The recession has taught business owners that they must be resilient and expect the unexpected in difficult times. Company directors, business partners and sole traders will all have been affected by inflation, low interest rates and the threat of possible redundancies within their work-force.
However, those business owners may not have considered whether their business will be adversely affected if they become incapacitated as a result of an accident or illness. For example, who would sign the cheques, pay the staff and manage the business on a day-to-day basis?
If an individual is no longer able to manage his or her financial affairs and has not executed a valid Enduring or Lasting Power of Attorney, a family member or friend will need to apply to the Court of Protection for a Deputy Order. This process is both expensive and time-consuming because the Court will want to ensure that the most appropriate person is being appointed.
If the Court of Protection is satisfied that the applicant is able to perform the role of Deputy adequately, the Deputy will be asked to put a guarantee bond in place and render accounts to the court each year.
This stressful and expensive process can be avoided if an individual executes a Lasting Power of Attorney in respect of his or her finances, or an Enduring Power of Attorney was executed before 1st October 2007.
You can appoint one or more attorneys to manage your finances by executing a Lasting Power of Attorney. The attorneys’ powers will include selling and buying property, signing cheques and dealing with your tax affairs. On that basis you should trust your attorneys implicitly.
Company directors should note that their incapacity would usually be governed by the Articles of Association of the company, most of which will include a provision stating that a company director will cease to be a director if incapacitated.