Risky business - why farmers should make a lasting power of attorney

Farming is a high-risk business with the agriculture, forestry and fishing sector topping the table for workplace injuries according to the most recent Health and Safety Executive figures.

If you are the key person who makes decisions and holds the purse strings on your farm and you get injured or lose mental capacity, your farming business could grind to a halt: workers and suppliers could not be paid, bank accounts may become inaccessible, and loan or mortgage payments could fall into arrears.

With this in mind, more and more farmers are making a lasting power of attorney to protect their business interests, to ensure their farm continues to flourish should they become incapacitated, as Laura Carter, Wills & Probate Solicitor and agricultural specialist at Pearsons & Ward Solicitors in Malton (part of Ware & Kay with offices in York & Wetherby), explains.

What is a business lasting power of attorney?

Better known as a financial decisions lasting power of attorney, this legally binding document allows you to select one or more people you trust to take over the running of your farming business and to make financial decisions on your behalf if you can no longer make them for yourself.

It empowers your attorneys to take on tasks such as:

• paying your workers, suppliers, HM Revenue & Customs, your mortgage lender and any other creditors;
• accessing your bank and savings accounts;
• buying and selling property;
• leasing or buying machinery you might need for your farm;
• managing your investments; and
• applying for any benefits you might need.

You can offer guidance to your attorneys on how your business and finances should be managed and place restrictions on their powers that you feel might be necessary. If you have more than one attorney, you can also stipulate how they divide the running of your affairs and whether they should act jointly or on an individual basis.

Your attorneys will be able to step in and act for you if you ever lose mental capacity; that is, when you are unable to make and understand the implications of your decisions at the time they need to be made, and you are unable to effectively communicate such decisions.

You can choose family members, friends or professionals to be your attorneys, provided they are aged over 18, mentally capable and are not bankrupt or subject to a debt relief order. They can conduct their duties for as long as you cannot manage your affairs yourself.

What happens if you do not have a lasting power of attorney?

If you do not have a financial and property lasting power of attorney in place and you lose mental capacity, an application would have to be made to the Court of Protection to have someone appointed as your deputy to run your business.

This process is much more costly than having a financial and property lasting power of attorney prepared and registered and, as it can take many months for a deputy to be appointed by the Court, such a delay could be debilitating for any business.

How we can help

Drafting a lasting power of attorney for a farming business – which may be held in a number of different ways, such as through a partnership, a limited company or a limited liability partnership – is more complex than for most people. If you make a mistake in the drafting, this could prove costly for you, your farm and your loved ones.

You are strongly advised to seek professional legal help in drafting your business lasting power of attorney. Our specialist solicitors can ensure you have considered all eventualities when drawing up the document, help you pick appropriate attorneys, and offer guidance on the restrictions you may need to place on them.

They will also make sure that your financial lasting power of attorney accurately reflects your wishes and is legally binding and properly registered.

For more information please contact Laura Carter on York 01904 716000, Wetherby 01937 583210 or Malton 01653 692247 or email laura.carter@warekay.co.uk to see how we can assist.