Making a Lasting Power of Attorney for your business

Lasting Powers of Attorney offer huge benefits to individuals, but their advantages are often forgotten when it comes to businesses.

A Lasting Power of Attorney (LPA) allows someone to appoint a trusted representative to act on their behalf once they lose the capacity to do so. This can be in respect of their property and financial affairs or their health and welfare.

Similarly, if you are a business owner, you can put a business LPA in place that will appoint someone to run your business for you in the event that you become unable to.

In the event that you lose the ability to deal with your business affairs, it could cause extensive problems. For example, if no-one can access funds except you, your business could be unable to pay suppliers or staff and any bank accounts could be frozen.

With no-one able to make decisions, the business could effectively come to an end. Although it is possible to apply to the Court of Protection for an LPA, by the time this has been done, usually several months, irreparable damage is likely to have been caused. In addition, the appointment made by the Court of Protection might not be of someone you would have chosen yourself.

Appointing an attorney under a business LPA

You should choose someone who you believe could carry out your role in the business without difficulty. This may well be a different person to the family member or trusted friend whom you have chosen to act in respect of your personal financial affairs if they are unlikely to understand the intricacies of your business. You can put together detailed instructions on what powers you want to give your attorney and when they can use the powers. It is possible to register and use a business LPA straight away if you choose to.

For example, it is possible to appoint someone to act on your behalf while you are away, as well as in the future if you become incapacitated or if you are temporarily incapacitated.

You therefore have the scope to limit the powers you give to a single transaction or a single aspect of the business, while you are still able to manage your affairs yourself.

You can specify non-binding preferences, telling your attorney how you would like them to act, although they will not be legally required to follow any non-binding directions.

If you have several business interests, you would usually make a separate business LPA for each one, appointing the most suitable person in each case.

Which type of business is a business LPA suitable for?

An LPA works well for a sole trader and also for a partnership where there is no provision for incapacity in the partnership agreement.

Similarly, if you are a company director and the company’s articles of association do not include any information about what is to happen in the event of incapacity, you can put a business LPA in place.

It is advisable to seek legal advice in respect of a business LPA before executing one, to ensure it does not conflict with any existing regulations your business may have.

For your own estate planning needs, you’re welcome to book a call with an expert via our scheduling window below:

ADL’s 2020 two sentence insights

Capitalism and technology have made the world glocal. It has and is bringing people closer together like no other point in human history. For example, today, because of the online gig economy, a start-up in London can contract affordable skilled services in the Philippines, without which neither would be able to add value to their local communities.

Yet it’s 2020, faced with a COVID pandemic our generation has never seen, and race relations at an all-time low since MLK, facing dire job losses and an unsurmountable national debt that I suspect will have a bigger impact on our domestic and foreign policy objectives since 9-11. But Europe, US and the UK are disunited and in disarray. I am intrigued like many others as to what the future could hold and how to prepare for it.

Here are my two sentence insights on the following areas:

  1. The UK economy: The performance of the FTSE index will not be reliable indicator of the economy as large companies benefit from a multi-billion-pound bailout under the guise of the Covid Corporate Financing Facility (CCFF) largely hidden from public view. However, I question whether some of these traditionally investment grade companies will be able to adapt in a post-COVID environment; failing to do so will have a serious impact on our pension and investment holdings.
  2. President Trump & the US elections: I wonder what would’ve happened if President Trump didn’t forcefully remove peaceful protestors outside the White House to walk to the damaged St. John’s Church back in June 2020 but rather reassured the protestors directly taking the knee in support be it only in principle of the #BLM movement? At the age of 74, President Trump is governing in an era of overwhelming racial divisiveness during a global pandemic, but should he be re-elected, and continue with a modus operandi focused on securitisation and divisiveness I suspect it will have dire consequences for a traditional liberal democracy and its international relations.
  3. Brexit: It appears Prime Minister Boris Johnson is taking his hardball negotiation cues from President Trump’s Art of the Deal which I don’t think can apply between nation states. I suspect his threat to break international law, is merely a crude negotiating tactic and if it did come to fruition it will only empower other emerging powers and undermine our own, which is why I don’t think a trade deal will be agreed in 2020.
  4. COVID & China: COVID will pass, humanity has overcome far greater threats and China will be under serious scrutiny over the extent they allegedly withheld key information about the virus that has sent the world on an expensive spin. But the next US administration will need to consider carefully as to whether they lead an adversarial approach towards China in an attempt to curtail its growing geopolitical influence which will no doubt have serious repercussions on its own economy thus curtailing its own global influence or to work with China on forming a new G2 platform or dare I say a G3 platform including Russia.
  5. Israel, Palestine & its neighbours: Two sentences on this? Yeah right.

Technology is breaking down borders which has been fantastic in allowing people the world over to recognise the overwhelming majority of us have similar shared sacred values. Exploiting difference will become much harder to do. But I wonder how inefficient democratic economies will compete with highly efficient undemocratic economies. There is a strong sentiment being made that we need to give up some of our freedoms to compete, but I say, we need more of it.

As humanity enters 2021 we continue to face serious threats including the competition for the earth’s limited resources and I can’t see how we can resolve these matters without an international effort, which will translate into treaties and mutual obligations which may mean our traditional conception of the nation state need also to evolve.

Mohammad Uz-Zaman is a private client trust and estate planning consultant who holds accreditations across regulated financial advice and estate planning. His career included 5 years at a highly respected think-tank. He holds graduate and post-graduate degrees and he is also an associate member of the Society of Trusts and Estate Practitioners (STEP). He works closely with financial advisers, general practice solicitors, accountants and investment managers from several major practices.

February Market Commentary

Introduction

Despite the claims of Brexit and the debate on triggering Article 50, it is impossible to start this commentary anywhere other than in Washington where, on January 20th, Donald Trump was inaugurated as the 45th President of the United States.

It is remarkably difficult to find a news outlet that has a neutral view of ‘the Donald:’ however, we’ll do our best in this commentary to stick to the facts and let you form your own opinions…

So far the new President is looking to make good on his pledge of “only America first:” he’s pulled out of the Trans-Pacific Partnership and indicated that he’ll be building a wall along the US/Mexico border – but he has graciously accepted Theresa May’s invitation to visit the UK.

The pro-business agenda of the new administration briefly saw the Dow Jones index break through the 20,000 barrier in January, before it slipped back later in the month. Most of the stock markets we cover in this commentary moved very little in January, but there were strong performances from both Brazil, last year’s star performer and up 7% in the month, and Hong Kong, which rose by 6%. There were perhaps intimations of a difficult year ahead for our old friend, Greece, with the Athens market down by 5% in the opening month of 2017.

Away from stock markets, the World Bank offered some good(ish) news to start the year, forecasting a modest recovery in global economic growth. It is expecting growth of 2.7% this year (compared to last year’s 2.3%) driven mainly by improvements in emerging markets and developing economies.

UK

The year got off to a good start for the UK manufacturing sector, with figures for December confirming that activity in the sector had reached a 2½ year high. The Purchasing Managers’ Index was up to 56.1 from 53.6 in the previous month, with any figure higher than 50 indicating expansion.

There was also strong growth in the service sector, which grew at its strongest pace for 17 months, and the Society of Motor Manufacturers and Traders reported that 2016 had seen UK car sales hit an all-time high, with 2.69m vehicles sold thanks to “very strong” consumer demand.

There was also good news for the housing market, with the number of first time buyers at a ten year high despite the average price of a house in the UK going through £200,000 for the first time – the Halifax recoding the figure as £205,170.

Last in the ‘good news’ column was the IMF upgrading its forecast for UK growth to 1.5% for the coming year (up from 1.1% in October) as it said the economy had “held up better than expected” after Brexit. Growth in GDP for the fourth quarter of 2016 was confirmed at 0.6% and unemployment also fell by 52,000 to 1.6m.

Less welcome was the news that household debt on loans and credit cards has returned to pre-crash levels, with the average UK household now owing £13,000. UK fuel prices also reached an 18 month high as inflation jumped to 1.6% in December from 1.2% in November.

There was mixed news from the UK’s retailers regarding the busy Christmas period. Next warned of disappointing sales, but several food retailers – notably Morrisons and Sainsbury’s – reported better than expected figures over the holiday period. As always though, the irreversible trend away from the high street and towards the internet continued.

What did the FTSE 100 index of leading shares make of all the news? In the event, ‘not much’ was the answer. Despite going through 7,200 at one point and breaking the record for the number of consecutive days where it rose, the index ended the month down slightly. It finished December 2016 at 7,143 and closed January down 44 points – or 0.6% – at 7,099.

Europe

Most of January’s news in Europe seemed to concern the car industry. BMW bravely announced its $1bn commitment to a new plant in Mexico, despite warnings from the new administration in the US. As we’ll see below, many firms are planning to invest in the US and/or move production back.

So potential problems for BMW and real problems for VW as it entered a guilty plea in the US over ‘deiselgate’ and agreed a $4.3bn settlement with the authorities over the emissions scandal. Despite these woes, VW has now become the world’s largest car manufacturer, overtaking Toyota which sold 10.175m vehicles in 2016, compared to VW’s 10.31m.

There was a grim prediction for the Euro, as Professor Ted Malloch, tipped to be Donald Trump’s ambassador to the EU, said the single currency “could collapse” in the next 18 months. Not surprisingly, Angela Merkel has taken exactly the opposite view – but with elections due in Holland, France and Germany, 2017 promises to be a turbulent year for Europe.

There was no such turbulence on the major European stock markets. The German DAX index was virtually unchanged in January, closing at 11,535, while the French index drifted back 2% to end the month at 4,754.

US

One of Donald Trump’s key pledges on the campaign trail was his commitment to pull the US out of the Trans-Pacific Trade Partnership, the 12 nation trade deal that was a key part of his predecessor’s Asia policy. Although this was largely symbolic (as the deal had not been ratified by the US Congress) it was a clear indication of his determination to push through election promises.

Executives at Ford were clearly aware of which way the wind was blowing as they cancelled plans to move to Mexico and instead announced a $700m expansion of their plant at Flat Rock in Michigan. And having been threatened with an import tax early in the month, Toyota ended January by announcing plans to invest $10bn in the US over the next five years.

Clearly major investments like this will not make an immediate difference to the US economy, and in January the news was not good. Jobs growth had slowed to 156,000 in December, against 204,000 in November and general estimates of 175,000, whilst growth in the fourth quarter was 1.9%, lower than the 2.2% which economists had been predicting.

Meanwhile, the new President was announcing his fabled wall along the US/Mexico border and a crackdown on immigration, as well as continuing to promise much lower taxes for both the middle classes and business. Wall Street has generally liked what it’s heard from Trump and his team: the Dow Jones index closed October 2016 (just before the election) at 18,142 and has risen by 9.5% since then, finishing January at 19,864. The index did briefly go through the 20,000 barrier at one point, but then fell back to settle for just a 1% rise in the month.

Far East

January saw Xi Jinping become the first Chinese leader to attend the World Economic Forum in Davos. This time last year his government was setting a target of 6.7% for GDP growth in 2016 – and what do you know? Official figures released in January showed that the economy grew by 6.7% in 2016, slightly down on the official figure of 6.9% recorded a year earlier and marking the slowest annual growth since 1990.

I say ‘official figures’ because there has been increasing scepticism over China’s growth figures and in January Chen Qiufa, the governor of Liaoning, said that his province had been “involved in large-scale financial deception” between 2011 and 2014 and that economic data had been doctored.

As Mr Chen may find out, that may not have been the greatest career move in the world. Unsurprisingly, the director of China’s National Bureau of Statistics declared the national data was “truthful and reliable.”

‘Reliable’ was certainly not a word that could be applied to Samsung’s Note 7: the phone’s habit of suddenly exploding and/or bursting into a flames gave a lot of YouTube viewers a lot of entertainment in 2016. Despite having to recall 2.5m handsets, however, Samsung still recorded a 50% rise in profits in the final quarter of 2016, up to 9.2 trillion won (around £5.8bn).

Meanwhile, Ant Financial, the digital payments arm of Chinese e-commerce giant Alibaba, was spending $800m to buy the US based MoneyGram. The deal will need regulatory approval from the US Committee on Foreign Investment, so it will be interesting to see what approach the new administration takes.

On the stock markets the Chinese Shanghai Composite had a steady start to the year, rising 2% in January to 3,159. As mentioned above, the Hong Kong market had an excellent month, rising 6% to 23,361. The South Korean market was also up, rising 2% to end January at 2,068, while Japan’s Nikkei Dow index was virtually unchanged, closing the month at 19,041.

Emerging Markets

As we’ve noted above, Brazil took the prize for ‘best performance in 2016’ among the markets we cover in this commentary with a rise of 39%. It made a storming start to 2017 as well, with the stock market rising a further 7% to 64,671. But despite the good performance of the stock market, we spent much of last year chronicling the ever-increasing losses at Petrobras, the state oil producer.

Petrobras is at the centre of a massive corruption probe in Brazil, with dozens of politicians having been arrested for taking bribes to grant lucrative contracts to private companies who then massively overcharged Petrobras. In January, Teori Zavascki, the judge overseeing the corruption probe was killed in a light aircraft crash – and the inevitable conspiracy theories were quick to surface. It’s another problem for President Michel Temer to wrestle with as he tries to keep the economy on track and eradicate the seemingly endemic corruption.

India – now the world’s fastest growing major economy – also enjoyed a good start to the year with the stock market rising 4% to 27,656. January was more subdued in Russia, however, where the market slipped back 1% close at 2,217.

And finally

January always brings us the World Economic Forum: the annual gathering of the great and the good at Davos in Switzerland. This meeting of politicians, business leaders and economists – sprinkled with a dash of celebrity – is supposed to chart a course for the world economy. Last year you may remember that delegates listened to Leonardo di Caprio rail against the excesses of corporate greed and then went off to reflect on the speech over £290 bottles of Cheval Blanc.

No such greed was reported this year – although one US TV reporter did complain that the price of a Davos hot dog had now reached $40. Clearly, he isn’t among the world’s super-rich who will have been cheered by news that sales of that ‘must have,’ the super-yacht, are back to pre-financial crisis levels. Just to give you something to aim at for the year, a super-yacht that is 100 metres long with a top speed of 25 knots and 50 crew will cost $275m – plus a $1m a year on maintenance and $1.4m on crew salaries.

If you can’t quite manage that, maybe the answer is to take advantage of McDonald’s all day breakfast. Launched with a fanfare as part of the grand plan to revitalise the business, the all-day breakfast has turned out to be a fine example of the Law of Unintended Consequences. Rather than draw new people in, existing customers have simply switched from burgers to breakfast, meaning that fourth quarter revenue for McDonald’s actually fell by 1.3%.

So no ticket to Davos and no super-yacht for the bright spark in charge of that initiative…

February Market Commentary Sources

Delighted panda cub plays in the snow for the first time

http://news-view.co.uk/delighted-panda-cub-plays-snow-first-time/ 

4 companies using Brexit to put up prices

Six months on from the Brexit result and there are many factors of the UK’s impending departure from the EU that remain clouded in mystery. What has become clear, however, is the impact the vote to leave has already had and will continue to have upon the price of products. A number of companies have already used Brexit as an excuse to increase the price tag on everything from the latest technology to the groceries in your shopping basket, despite the fact that Article 50 hasn’t even been triggered yet. Here are four of the main offenders:

  • Apple – The computer giant’s price hikes have perhaps received more coverage than those of any other company. It’s partly due to the fact that the Mac Pro desktop computer, a piece of kit that hasn’t been updated for three years, has seen a whopping £500 added to its already hefty £2,499 price tag. That the company was ordered by the EU to pay €13 billion (£11 million) in back taxes earlier this year hasn’t helped their case with consumers either.
  • Unilever – The multinational company made headlines in October for increasing the price of Marmite – a move which prompted some major supermarket chains to briefly remove the love-it-or-hate-it spread from their shelves – but several other products likely to feature in your weekly shop also cost more than they did before 23rd June. These include Hellmann’s mayonnaise, Comfort fabric conditioner and PG Tips tea bags.
  • Walker’s – The crisp manufacturer blamed the need to increase the price of a standard 32g bag from 50p to 55p on ‘fluctuating exchange rates’ – a move which angered some snack fans as Walker’s crisps are manufactured in Britain using potatoes grown in this country. The company responded that, whilst this is the case, packaging, seasoning and oil are all imported

LEGO – The latest additions to the Brexit price hike are the much-loved Danish plastic bricks. Fiona Wright, LEGO vice-president, has announced that the prices of the company’s toys are set to rise by 5% on average. Parents can take some comfort in the fact that the increase is set to come into effect on January 1st 2017, allowing any LEGO Christmas gifts to be bought before the price goes up.

A Night of the Northern Lights

 http://news-view.co.uk/night-northern-lights/

 

 

The Brexit Effect: Cutting the Living Wage.

You would have to have been living on another planet to have missed the UK’s biggest political news so far this year: Brexit. The vote to leave the EU was a shock to many in the City, and for the large part, the economy has remained stable although there have been times where the Pound lost considerable ground to the Dollar, nonetheless the drastic economic implications are yet to materialise. You may have noticed, Apple products cost more now in the UK post-Brexit and that’s a direct result of the weakening of the Pound due to uncertainty in the British markets.

Naturally, we have never pulled out of the EU before so we aren’t entirely sure what this may mean for the UK economy. Whilst there are many educated predictions, only time and initiating Article 50 will really tell.

As more attention turns towards the Brexit effect, one of the implications which has come to light recently is a reduction in the National Living Wage. Where previously the National Minimum Wage for over-25s was meant to rise from £7.20 to £7.60 per hour, this will now fall 10p short and only rise to £7.50.  http://www.bbc.co.uk/news/business-37626422

10p may not seem a large amount in the grand scheme of things but this is a result at odds with George Osbourne’s previous policy promises introduced in 2015.  Weak pay growth mean that this 10p off will result in a lower wage long-term and a less progressive future for many. By 2020, the target of taking all over-25s to £9 an hour, simply won’t happen.

So what does this mean for you?

Life has it’s hurdles, this is one of them, but at least you are not on your own, as if everyone is going through the same thing, that will filter through into the economic market you find yourself operating in. Yes, we all have our own micro-economic environment…maybe that’s a topic for another blog.

However, what you may want to be thinking of, in order to prepare for a potential difficult post-Brexit economic climate is how you can increase your income faster than the cost of living and also the reduction of your wage, if you are to be on the minimum living wage that is. That solution is upskilling, learn a new skill, diversify your skillset, don’t think you can’t do it, because you can. Someone once told me, sometime’s it’s not about the goal, it’s about the journey, just maybe that journey in upskilling will bear more fruits than the skill you eventually gain. Oh yes, I actually heard it on Star Trek.

Oh yes, I actually heard it on Star Trek.

Look if you’re one of those who fall in this area, seriously drop us an email and we’ll speak to you about where you are today and help you explore your options…and no we won’t charge for such a consultation. It’s just something that means a lot to us. Some of us have been there too.

 

Disclaimer: The information contained within this article are provided as illustrative purposes only based on legislation at the time of publication. Nothing in this article should be construed as advice or guidance to one’s personal situation. The value of your investments may go up and down, similarly, other aspects of your wider lifestyle and financial context may impact on your objective. In a nutshell, don’t rely on blogs and the articles for personal advice, and always seek advice from a qualified professional.