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Why should I have a business Lasting Power of Attorney (LPA)?

Legal Question Time with Gardner Leader

Why should I have a business Lasting Power of Attorney (LPA)?

Laura Buchanan, Solicitor – Dispute Resolution Team

Business LPAs are basically the same as personal LPAs, except as the name suggests, they relate to your business affairs rather than your personal ones.

What is an LPA?

An LPA is a legal document that allows you to appoint someone (known as an
attorney) to deal with your personal and financial affairs should you become unwell or lose the capacity to make your own decisions for any reason.

Why should I have an LPA?

If you are a business owner, it is important to consider what would happen if you were unable to make decisions, eg if you were to have an accident, if you had an illness which incapacitated you or if you were abroad and not contactable for any reason (either on holiday or for
business).

In those circumstances, it is important to consider who would pay salaries, authorise the payment of bills or service business loans.

Many people just assume that a colleague or family member would be able to make those decisions on your behalf, but that assumption can leave you and your business exposed to considerable risk.

Does everyone need a business LPA?

No, this very much depends on the type of business you own.

If you are a sole trader, then your business is unlikely to have a separate legal entity.

In this situation it would be really sensible to have a business LPA in place to ensure you have provision for the continuity of your business in the event that you are incapacitated.

If on the other hand, you are in a partnership, you would need to check the terms of your Partnership Agreement first as some include provision for the continuity of the business should one of the partners be incapacitated.

If there is adequate provision then a business LPA would not be required.

If you are the director of a company, you should check your company’s Articles of Association.

Sometimes the articles will state that a director’s appointment should be terminated in the event they lose their capacity.

This provision is there to protect the interests of the business.

If no such provision is included, you should seek advice and may want to consider including such a provision.

However if you are the sole director of a small private company, the articles are unlikely to terminate your appointment as that would leave the business with no one to run it.

In that instance it would be sensible to have a business LPA in place.

Choosing your attorney

If you do decide to put an LPA in place, it is important you chose your attorney wisely.

The task may call for specialist skills and it is important to consider whether the person you appoint will be able to command the respect of those that they will be working with.

Also, if you work in a specialised industry there may be restrictions on who can make decisions on your behalf.

What if I don’t have a business LPA?

If you do not have a business LPA in place and you become unable to make business decisions, it may become necessary to make an application to the Court of Protection for the appointment of a deputy to act on your behalf.

This process can be costly and it can take months before a deputy is appointed, during which time your business maybe left vulnerable and at risk.

There is also no guarantee that the court of protection would appoint the same person you would have chosen.

If you are a business owner it is therefore important to consider carefully whether you should put a business LPA in place and if you are in any doubt you should seek legal advice.

Author’s Details:

Laura Buchanan
Solicitor – Dispute Resolution Team

T: 01635 508078
E: l.buchanan@gardner-leader. co.uk

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