A BUSINESS LASTING POWER OF ATTORNEY (LPA)
Business Lasting Power of Attorney (LPAs) allow the donor (the business owner/ Director) to appoint a suitable attorney to make decisions concerning their business interests when they are unavailable/ unable or lack the mental capacity. You will have spent time and money to identify and prepare for other probable risks, such as computer hacks, theft, fire and even death, however few businesses consider preparations for the business decision makers being incapacitated.
If there is no business LPA in place, certain risks arise. For instance:
- If one of the bank account signatories lacks capacity the bank can freeze or limit the account to protect the now vulnerable adult. If there is an overdraft, the possibility of the bank freezing the account is greater.
- Contracts entered into by a person who had capacity but now lacks it may become unenforceable owing to their incapacity.
- Paying creditors, employees or tax becomes difficult as does running the business generally with a person who now lacks capacity.
- Investors may require the return of their investments.
In such circumstances, who will authorise the payment of bills, sign cheques, service a business loan or pay salaries?
Don't assume that a family member or business partner/ colleague will gain authority to make these decisions on your behalf - this assumption could leave your business exposed to risk.
If there is no business LPA in place an application will have to be made to the Court of Protection to have a deputy appointed. This may take months, during which time the business is exposed to a great deal of uncertainty and may not survive.
Can you make an LPA covering both your Personal and Business affairs?
Yes, it is possible, however it may not be appropriate for the same person to make both personal and business decisions, due to a potential conflict of interests. Consideration should be given to a separate LPA appointing certain attorneys to manage personal assets and a business LPA to manage business assets. Fortunately, it is possible to make more than one LPA, people often like to keep their business affairs separate from their personal affairs, so this option tends to appeal.
When will an LPA be used?
A business LPA can only be used when it is registered unless there are restrictions in place regarding mental capacity.
How do you get a Business LPA?
Simply contact me and I will talk you through the process. Special discounted rates for all Professional UK members.
