Client very ill

Client very ill

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We have a client who is very ill and going in for a major operation in a couple of weeks, and to put it bluntly we are trying to ensure that the business will continue to operate smoothly either way. We have discussed with the client a power of attorney for himself in order for the day to day business to continue (which is what he wants as there are other family members involved in the business) should he not be able to do so, but was wondering whether there is anything else we should be considering? If a client dies, does a power of attorney still stand, or are we getting into the realms of wills etc ? He will be going to see a soliticor shortly to get things drafted as necessary, but we were wondering what he may be asked to sign. We are the registered as agents for VAT and PAYE purposes and he is a sole trader.
Anon

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David Winch
By David Winch
17th Apr 2007 10:28

A part answer

I have no doubt that others better qualified to advise than I am will pitch in with helpful suggestions, but in the meantime I can say that my understanding is that a power of attorney will not operate after the client's death.

I take it that the possible outcomes are (1) a successful operation from which the client makes a full (or nearly full) recovery so that after a while he can continue to run his business, or (2) the client dies shortly after the operation. (Sorry to be brutal.)

If a possibility is that the client survives but is mentally incapacitated then you need to consider another type of legal document known as an enduring power of attorney. Take advice from a solicitor on that.

You (or rather your client) does need to check that his Will says what he currently wants to happen (which reminds me I must update my own Will). Again this is one for the solicitor more than yourselves but you may want to ask the solicitor to do everything possible now to facilitate the continuing operation of the business without interruption in the event of the client's death (if that is what is wanted). You don't want everything frozen for months while the solicitor gets probate organised!

It might be sense for the client's intended successor to become a partner in the business now (and hence be a signatory on the business bank account and have authority to continue the running of the business). But watch for CGT and IHT implications (not my scene these days - but others will know). Another option might be incorporation of the business into a limited company (with your client plus at least one other person as directors so that you have at least one director in good health to run the business whatever happens).

It is a tricky one to discuss with the client and his family. Good luck!

David

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