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Business Lasting Powers Of Attorney (LPA)’s

Business Lasting Powers Of Attorney (LPA)’s

Don’t leave your business vulnerable

What is an LPA / business LPA?

 A Lasting Power of Attorney is a legal document where you appoint somebody to make certain decisions on your behalf if you are unable to do so yourself. This can be in relation to your finances, your estate or your personal welfare depending on the type of LPA used. 

However, a lot of business owners are not aware that they need a specific business LPA to cover the management of their business if they are unable to do this themselves. 

Times when a business LPA may be needed include:
  • If the business owner has a medical condition which means that they do not have capacity to act
  • If the business owner has an accident and becomes temporarily unable to act
  • If the business owner is on holiday and not able to sign documents/cheques or agree or disagree with any urgent decisions to be made

You, as the business owner will need to consider that if you were to lose mental capacity who would sign cheques, pay bills, service loans or pay salaries? It is often assumed that family members or employees automatically have the right to deal with the running of your business, however, under law this is not correct. 

Even if your business bank account is held jointly with other business partners or directors, if you lose mental capacity, this can be frozen until a deputyship order is produced (see below).
Contact Our Wills & Probate Specialists

What happens if you don’t have a business LPA?

If you do not have a business LPA in place and you are unable to manage the running of your business, then somebody may need to apply to the Court of Protection to be appointed as Deputy on your behalf.


This is a lengthy and costly process, leaving your businesses at risk with nobody to manage things while the paperwork is being processed.


The applicant may then be refused deputyship and the Court of Protection will appoint an official deputy, which adds further costs and leaves a stranger running your business.


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Having a business LPA in place allows for somebody you trust and somebody that knows your business to take over the day-to-day management.


You can limit the powers that they are given under the LPA for example, access to business accounts, authority to sign cheques, authority to pay staff and suppliers, deal with tax affairs and enter into contracts. 


It is important that the powers you give your attorney under the LPA are sufficient for the business to continue operating as it would if you were making the decisions. 

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Types of business that benefit from LPA

If you are a sole trader, you will benefit from an LPA because your business is unlikely to have a separate legal entity from you. A business LPA will ensure that things continue to run smoothly in the event that you are unable to manage it yourself. 

Partnerships

If there are several partners within a business, a partnership agreement may already include provision for what would happen if one person became incapacitated. You should seek legal advice as to whether a business LPA would be necessary in this instance and be mindful that the business LPA doesn’t conflict with the partnership agreement. 

Directors

If you are a director, there will usually be company articles of association. These will often provide for termination of a directors appointment in the event of incapacity. However, if you are the sole director the articles of association are not likely to deal with this as there would be no other director to take over the role and therefore a business LPA would be needed. 

 *This article is for information purposes only and legal advice should be sought before taking action*

Aconveyancing’s Wills & Probate department can deal with all types of legal matters around business LPA’s.  For more information or to book an appointment with a solicitor, contact dlocke@aconveyancing.com

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