Business/Commercial Lasting Powers of Attorney

What is a Business LPA?

A Business LPA is a Lasting Power of Attorney in which you can appoint people you trust to make decisions regarding your business in the event that you cannot. There are a number of types of LPAs (property and financial affairs, health and welfare etc). Here is a basic definition.

What is a Lasting Power of Attorney (LPA)?

A lasting power of attorney (LPA) is a legal document in which you authorise a chosen person or persons (attorneys) to make certain decisions on your behalf, in the event that you become unwell or lose the capacity to make decisions for yourself. They are also useful should you chose not to make a decision or are out of the country etc. For businesses, continuity is crucial and a commercial or business LPA is important.

Why have a business/commercial LPA?

Just as a starter, it’s the same thing but it gets given different names. As a business owners, whether you’re a partner, sole traders or company director, unexpected incapacity (even if only temporary) can impact significantly on the business finances, potentially meaning that suppliers are not paid, staff are not paid, stock could not be purchased, business loans may go unpaid and no one else would be authorised to control the business account. This could cause untold havoc within the business and could put significant pressure on the sustainability of the enterprise. You might think you could rely on family members or employees to deal with the running of the business, but they may not have the authority to do this and business colleagues do not automatically gain the authority to make decisions on your behalf if you lose capacity. It’s therefore important to consider creating a commercial LPA.

These can be used under the following circumstances:

  • If the owner or person with responsibility is overseas or on holiday.
  • If the owner or person with responsibility has had an accident that means they are temporarily or permanently incapacitated
  • When the business owner has a medical condition which means that they will not always be in the business or be able to make key decisions on a regular basis.

What happens without a business LPA?

If a business owner loses capacity and they don’t have a business or commercial LPA in place, an application to the Court of Protection to appoint a deputy to act on their behalf may be needed, which can prove costly and take a significant length of time, exposing the business to a huge amount of risk. Obviously one of the key risks is that the business will not survive the time needed for the deputy to be appointed.

Who ought to consider a business LPA?

Sole Traders

Self-Employed individuals with business bank accounts

Company Directors where the director’s incapacitation is not covered by the articles of association or memorandum of association

Business Partners where a partnership exists. Again, if a partner’s incapacitation is not covered by the articles of association or memorandum of association

Points to remember

The LPA must be registered with the Office of the Public Guardian whilst the Donor still has mental capacity, to take effect.

A person can have a personal financial LPA, a health and welfare LPA and a business LPA, but should appoint attorneys that are suitable for each one separately.

A business attorney must be able to carry out the role and be someone suitable to undertake the responsibilities of the donor in a business LPA, and the donor should consider giving specific and detailed instructions on what powers a business attorney would have.

How to create a Business LPA

Contact Philip Anthony Associates at www.paalifeplanning.com or call us on 0800 970 0649 to book a FREE no-obligation consultation.