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Tipi Wills & Planning
Passionate about People. Passionate about Planning
We have one life. Let's live it to our best.
Wills & Planning for the Isle of Wight, Hampshire & Sussex
Supports Living your best life.
Tel: 01727807169
Trained by & member of both Society of Will Writers and Estate Planners and Society of Mediators
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Empowered To Talk
Facilitating Agreement. A local and national centre offering a variety of mediation and the NEW Empowered to Talk premediation. We facilitate solutions over a wide range of situations from legal to difficult decision making. This includes problems & disputes around Wills and contentious probate resolution, Civil & Commercial Mediation for a wide range of conflict. claims, medical decisions or disputes
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Our virtual office can be 100% online The beauty of using technology like Zoom is the flexibility. Your location does not matter for appointments or documents. Finding time is much less of an issue. Costs and expenses are kept down too, yet its still great getting to know each other face to face. Book your free consultation now
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Tipi Wills & Planning
"An Englishman's home is his castle"
Edward Coke 1604
Whether its a tipi or a castle it's your home
We are pleased to announce the formation of Isle of Wight Mediation to focus on a wide range of mediation. Our name is changing to Tipi Wills & Planning. Its unique combination of services for planning and mediation remains
The content, concepts and planning services in these websites and used by this business are strictly the creation of and the property of Patricia Horwood trading as Tipi Wills & Planning & Isle of Wight Mediation
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Lasting Power of Attorney for Business
Could your business continue without you?
OK, so below is some information about what a business lasting power of attorney can do and why you may need or wish to have one, and more besides. You may, or may not, wish to know this. What I do know, is that I can address it. Are you concerned about ensuring your business continues if something happens to you? Or, do you want to know who could run for your business while you are in hospital? Perhaps you wish for temporary or permanent cover if you lose capacity? Perhaps you wish to know what to do, not just if you lost capacity short term or long term, but what would happen to your business if something happened to you? Are you worried if you dont do what is in the best interest of the business you could open yourself up to claims by those relying upon the business (employees or investors?) So, really, you dont need to read all that stuff below if you dont want to. You can simply contact me, we can discuss and put in place a solution to address your concerns as swiftly as you like. The information below aims to support your decision making. At the end of day, these solutions are here to serve you and it is our intention to do just that. Call me today.
A business LPA is essentially a finance LPA that has been carefully crafted to provide for the more diverse and complex needs that would entail keeping your business running in the event you were incapacitated, or unable to run the business. In addition your BLPA has to take into account various aspects of the law in relation to your type of business and your position within in it. There may be regulatory bodies to consider also. As with any LPA, you can decide whether it is for a short term, eg, recovery after an accident or for long term so that it stays in place until you revoke it, or it stays for as long as it is needed. These are terms you can specify within your BLPA. An LPA is arguably as important as your Will as it protects property and people in a similar way and so it is a very important document. It is a legal power you give to ensure continuity in the management of your life and your finances. Who you give those powers to therefore, is to be done with great care. There are some caveats though when creating a BLPA.
As with any LPA, you need to be aware family members do not have the automatic right to make decisions on your behalf whether for health, finance or business. Also, that other specialist people or regulatory bodies may have to step in.
When considering an LPA for business (or indeed any LPA) the legal professional may question the donor on whether the chosen attorney has sufficient skills and abilities to manage the tasks being asked of them. These issues are more significant when it comes to making a BLPA. For example, if a solicitor were an expert in company law, would it be appropriate to appoint an attorney who was expert in family law? The attorney’s decisions may affect the business and livelihood of others and as such may be held accountable for those decisions. This is in fact the same reasoning as to why you may need to appoint a BLPA at all. The successful continuation of a business and the livelihoods of others may be reliant upon having a (correct) Attorney in place should you ever lose capacity to make such decisions, such as accident or [sudden] serious illness.
When making a BLPA, the donor and the attorney need to take a number of considerations into account. As such, you are likely to need a legal professional to draft your BLPA and possibly a solicitor to work with and advise on the powers that you are able to delegate within your BLPA. This may depend on your type of business.
For example, you may need to consider the authorities you need to give and the restrictions you need to make, how they comply with your articles of association and whether you need to make separate BLPAs for separate things. However, this more complex consideration tends to go with a more complex business structure and are not likely be applicable with small businesses such as a sole trader. Nonetheless, you will need to consider the abilities and duties being asked of an attorney you would like to appoint in the event it may be required.
The donor might consider the attorney able to manage certain day to day financial responsibilities but make a provision that the attorney can delegate specified investments to a specialist, such as an investment manager. This would be important when appointing a business manager as they would need to follow relevant business legislation. If your business is a specialist in a particular industry and it will be difficult to find an appropriate attorney, you may like to look into whether there is a regulatory body that can appoint someone whilst certain matters and considerations are attended to.
A donor may restrict the attorney from acting in relation to certain assets, such as the family home or confer power upon his attorneys to act jointly in some matters and jointly and severally in others. You may like to sit down and think this through, or talk it through with appropriate people as to how you may like this to work. If you are not sure how to proceed, we can certainly start the discussion with you and guide you as to what the next steps could be until we have reached a satisfactory conclusion with you.
When taking instructions from a partnership or a company, a legal professional should check to ensure that the client has not limited (inadvertently) the use of an LPA via an existing deed. The legal professional would therefore need to see the relevant business documentation, such as the Memorandum and Articles of Association if applicable.
The donor will need to consider what skills and abilities are needed to continue to run their business and thus what kind of trading entity they are wishing to protect. The business owner will need to take into account what type of trading entity they are. In the UK these are now five types with various tax and liability implications for owners and shareholders
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Sole Trader
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Partnership
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Limited partnerships
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Limited liability partnership
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Limited Company
Directors of companies and their articles of association
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If you’re a director of a company, you will generally know the terms of the company articles of association. Very often, articles of association will have been amended to provide for the termination of a director’s appointment in the event that the director loses capacity. This is often done to protect the company’s interests. If a company adopted the Model Articles without altering them, the Mental Health (Discrimination) Act 2013 amends these by saying a director may not be removed by a court if he has mental health concerns, which may include incapacity. Calling a shareholders’ meeting to remove a director is unlikely to be effective as these may be discriminatory. Also, a partner, an LLP member or a director lacking capacity may not give a valid receipt if his shares or interest in the business are sold. If an LLP member or a director who is ‘person with significant control’ lacks capacity, Companies House should be informed, which may have consequences. There is of course considerably more law about how co-directors may or may not act toward a director with mental health concerns or loses capacity and can find themselves in breach of various items, so if a company finds themselves in such a situation, it is wise to consult a legal professional before taking any action.
Since the introduction of the Mental Health (Discrimination) Act 2013, more businesses are creating BLPAs. A business owner, the donor, can have the BLPA operate once capacity is lost. The attorney acts as an attorney and does not acquire the position of partner or director. However, this does need to be within the context of the existing articles as it may be agreed that some things may not be delegated. It is therefore a good idea to have your/our solicitor look over your company documents when drafting a BLPA so that there are no conflicting instructions.
Additionally, it is quite acceptable for a donor to create multiple BLPA’s to make business decisions provided that it is clear what the power of attorney relates to so there is no confusion.
Setting up a BLPA may be important as it is effectively “making reasonable adjustments” for people who lack capacity and need decisions made for them. This may be interpreted as doing what is in the best interests of the business and can mitigate any claims against the business for losses through not making the provisions needed to keep the business running smoothly.
As with any LPA, a BLPA may be created using a single attorney or with attorneys acting jointly and severally, ie where one person can make a decision or where all attorney’s must agree. Differences when making a BLPA, as opposed to a general finance LPA, are surrounding the suitability and knowledge of an attorney, whether there are any conflicts of interest and any regulatory bodies to take into account.
If you are the sole director of a small private company, the articles of association are not likely to simply terminate the director’s appointment, or there would be no one else to continue running the company. In such circumstances, a business LPA would be appropriate.
Can you make an LPA covering your personal and business affairs?
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As mentioned above, you can have more than one LPA. It may be possible to have just the one LPA appointing attorneys to manage your personal assets and your business assets. However, it may not be appropriate for the same person to make both personal and business decisions, due to a potential conflict of interest or expertise. You could consider making an LPA appointing certain attorneys to manage your personal assets, and others to manage your business assets. Bear in mind though, that this could create confusion regarding the scope of the attorneys’ powers, and the Office of the Public Guardian is likely to reject the LPA.
Fortunately, as it’s possible to make more than one LPA, you could consider making one for your personal affairs and a separate one, or more, for your business affairs. Often, people like to keep their business affairs separate from their personal affairs.
If you are considering making two or more LPAs, each should contain specific instructions ensuring you limit the scope of the attorneys’ powers to those powers. For example, a personal LPA should specify that your attorney will have general power in relation to your personal affairs, except for the relevant business assets for which you have executed a separate business LPA naming a separate attorney(s). Your business LPA should contain specific instructions in this respect too. Your attorneys will then be clear about their powers and will not encroach on each other’s responsibilities and decisions reducing the likelihood of confusion and conflict.
What happens if I don’t make a business LPA?
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If you’re unable to make business decisions in the future, and have not made a business LPA, it may become necessary to make an application to the Court of Protection for the appointment of a deputy to act on your behalf. The process can be expensive, and there’s no guarantee that the Court of Protection will choose a person you would have liked. It could also take more than six months before a deputy is appointed, during which time your business may be vulnerable and at risk.
To avoid disruption, and various risks, it should be part of any business owner’s continuity plan and crisis management strategy to consider making a business LPA. It would also be wise to consider if there is a possibility of any claims against the business for losses and damages should provisions to protect the business not be in place.
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If you would like to discuss any concerns or issues raised in this article, please contact Patricia at Tipi Wills & Planning
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Written by Patricia Horwood 10/10/2024
Society of Wills and Estate Planning Practioners
Society of Mediators