Contracts, processes, backups… when you run a business, you’re used to putting things in place to protect yourself. Unfortunately, sometimes things go wrong. That’s why you plan for all eventualities; from insurance to cyber security you make sure your business can keep going, no matter what.
But what if you lost capacity and couldn’t run your business? Did you know that you can’t simply hand the reins to a family member?
Your family can’t simply step in and take over
Contrary to what you might think, your partner, children or business associate can’t simply step in and run things for you.
Think about your own business – who has the authority to do the following?
• Pay salaries
• Pay suppliers
• Sign contracts
• Deal with banks
• Speak to HMRC
Without you at the helm, your business could be in a very tricky spot if you lost capacity.
For good security reasons, banks and HMRC won’t deal with just anyone – even if they are a relation. As for salaries, if the bank can’t be accessed, staff won’t be paid. And with suppliers and contracts, only certain individuals have the authority to issue instructions. If suppliers can’t be paid, they’ll withdraw their services and if new contracts can’t be agreed, the business will struggle to continue.
This leaves your business exposed: what to do
While it may seem obvious to assume that a spouse or grown-up child could step in and run your business, that is not the case.
There are steps you can take to ensure that you are protected. A business LPA allows you to nominate a trusted representative (Attorney) who has the authority to make decisions on your behalf. If you (the Donor) are incapacitated, the business can still run under their watch.
Bear in mind also that if you have personal LPAs in place (for welfare and/or finances) this doesn’t cover business affairs. If you nominate the same person as your attorney for an LPA and BLPA know that the court may reject the application if they believe there could be a conflict of interests. It’s best to nominate a separate attorney(s) for your business.
What you need to know about a business LPA
A business LPA can be enacted temporarily or permanently. If you are unwell for a short period, it provides business continuity.
If the worse were to unfold, it would ensure your business’ survival. All of your hard work to build up the business over years would be protected. Your family’s future income would be secured and your loved ones taken care of.
You wouldn’t trust just anyone to run your business…
Above all, the attorney you nominate for your business LPA should be someone you trust. If you’re unsure about who might be a good representative, speak to a professional. The team at My Family Legacy regularly assist business owners to put their affairs in order. Call us on 0117 2795507 and we’ll be happy to answer any questions you have.