Article – Business Lasting Powers of Attorney
Most of us are familiar with putting Lasting Powers of Attorney (‘LPAs’) for our personal affairs in place for our Health and Welfare Decisions and Financial Decisions, but how many of us have considered putting a Business LPA in place to allow for the continuity of your farming business?
Similar to your personal LPAs, creating a Business LPA delegates the business owner’s role to appointed individuals, should the said business owner lose capacity or become unable to fulfil their role in the business for a specific reason. The business owner could then, under the Business LPA of course, pass on all responsibility for business decisions to a trusted individual or individuals of their choice, giving some piece of mind that the business can continue to trade in the future without issues.
If you’re a Sole Trader
It is unlikely that you will have a separate legal entity, therefore a Business LPA in this case would be very sensible to enable your business to continue through the arms of a trusted individual or individuals, should you not have the capacity to do so yourself.
If you’re a Partner in a Partnership…
The provisions of the written Partnership Agreement are very important in this case. The Agreement should state whether it is possible for someone to take over another Partner’s role in the business, in the event of one Partner losing capacity. If this is not permissible, then a Business LPA may not be the best option. If, however, the Partnership Agreement states nothing in relation to delegation, then one could consider whether the terms of the Partnership Agreement are lawful under the Mental Health (Discrimination) Act 2013. If the Partnership Agreement terms are discriminatory by preventing an arrangement which would otherwise be acceptable, for example in this case by preventing any kind of delegation in the event of mental capacity difficulties, then one could argue that the Partnership Agreement is discriminatory and those particular terms should not apply and thereby the Business LPA could take effect.
If you’re a Director of a Company…
In this situation, the Company’s Articles of Association need to be considered in relation to delegation. Some of the standard Articles (Article 5(1) for example), do allow delegation which includes through a Business LPA. However, standard Article 18 automatically prevents a person being a director if that person is medically certified as being ‘mentally incapable’ and will remain in such a condition for more than 3 months. If Articles 5 and 18 are unchanged, then the Business LPA can be used for delegation, but only whilst the director has mental capacity. Article 18 would look to remove the director if s/he loses mental capacity.
Further Advice
For any further advice in relation to the contents of this article, or if you’re interested in putting a personal LPAs, a Business LPA or a Partnership Agreement in place, then please contact a member of Agri Advisor’s Private Client Team on advisor@agriadvisor.co.uk.
By Manon Thomas Cooper, Solicitor based in our Newcastle Emlyn Office.
Original article published in the NFU Members Magazine ‘Farming Wales’. www.nfu-cymru.org.uk.