Business owners, have you thought about what would happen with your business if you lost mental capacity?
Previously, a director of a company ceases to be a director as soon as a medical practitioner gives a written opinion stating that the director has become mentally incapable and will remain so for three or more months. However, on 29 April 2013 the law changed and the Mental Health (Discrimination) Act now allows directors of a company with mental health issues to continue acting.
The change in law may not be a problem if the mental health issue is mild but it also allows someone who is very ill, with clouded judgement to continue running the business which may not be a sensible idea. In those cases some banks may, under their terms of business, give 28 days notice and call in any loans or monies which could leave you and your business in a sticky situation!
To avoid this from happening, it is possible to make a business lasting power of attorney.
A business lasting power of attorney is similar to a lasting power of attorney in that it is a legal document allowing you to give one or more persons the authority to make decisions on your behalf. However, the authority extends only to your business so you can choose people with the most appropriate set of skills and have a separate set of attorneys to deal with your personal affairs. The appointed business attorneys can then step into your shoes and carry on running the business on your behalf.
A business lasting power of attorney can be very useful as it can be used on loss of mental capacity but it can also be used in the event of temporary absence. For example, if you were on holiday or away for business and needed to action something in your absence.
For more information on LPAs or any other mental capacity issues, please contact our Wills & Wealth Planning team on 01625 442148.