‘Power’ failure could leave rural businesses in the lurch | 03 August 07
FARMERS and rural businesses are being warned that time is running out to protect their properties and business affairs in the face of new Government legislation.
North law firm Ward Hadaway is warning that changes to Powers of Attorney which come into effect on October 1 will potentially affect all countryside businesses.
A Power of Attorney is a legal process by which the ‘donor’ gives the legal right to someone else - the ‘attorney’ - to manage their financial affairs and property and is most often used in cases when an older relative loses capacity to manage their affairs.
At the moment, it is possible to grant an Enduring Power of Attorney (EPA) which allows the attorney to deal with part or all of the donor’s financial affairs even if the donor loses capacity. This can be crucial particularly if one of the partners of the business is elderly and may lack capacity to make decisions in the future.
However, from October EPAs will be replaced by Lasting Powers of Attorney (LPAs), which will cost more to obtain and raise doubts over what powers the attorney can exercise over the donor’s estate.
Alison Burn, partner in the Private Client department at Ward Hadaway, said: “For many people in the country, their home and property is also the mainstay of their business. This makes the issue of a Power of Attorney even more important to people in the countryside.
“Granting an LPA will be more complex than granting an EPA. The form of the document is longer and an additional certificate - generally given by a doctor or independent solicitor - is required.
“There is concern that the ability of the attorney to make some decisions whilst leaving other decisions to the donor will cause problems and it is also felt that the cost of an LPA will be far greater than an EPA.”
The Newcastle-based law firm is now advising people to get an Enduring Power of Attorney in place before the new rules come in.
Ms Burn said: “I would advise everyone to consider whether they should sign an EPA now. At least the document will be in place if needed.
“The old system is tried and tested - and cheaper. While you would hope an EPA would just gather dust and never be needed, can you afford to miss this last opportunity to execute one?”