Do I need a business Lasting Power of Attorney?

While many people understand the importance of a Lasting Power of Attorney (LPA), the idea of putting a business LPA in place is not as familiar.  

An LPA gives legal authority to a trusted attorney to deal with your affairs and make decisions on your behalf, should you ever become unable to manage this yourself. You can make a financial LPA as well as a health and wellbeing LPA. A business LPA will appoint someone to deal with your business affairs in the event that you lose capacity.

When would I need a business LPA?

A business LPA could be used if you lost the mental capacity to act or if you were temporarily unable to deal with your business affairs, for example if you were involved in an accident or if you were overseas and unavailable to sign documents and make important decisions.  

Why put a business LPA in place?  

If you do not have a business LPA in place and for any reason you were not able to deal with your business transactions, then there is a risk that your business could suffer. With no-one able to take decisions or having the authority to make requisitions or access funds, your business could be left unable to function.  

There is also a possibility that the bank could freeze your accounts if you were not able to operate them yourself. In this situation, a family member or employee could not simply step in to help unless they had sound legal authority to do so.

Your next of kin would need to make an application to the Court of Protection to appoint a deputy. This is a lengthy process and is much harder than registering an LPA. A deputyship also involves more ongoing monitoring and expense than an LPA.

Do I need a business LPA if I already have a personal one?

Generally speaking, you should consider appointing a different attorney for your personal and business LPAs. The person you trust to deal with your own financial affairs might not be able to deal with your business, while you might not want your business attorney to also have control of your personal finances. In addition, there could be a conflict of interest between your business and personal situation, which could make things difficult for your attorney and might make the LPA ineffective. It is also open to you to appoint different attorneys in respect of different businesses, if you own more than one.  

Choosing an attorney  

You should make sure that the person you choose to act as your attorney will be able to cope with the role, should they be called upon. It will need to be not only someone you trust implicitly, but someone you believe can carry out the same function as you within your business. You should also consider whether your employees will be able to accept your attorney’s authority.

Granting power to your attorney  

You can tailor your business LPA to give your attorney specified powers, for example, the authority to deal with a single issue could be granted if you needed them to deal with a transaction while you were overseas.  

You can also leave non-binding instructions as to how you would prefer them to act, although these will not be enforceable in court.

Provided by Sue Ioannou, Chair & Head of Training.