Published on: 28th March 2022

A Business Lasting Power of Attorney

A Lasting Power of Attorney (LPA) is a document that gives someone you trust the legal authority to make decisions on your behalf if you lack mental capacity or no longer wish to make decisions for yourself. During estate planning, many people will consider implementing LPAs for Health & Welfare and for Property & Financial Affairs for their personal matters. There is, however, a lesser known (but equally important) tool in estate planning: a business LPA. This will allow nominated attorneys to make financial decisions for your company.

Why might someone want to create a business LPA?

• If they spend a lot of time out of the country, a business LPA can be useful to allow a representative in the UK to undertake business responsibilities. This was especially important during ever-changing COVID-19 travel restrictions.
• For those with mental health concerns, business LPAs allow the donor to step away from the business at times or receive aid and support from their attorneys when needed.
• If they do not have mental incapacity and cannot make decisions, business LPAs can ensure that the business continues to operate. Additionally, banks are more likely to freeze assets to protect donors and their finances if the sole trader or member of a partnership / LLP has lost capacity. To avoid this and allow the business to continue as normal, a business LPA might be needed.

A business owner might already have personal LPAs in place for their property and financial affairs. In the majority of cases, the nominated attorneys in these personal LPAs are family or loved ones who might be useful when handling personal finances, but would not be suitable for making decisions for a company. Additionally, having the same person handle personal and business financial affairs could create a conflict of interest and render the LPAs ineffective. For these reasons, it is the best advice to create separate business LPAs with different instructions to indicate which attorneys can handle which affairs.

Whilst business LPAs are undoubtedly useful for business owners, it is also important to know if the business is subject to regulations. Questions to ask before creating business LPAs are whether the donor has the ability to delegate decisions and if the company is regulated by a professional body which would mean a donor could only appoint similarly qualified attorneys. Additionally, if you are in a partnership or LLP rather than a sole trader, there must be wider considerations about appropriate arrangements and who can be appointed as an attorney.

Overall, business LPAs can be an extraordinarily useful planning tool for those who own a business but must be carefully considered. If you are interested in discussing the creation of an LPA to have the peace of mind that your business affairs will be taken care of if you are unable to do so, please call 01732 868190 to book a no-obligation appointment or use our online form by clicking here.

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If you wish to give instructions or require general information about our Wills, Lasting Powers of Attorney, or Trusts then we will carry out a telephone or Zoom appointment. However, if you wish to give instructions to one of our Consultants and you feel that you can only do this at a Face to Face meeting we are offering, at our Consultant’s discretion, a limited number of Face to Face appointments in most of the areas we normally cover (subject to Government advice). To see the areas we normally cover please click here. To arrange an appointment please telephone 01732 868190 or click here.

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