Safeguarding the future of your business

By Claire Read, Birkett Long.
Business owners should consider having a will and a lasting power of attorney (LPA) to protect their interests and those of their business.
Published in UK Director Magazines Summer 2024

Legal: Claire Read, Birkett Long

A will allows you to decide how your estate is distributed after your death, ensuring your assets go to the intended beneficiaries. An LPA authorises a chosen person to make decisions regarding your finances or personal life, if you become unable to do so yourself. 

Why is it important?

Putting an LPA and will in place gives peace of mind to your staff, stakeholders, and loved ones and ensures that your business and personal affairs are in order. 

If you have a business, it may be set up so that it will continue after your death, but this is not always the case. It is important that you set out in a will what you would like to happen and who will run the company. 

Having an LPA can also be crucial as it ensures continuity in managing both personal and business affairs in case of incapacity or inability to make decisions. Be sure to consider the type of business owned when deciding on a business LPA, as different company structures may have varying needs and legal implications. 

The key benefits

A will allows you to decide how your estate, including your business assets, will be distributed after your death. This ensures your business is passed on according to your wishes rather than being subject to the default intestacy rules. 

An LPA allows you to appoint trusted people to make decisions on your behalf if you become unwell or mentally impaired, ensuring your business can continue operating.

Without an LPA, if a sole trader is incapacitated, there will be no one who has the authority to make decisions and carry on running the business, and the business could fail as a result. For businesses with multiple owners (e.g. partnerships and companies), it will be necessary to check how many partners or directors there are, and the terms of the partnership agreement or company’s articles of association.

If you do not have an LPA in place and you are unable to make decisions in the future, it would be necessary to apply to the Court of Protection for the appointment of a deputy on your behalf. The process is time-consuming and expensive, and applications can take between six and 18 months to complete. At that stage, there may not be much of a business left to manage!

Giving another person the ability to act in key areas of your life and business is an important step. Seeking legal advice from a solicitor on completing LPAs is imperative to ensure there is no room for ambiguity in your wishes – they should be wholly controlled by you and, therefore, reflect your wishes. 

Ultimately, having a will and an LPA in place can provide peace of mind and ensure that your wishes are carried out effectively in the future. 

Safeguarding the future of your business 1

GET IN TOUCH

Claire Read is Partner and Head of Private Client Department at Birkett Long. If you would like more information on arranging a will or lasting power of attorney, please contact our specialist team. 

T: 0330 818 3294
E: claire.read@birkettlong.co.uk
Or visit www.birkettlong.co.uk

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