The Importance of Power of Attorney
Agriculture, forestry and fishing is the UK’s most hazardous industry to work in according to Health & Safety Executive figures, with 13,000 workers injured in the sector each year and 17,000 suffering from work-related ill health.
Apart from the inherent risks involved, running a farm is hard work, with a particularly heavy burden falling on those at the helm. With so much at stake, it is therefore essential to draw up contingency plans to ensure your business continues to thrive should you be unable to work due to injury or illness.
One way of doing this is to have a financial lasting power of attorney which allows you to nominate someone to run your affairs while you are incapacitated. Lynne Smith, Private Client Lawyer and part of the agricultural law team at Pearsons & Ward Solicitors in Malton explains what a lasting power of attorney is, how it works and why every farmer should have one.
What is a financial lasting power of attorney?
A financial lasting power of attorney is a legal document which lets you (the donor) select a person or people you trust (your attorneys) to make financial decisions on your behalf while you are out of action. This includes dealing with issues such as:
- running your bank and savings accounts;
- managing your investments;
- paying your bills, including the taxman, your staff, suppliers, and any loan or mortgage payments due;
- applying for benefits; and
- purchasing and selling property.
What are the benefits of having a financial lasting power of attorney?
The beauty of a financial lasting power of attorney - which must be registered with the Office of the Public Guardian before it can be used - is that you can outline in the document how you would like things to be run, giving guidance to your attorneys and placing any restrictions on them you feel are necessary.
If your farm is run as a company the financial lasting power of attorney can detail how your voting rights should be exercised. If it is run as a partnership the attorney can ensure your rights and interests in the partnership are upheld.
You can choose family members, friends or professionals to be your attorneys, as long as they are over 18, have mental capacity and are not bankrupt or subject to a debt relief order. They can perform their duties for as long as you are unable to manage the farm yourself.
If you select more than one, you can appoint them to act jointly or give them the power to make joint or individual decisions. This latter option provides more flexibility as decisions can still be made if one attorney is not available.
What happens if you do not make a financial lasting power of attorney?
If you do not have a financial lasting power of attorney in place, the consequences can be severe for you and your loved ones and have a damaging effect on your farming business if you should become incapacitated.
An application would need to be made to the Court of Protection to have a fee-charging professional appointed as your deputy to run your affairs. This process can take months and is a much more costly option than registering a financial power of attorney.
For more information on setting up a lasting power of attorney, or any enquiries regarding private client law, please contact Lynne Smith on 01653 692247 or email Lynne.Smith@pearslaw.co.uk to see how we can assist.