Why it’s important business owners get organised before a second coronavirus wave.
No matter what your interest in a business – owner, director, partner or sole trader – the sensible course is to protect the future of the enterprise.
And the best way to start is by ensuring you have a Will and Lasting Power of Attorney. This is the advice of specialist solicitor Sarah Finnigan, who is currently working with many Oldham business owners to make sure their personal and business interests are protected post Covid-19.
“People don’t hesitate to take out insurance to safeguard against unforeseen problems, but don’t consider what would happen in the event of a death or becoming incapable of running things. How this would affect your firm?” asks Sarah.
Depending on the structure, some types of businesses are exposed during the administration of an estate because there are limitations on what can be achieved until probate is granted and the estate is finalised.
And this can sometimes take many months, if not longer.
“Without a Will your estate will be distributed in accordance with the rules of intestacy and often the people who would benefit under these rules are not the people you would choose – and there may be detrimental tax consequences.
“The good news is death doesn’t have to mean the demise of a business – and making a Will is actually easier than most people realise,” says Sarah.
“Your health also comes into consideration and capacity is something that unfortunately can affect anybody at any time. As a business owner, it is important to make sure that the operation of your business is not adversely affected and of course the easiest way to achieve this is to make a Lasting Power of Attorney (LPA),” she added.
A property and financial affairs, or health and welfare LPA is a legal document allowing you to appoint an attorney who can make decisions and act for you if you lose mental capacity and it is possible to make a ‘Commercial’ LPA, purely for the purposes of running your business, she explained.
Having this commercial document in place will ensure certain business operations continue. The attorney will be able to vote at shareholder meetings as if they were the business owner, or make decisions you would make as a partner in a business such as paying wages, signing cheques or entering into contracts.
Adds Sarah: “Without this safeguard the effect on a business could be disastrous as no one would be legally entitled to manage the business. The only option then available would be for an application to be made to the Court of Protection to get authority to manage the business, but such applications are time consuming and expensive.
“Making an LPA is just another way to protect a business and, like any form of insurance, is invaluable.
“These unprecedented times have prompted business-owner clients to make contact with us as their trusted legal and financial advisers, their minds having been focused in a way only a pandemic could.
“They are not putting off the important decisions about their family’s future financial security.