Shropshire Farming Talk: The importance of lasting power of attorneys
With the self-assessment tax returns having just been submitted, there is no better time to be thinking about your financial situation and what would happen if you were unable to deal with your personal affairs.
Lasting Powers of Attorneys, known as LPA’s, are important for everyone.
It is particularly important however that every farmer considers having an LPA, as not only do they run a farming business, they also very often live and work on the farm.
A Lasting Power of Attorney (LPA) gives another person, known as your Attorney, the power to make decisions on your behalf when you are mentally or physically incapable of doing so.
There are two types of LPA’s- one that relates to property and financial affairs and another that relates to your health and welfare.
Decisions are taken every day in a farming business; from buying feed, paying bills to the sale and acquisition of land. If you became mentally or physically incapable of making decisions, who will make these personal and business decisions on your behalf?
This is why an LPA is so important - think of it as an insurance policy. Having an LPA in place ensures that not only can the everyday decisions be made, but also the larger financial and often strategic decisions required for you and your business. This will not only safeguard the continuity of your business but will provide you with peace of mind.
Appointing the right Attorney for your individual circumstances and business is therefore crucial. A little-known fact is that you can have separate LPA’s- one for your personal finances and one for your business affairs.
You can appoint more than one Attorney and even specify how they are to act, whether jointly for some decisions or individually for others, resulting in a truly tailored LPA for your individual and business circumstances.
Entering into an LPA means that your trusted Attorney would be able to make personal and business decisions on your behalf and you can carry on safe in the knowledge that the business can continue to function as normal.
Before proceeding, it is important to consider the structure of the farming business, any existing partnership agreement or shareholders agreement. It is therefore vital that legal advice is sought before entering into an LPA.
If no LPA has been entered into and you have no capacity to prepare an LPA, an application will need to be made to the Court of Protection to appoint a Deputy. This is a lengthy and costly process and is to be avoided at all costs.
The importance of an LPA therefore cannot be underestimated - it should be part of your farm’s contingency plan.
by Aneira Evans, Partner at Agri Advisor Legal LLP
