Have you got a Business Lasting Powers of Attorney

You may have heard of Lasting Powers of Attorney (LPA’s), but did you know you can make business LPAs? 

A business LPA is a financial affairs LPA which provides attorneys with the authority to deal with the donor’s business interests only.  The LPA is tailored specifically to cover your business interests, whether you are a sole trader, a partner in a partnership, single-director company, or a director of a larger company. 

This legal document allows a business owner to appoint one or more trusted people to act as attorneys to deal with business matters if the owner becomes unable to make these day-to-day decisions themselves. 

If you have personal assets such as bank accounts and investments, it is advisable to make a separate LPA which specifically deals with those personal affairs. 

Who should consider a business Lasting Power of Attorney?

• Sole traders 

• Partners in a partnership

• Owners of single- director companies, where one person may be central to signing documents, operating accounts, and making key decisions. 

• It may also be relevant for partners and directors in larger organisations. 

It is important to check the governing paperwork of the business, such as the partnership agreement or shareholders agreement and articles of association to ensure that they allow substitute attorneys in the event of incapacity. Indeed, those documents may contain provisions dealing with incapacity or delegated authority within the business and any business LPA must be drafted so that it does not conflict with those terms and in some cases may mean a business LPA is not required.

If a business LPA is not required, the governing paperwork of the business should still be reviewed to check for conflicting provisions.

Key points to consider 

You may have LPAs in place to cover your wider financial affairs, including your business, and be content with those appointed to assist with decisions concerning your business. However, where this is not the case or is not otherwise appropriate, we recommend thinking about the following: 

• Choosing attorneys who have commercial understanding and are trustworthy.

• Checking company documents and any partnership terms to avoid any conflict before appointing an attorney. 

• Ensuring clear and concise instructions are provided to the attorneys to deal with banks, payroll, suppliers, contracts, tax, and regulatory obligations.

• Keeping clear records, attorneys must always act in your best interests. 

• Always retaining evidence of important decisions made and ensure financial records are kept up to date.

• Ensuring the LPA is registered with ‘The Office of the Public Guardian’ before it is needed. 

What are the consequences of not making a business Lasting Power of Attorney?

If a business owner loses capacity without an LPA in place, the business may be in a vulnerable position whereby no one would have legal authority to access business bank accounts, pay employees or sign contracts.

 A spouse, business partner or co- director does not necessarily have legal authority to act on behalf of the incapacitated business owner. 

This could result in business matters being unable to progress, causing significant issues for the business.  An application may need to be made to the Court of Protection for the Court to appoint a person known as a ‘deputy’ to deal with such assets but this can be a lengthy process and expensive. 

A business LPA can protect the business and form a structured continuity plan.  

To Summarise

Putting an LPA in place is not about expecting the worst, it is about reducing uncertainty. 
Early planning makes a difference because:

• You choose who makes decisions.

• It avoids delay and costs.

• It supports/ forms part of sensible business planning.

We can help you

A business LPA is a sensible safeguard which we advise putting in place not just for your own beneficial protection as the business owner but also to protect your employees. 

Our experienced Private Client Solicitors can help you through the process and answer all of your questions. Whatever your requirements, Porter Dodson are here to help.