Many people associate a Lasting Power of Attorney (LPA) with personal affairs, such as managing finances or healthcare decisions if they lose mental capacity. However, if you own a business or have commercial interests, failing to have the right LPA in place could leave your company vulnerable and create significant financial and legal challenges.

What is a Lasting Power of Attorney (LPA)?

An LPA is a legal document that allows you to appoint one or more people (your attorneys) to make decisions on your behalf should you become unable to do so due to illness, accident, or incapacity. There are two main types:

1. Property and Financial Affairs LPA – Covers financial matters, including business assets.
2. Health and Welfare LPA – Covers medical and personal welfare decisions.

For business owners, the Property and Financial Affairs LPA is crucial to ensure continuity and avoid disruptions.

Why Business Owners and Those with Commercial Interests Need an LPA

1. . Flexibility to Appoint Different Attorneys for Business and Personal Affairs

You don’t need to appoint the same person for your personal finances and your business matters. You can:

• Appoint a business-savvy attorney (such as a co-director or financial expert) to handle business decisions.
• Appoint a family member or close friend for personal financial matters.

This ensures that the right person is making decisions in the right area.

• Avoiding Costly and Lengthy Court Applications

Without an LPA, your family or business partners may have to apply to the Court of Protection to gain authority to act on your behalf. This process:

• Can take months (sometimes over a year).
• Is costly, involving legal fees and court costs.
• May result in someone being appointed that you would not have chosen.

An LPA prevents this uncertainty and ensures that your chosen attorney steps in immediately when needed.

• Protecting Business Interests and Shareholders

If you have business partners, co-directors, or shareholders, your incapacity could create operational challenges. For example:

• If you are a sole trader, your business could grind to a halt without you.
• If you are a director of a company, your Articles of Association may not automatically allow other directors to act on your behalf.
• If you own shares in a business, decisions about your shares may be left in limbo, affecting company stability.

By appointing a business LPA, you ensure that a trusted individual can take over your role and protect the company’s interests.

• Business Continuity in Case of Incapacity

If you become incapacitated and do not have an LPA in place, no one will have the legal authority to make business decisions on your behalf. This can result in:

• Frozen bank accounts – If your name is on business accounts, access could be restricted.
• Missed financial obligations – Bills, salaries, and supplier payments could go unpaid.
• Legal complications – Contracts and ongoing transactions could be delayed or voided.

Having an LPA ensures that someone you trust can take over and keep the business running smoothly.

• Peace of Mind for You, Your Employees, and Your Family

Having an LPA in place reassures your employees, partners, and family that your business and assets will be handled properly. It provides:

• Stability – Your business can continue running without unnecessary delays.
• Financial security – Protects your income and assets.
• Control – You decide who takes over, rather than leaving it to the courts.

How to Set Up an LPA for Your Business Interests

Setting up an LPA is a straightforward but legally important process. Here’s how:

1. Assess Your Needs – Determine whether you need separate attorneys for business and personal matters.
2. Choose the Right Attorney(s) – Pick someone trustworthy, financially competent, and familiar with your business.
3. Draft the LPA – Work with a solicitor to tailor the LPA to your business structure and needs.
4. Register the LPA – LPAs must be registered with the Office of the Public Guardian to be legally valid.
5. Inform Key People – Let your business partners, financial institutions, and relevant stakeholders know about the LPA so they can act accordingly when needed.

Conclusion

For business owners and those with commercial interests, an LPA is not just a personal safeguard—it’s a business necessity. Without one, your business could face financial loss, legal complications, and operational chaos if you were to lose mental capacity. By putting a Business LPA in place, you ensure smooth decision-making, protect your assets, and provide long-term stability for your business and loved ones.

If you need assistance setting up an LPA tailored to your business needs, contact our legal team today.