But what exactly is a Business LPA?
The use of a ‘Lasting Power of Attorney’ (LPA) has increased substantially over the years. Many people plan to retain control of their futures by appointing someone they trust to manage their affairs in the event of serious illness or where their capacity to make decisions is lost.
An LPA is not solely for personal use though. In a business situation a Business Property and Financial Affairs LPA could prove to be invaluable as it allows the business person, whether it is a director or sole trader to appoint a person(s) to make decisions and run the business in the event that the business person is temporarily or permanently unable to due to ill health, accident or loss of capacity.
For directors with more than one company it is essential that they have an LPA for each company to avoid any ambiguity.
Many people will have an informal agreement within their business team stating who should take the reins and support should the worst happen but without a legal structure this scenario could soon develop flaws.
The only recognised legal way for a person other than the business owner/financial director to be able to access bank accounts, pay staff, and organise those large contracts is via a Business Lasting Power of Attorney that legally appoints an attorney to legally act on behalf of the business/business owner. If there is no Business LPA in place it can all lead to the company getting into difficulties, e.g. employees and suppliers not being paid and contract not being signed. Appointing the right person and writing a Business LPA for an attorney to oversee the running is the best way to ensure the continuity of your company. Trusting this responsibility to someone who has a similar outlook, skill and knowledge, is reliable and understands your vision for the business is essential – and do not forget to discuss this with them – they will need to be aware of their duties and responsibilities.
Do I really need an LPA?
So many people ask this question. Without making it legally clear that one of your team or someone you know and trust can step in and make important business decisions on your behalf and of the business, you could put the very future of the firm in danger.
Successful business owners pride themselves on being prepared for all eventualities, but sadly some fail to consider the possibility of them not being able to make decisions for themselves or the business. Should this occur a person without mental capacity is not only unable to enter into a lawful contract but the bank will freeze or restrict use of the business account, therefore supplies and employees are not paid. Subsequently, everything that has been worked hard for could be threatened in a short space of time.
Unexpected ill health is an important factor to consider and having a Business LPA in place is vital.
In 2013 the Mental Health (Discrimination) Act came into law, and it ruled it to be discrimination were a director removed from a business’s accounts by a court on the grounds of mental health concerns.
An application to the Court of Protection would be required for signatories to be removed from a company’s accounts, requiring a lot of time, while the company faces potential issues regarding company expenditure, including loans and overdrafts.
These acts protect the vulnerable from would-be predators and you do not want to be bundled into the spare room while unscrupulous business partners, friends or even family take advantage.
Payment of Business LPA is a legitimate cost to your business rather than to you personally.
Things to consider…
All relevant documentation pertaining to the business would need to be considered – partners, partnerships, or a limited company – ensuring that there is nothing set out to prevent the representation of a chosen attorney.
Think carefully about who would be chosen. Do they know and understand the business? Do they have adequate experience and knowledge to continue without guidance? Are they able to work within the team created and deliver the absolute best for the company?
A business LPA protects the you the donor, the employees and the company and I genuinely cannot think of any reason why you would not make one.
Easily explained by… Donna Shepherd @RedkiteCopywriting
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