New legislation governing Powers of Attorney could have a profound effect on owners of the region's growing businesses. Andrew Facer, head of private client at Ward Hadaway, explains.
AS THE owner of a successful business such as those found in our Fastest 50, the last thing you are likely to think about is what would happen to your company and your assets if something drastic happened to you and you lost your capacity.
While most business owners tend to have things such as life insurance and business continuity insurance in place should the worst happen, few are prepared in the event of their losing capacity to manage their financial affairs.
Of those who do consider such a scenario, many will either hope it does not happen to them or will think it will only happen in old age. However, while one does not want to become too morbid about these things, conditions such as Alzheimer’s disease can happen relatively early – as demonstrated by the fate of businessman Mike Baldwin in Coronation Street – and sudden events such as car accidents can leave victims without the capacity to make financial and welfare decisions.
The fact that for some business owners, particularly those in rural areas, their home is also the mainstay of their company makes it even more crucial to put plans in place to safeguard their assets should such a situation come to pass.
A Power of Attorney is the customary way to ensure decisions can be made about the finances and future care of someone who has lost mental capacity.
It is a legal process by which the ‘donor’ gives the legal right to someone else – the ‘attorney’ – to manage their financial affairs and property.
Before October 1 of this year, it was relatively straightforward to secure an Enduring Power of Attorney (EPA), allowing the attorney to deal with part or all of the donor’s financial affairs.
An EPA often included restrictions only allowing the attorney to act if the donor lost capacity at a later date.
However, EPAs have now been replaced by Lasting Powers of Attorney (LPA).
Granting an LPA is more complex than granting an EPA and likely to be more costly. The form of the document is longer and an additional certificate – generally given by a doctor or independent solicitor – is required.
LPAs also allow the donor to continue to make some decisions, an aspect of the legislation which has caused some concern over who makes the final decision in various situations.
The added complexity of the LPA is likely to make it much more costly than the previous EPA, as well as making it take longer to execute.
This is why we at Ward Hadaway have been urging our clients to take out EPAs before the October deadline.
While that has now passed, the need to think carefully about the future of your assets and your business remains.
It is unlikely to be at the top of your list of current priorities, but it is something which should be part of your long-term plans.
For further details on issues raised in this article, please contact Andrew Facer on (0191) 204-4435.