Many business owners, when thinking about protecting their business, insure against common business risks such as property damage, theft, third party liability and business interruption. A few also look at keyman insurance to cover the risk of the owner becoming incapacitated because of some physical or mental condition or unplanned absence abroad but very few create a lasting power of attorney which will give an individual the authority to run the business in such situations.
What is a lasting power of attorney for business?
A lasting power of attorney allows a business owner to delegate specific or restricted powers to one or more attorneys to make decisions on behalf of the business as if they are the owners. The power can be restricted to situations where the owner is unable to take decisions due to a loss of mental capacity. However, the power can also be exercised when the donor has capacity (provided they consent) and can be useful where the owner is abroad or is otherwise absent from the business for an extended period of time.
Usually, your attorneys will be people you trust, not necessarily those who work in your business e.g. your accountant or solicitor and often they are appointed to work alongside a family member, particularly the owner’s spouse.
All business owners should consider putting a lasting power in place as its absence, at the very least, could cause your business significant operational difficulties very quickly if there is no-one else who can make payment to staff, suppliers or to the landlord and it is not unheard of for businesses to go under as a result of the owner being incapacitated and no-one able to make decisions on his behalf.