Business Clinic: Should I have a lasting power of attorney?

Whether you have a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Russell Reeves, a partner with law firm Thrings, advises on the benefits of appointing a trusted person to make decisions on your behalf should you become incapacitated.

Q: I’m 72 years old and farm in partnership with my wife, son and daughter. I still own and run the farm and I haven’t lost any of my marbles.

However my daughter tells me I should have a lasting power of attorney in place. Can you please explain what this is and whether I should have one?

A: Your daughter is right. A lasting power of attorney (LPA) is a sensible precaution which all of us should take.

An LPA is a legal document that allows individuals to choose one or more people they trust (attorneys) to assist or make decisions on their behalf, in their best interest, when they are unable to do so.

There are two types of LPA: one for property and affairs, and one for health and welfare.

It’s an unfortunate fact of life, but any of us could lose mental capacity at any time.

Sometimes the onset is gradual – as can be the case with dementia, where there are good days and bad days for memory – or sometimes it can happen suddenly owing to an accident. 

See also: Business Clinic – partnership dissolution was badly handled

Agriculture has the poorest safety record of any industry. We all know farmers who take health and safety shortcuts, often because it’s the way they have always done things.

But even with the best health and safety planning, accidents can happen. This isn’t surprising because farming can be high risk, often involving solitary working with machinery, livestock or hazardous chemicals.

Safety net

An LPA is akin to a safety net, much like insurance. Each year you insure your vehicles, farming equipment, property and so on.

This is often irrespective of whether you expect to make a claim – it is done on the premise that you may need it in the future for those “what if” situations.

Therefore, much like an insurance policy, you may never use an LPA, but it is there should the unexpected happen and should be considered essential to minimise interruption to the running of a farm.

Regardless of family relations, or whether someone is your business partner or co-director, nobody has an automatic right to manage your affairs should you become incapacitated.

Your loved ones would be required to apply to be appointed to manage your affairs.

This is a long, complicated and expensive process. An application to the Court of Protection would be needed and your family would need to prove your incapacity with expert evidence.

The court would then appoint a deputy to run your affairs for you, meaning you would also miss the opportunity to decide who will manage your affairs and how.

There is a common misunderstanding that in appointing an LPA people are giving away control and abuse of power may be exercised by the attorney.

This is misleading because there are safeguards in place and the attorney must act within the law in your best interest.

Advanced preparation for incapacity and vulnerability enables you, as the donor, to carefully decide who you trust to manage your affairs and detail exactly how they should do this and when.

Once you have approved the LPA, it simply needs to be registered with the Office of the Public Guardian.

You may never lose capacity, but an LPA is there should you become mentally or physically frail and need assistance in managing your business or personal affairs.

Without an LPA there will likely be a period of time in which no one can deal with your affairs or manage the business, pay wages or contractors.

Neither would your wife or children be able to access your bank accounts, insurance policies, assets or other bills which might need paying.

This can be incredibly stressful for your family when they are already trying to cope with the deterioration in your health.

It is not just about getting old – which is why I would suggest that your wife, son and daughter have an LPA in place too.