Our legal columnist says a Lasting Power of Attorney provides a safety net for business owners
What Happens To My Business If I Am Ill?
Owning and developing a business can take years of hard work, but have you ever considered what would happen to your business if you are ill?
Succession planning is part of any business, as disaster planning should be, too. For most people if you are ill for a few days then as a business owner it is usually fine. Everyone gets on with what they need to do, and any important decisions will wait until you are back to full strength.
But what happens if you are seriously ill for a significant period of time and not able to run the business yourself? How long can decisions wait before they become critical and the business stagnates or folds completely?
To prepare for such an eventuality business owner of all kinds should consider making a Lasting Power of Attorney. This is a legal document which gives – to somebody that you have chosen and trust – the legal authority to act on your behalf. Most people are familiar with these for personal assets, but it is less widely known that these documents can also be used for business assets.
For sole traders, partners, members of an LLP and shareholders in a family business, a Business Lasting Power of Attorney should be considered. Having a Business Lasting Power of Attorney means that the business can continue in your absence and can therefore ensure income for your family. Without a Lasting Power of Attorney, the consequences could be devasting, not only for the business itself but also for your family.
If there are others who can continue to manage the business, they may find they are limited in some of the important decisions they need to make or that they require your personal input, for example your signature, to deal with certain matters. Having a Lasting Power of Attorney where business partners appoint each other means that the business can continue, and full authority can be given without needing your signature.
A Lasting Power of Attorney does not affect the owner’s right to continue to manage and run the business at anytime that they are willing and able to. Once made the Lasting Power of Attorney can just be left ready and available should it ever be required, providing a safety net and peace of mind for the business owner and his or her family and business partners.