Despite the huge disruption that is being caused to daily life due to Coronavirus, while complying with social distancing guidelines, business and personal life should still carry on as much as possible.
In many sectors including property, law, banking and finance, the restrictions on movement and imposed social distancing can cause significant challenges for individuals and businesses. There are specific challenges in relation to signing documents where this cannot be done electronically and particularly where time is of the essence.
The current situation is a reminder of how important it is to have suitable powers of attorney in place so that it is still possible to operate “business as usual”, as much as possible.
It would be very helpful for many individuals to have in place both a general power of attorney and suitable Lasting Powers of Attorney (LPAs).
General Power of Attorney
A general power of attorney provides authority, sometimes in relation to a specific circumstance, to a named individual to act on the donor’s behalf. These types of power of attorney can be limited in scope, for example, to sign a particular contract or document on the donor’s behalf and therefore once the specified transaction has been completed they cease to have effect. If the powers of attorney are wider in scope, giving the attorney the authority to act generally in relation to the donor’s financial and/or business affairs, the power should usually be renewed at least every two years. A practical solution for those entering into business and legal transactions of a time-sensitive nature would be to grant a specific power of attorney in favour of the solicitors acting for them in those transactions, so that documents can be signed by the solicitors at the instruction of the donor, for example, by email or (more securely) over the telephone. However, even this requires a certain amount of forward planning as the power of attorney will need to be in place and ideally the solicitor would be in possession of the power before completion. A general power of attorney becomes ineffective should the donor lose mental capacity.
Financial Decisions LPA
A financial decisions LPA continues to be effective even if the donor loses mental capacity. This type of LPA gives your chosen attorney(s) the right to act on your behalf regarding your day to day spending, any property sales or acquisitions, the management of your bank accounts or investments. Business owners will often put in place separate financial decisions LPAs for their personal and business affairs. A financial decisions LPA can be used as soon as it is registered with the Court of Protection and at your direction whilst you have mental capacity.
Health and Care Decisions LPA
For good measure, although not strictly relevant in a business scenario, we would also recommend putting in place a health and care decisions LPA which gives your attorney(s) the power to make decisions in relation to your personal health, your diet, living arrangements and medical treatment and, if the LPA provides for it, the power to give or refuse consent to life sustaining treatment on your behalf. This type of LPA can only be used once you have lost mental capacity to make the particular decision in question.
Both types of LPA are only effective in England and Wales although many other jurisdictions have equivalent longer lasting powers of attorney in place.
Creating a general power of attorney and a financial decisions LPA in favour of the same attorney(s) concurrently is a useful two pronged approach; the general power of attorney covers the immediate need for an authority and can be revoked once the LPA is registered and therefore effective long term.
We would be delighted to advise on the preparation and drafting of powers of attorney to ensure that appropriate and adequate authority is given to the chosen attorney(s) so that they may act effectively in the donor’s personal and/or business interests.
Since “lockdown” began, we have seen an increase in enquiries about and instructions to put powers of attorney in place. It will be reassuring for clients and save considerable time and stress to have suitable powers in place so that they may continue to conduct “business as usual”.
Please contact any member of the Private Client team if you would like to discuss this further.
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Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing.