
An LPA is a legal document which allows you to formally
appoint people (your attorneys) to make decisions on your behalf in circumstances where you cannot do so yourself. Many people have heard of an LPA for their personal aff airs and relate this to being elderly, but they have not considered, or were not aware, that it can be crucial at any stage of their life, to include both their personal and their business aff airs. Whether an LPA is the most appropriate way to deal
with a business owner losing mental capacity, or if there is something else you may need to do instead, will depend on the type of business you have. A Sole Trader is a single person running a business, and
there is no separate legal entity away from the business owner, therefore a business LPA is the most eff ective way of dealing with loss of capacity to ensure the business continues to run. If a Sole Trader loses capacity, then the business may not be able to survive. A Partnership Agreement should adequately provide such
provision surrounding a partner losing mental capacity. If it does not, then an LPA can be attractive. However, the LPA must be drafted very carefully so it does not confl ict with a Partnership Agreement. Before considering a business LPA, a company’s Articles
of Association must be reviewed. T e articles may provide for termination of a director’s appointment. If the model articles were adopted, they will provide for termination. Many directors are unaware of this position. If a company’s articles do not provide for loss of capacity then it would be in the company’s best interests to amend their articles to make relevant provision. Our Corporate Team can assist with this. A business LPA is made using the normal prescribed form
for a Financial LPA. T e same rules and processes regarding capacity and execution are required as an LPA for personal aff airs, however it is important to note that separate LPAs are required to deal with business aff airs and personal aff airs and your choice of attorneys may diff er. Careful drafting of these documents is required in order to ensure each one is limited in their use. LPAs are important at any stage of your life, whether you
own a business or not. Make it a priority this year to get yours done and I will be happy to assist with this important legal advice, in a friendly, down-to-earth, understandable manner.
Call 01604 609560 or email
katie.nightingale@
dfalaw.co.uk
Find out more about DFA Law at
www.dfalaw.co.uk
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