This week, we’re opening up the Optimise Accountants blog to a Guest Blog contributor – Ann Farnill, Head of Wills, Trust & Probate at solicitors firm Tallents, looks at how property investors and property business owners can protect their interests if they become incapable of running or making day-to-day decisions either through physical or mental incapacity.
We work closely with Tallents, so it’s a pleasure to provide our blog readers with their expertise here:
“Having invested significant time, effort and money into your property business, it is vitally important that business owners plan ahead to keep their businesses running successfully should they be unable to make key decisions due to incapacity.
You may think you can rely on family, friends, or even employees, to temporarily take over the running of the property investment business for you but this really isn’t a satisfactory long-term solution.
You’ve probably spent years building up your property business and you need to know that the person left in charge will have the knowledge and authority to make the best day-to-day decisions to keep it running. That could include paying staff wages, ensuring loans and mortgages are paid on time, dealing with taxation and perhaps negotiating contracts while you are incapacitated.
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This is why we recommend that property business owners protect themselves and their company by having a Financial Lasting Power of Attorney (LPA). Not only could it save time, it’ll help ensure that everything runs smoothly in your absence.
A Financial LPA enables you to appoint an Attorney to look after your property business’s financial affairs if you were to become incapable of dealing with them yourself, either mentally or physically.
You decide on who will deal with your affairs on your behalf and you can place restrictions on and give guidance to your Attorney on how they should deal with your business affairs.
If you are making an LPA in respect of your property investment business affairs, it makes sense to appoint someone who is familiar with the day-to-day running of your business. For example, the partners in a business could appoint each other, or you could appoint someone in your family who knows the business well. You can also choose more than one Attorney who can act jointly or separately from each other.
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A Financial LPA must be registered with the Office of the Public Guardian, regardless of your mental capacity, in order for it to be valid. Once that’s done, then you will have peace of mind that should anything happen to you, your Attorney can act immediately on your behalf, if required.
An LPA can be revoked at any time, assuming you have the capacity to do so.
However, if you were to become incapacitated without a LPA, an application would have to be made to the Court of Protection in order for someone to be appointed as your Deputy. This process can take months and the costs involved are much higher than those involved in obtaining a Lasting Power of Attorney. And in the meantime, who knows what will happen to the day-to-day running of your property business?
It really makes sound commercial sense to apply for a Financial LPA now but never have to use it.
Think of it as an insurance policy that could keep your property business running successfully should the worst happen.”
To find out more about Tallents, please visit here.
To find out more about how to reduce IHT in 2017, read our recent article here.
Uniquely positioned in the marketplace to specifically serve buy-to-let property investors and traders, Optimise Accountants offer a range of services from advice on starting a portfolio, profit maximisation, Limited company structuring/restructuring, tax returns and fully compliant mitigation strategies.
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