Business owners – need for Business Power of Attorney

Why do business owners need a Business Lasting Power of Attorney (LPA)? The COVID pandemic certainly made business owners sit up and think about what would happen to their business if they were suddenly incapacitated and unable to make decisions.

Business LPAs are an important part of contingency planning. They set out who will act on your behalf to ensure that your business continues to operate effectively.

You may be a sole trader running a business through a limited company or through a partnership or LPA. Or perhaps yours is a family business with more than one generation involved in the day-to-day running of the business. An unexpected illness or accident has the potential to disrupt well laid succession plans, especially if there is a loss of mental capacity as a result.

Lasting Power of Attorney

The COVID pandemic really highlighted the need for Lasting Powers of Attorney. According to the Office of National Statistics, the number of LPA applications reached record levels at the end of 2022, with over 4,000 applications per day.

An LPA is made before you have become incapacitated. It is a legal document through which you can appoint one or more people (‘attorneys’) to make decisions on your behalf. There are two types of LPA, one for health and one for finances.

An LPA allows you to choose who will have authority to manage your property and finances and make decisions on your behalf. This then prevents any delays in the event you are incapacitated as everything is already set in place.  

But what about decisions relating to your business if you are a business owner?

Business Power of Attorney

You may already have an LPA in place and have appointed a family member. But are they the right person to take charge of business decisions? It is sensible to have two financial Powers of Attorney – one for business affairs and one for personal affairs. On that basis you can keep business and personal matters separate.

Putting in place a Business Power of Attorney means you can ensure that staff and suppliers continue to be paid. It allows you to appoint someone to make strategic decisions about the business.  

Deputyship if no LPA

In the absence of an LPA, and a business owner becomes incapacitated, the only other option is to apply to the Court of Protection for a Deputy to be appointed. This can be a long and drawn-out process and will cost more than an LPA. Additionally, a Court appointed Deputy has fewer freedoms than an attorney. So, it is far better to have established an LPA.

Having lived through a global pandemic, we are all very aware of how life can suddenly be disrupted. Whether through incapacitation or even being stranded in another country. Plan for all eventualities by making an LPA.

For further information and advice on Lasting Powers of Attorney, contact one of Bird and Lovibond’s specialist team.

Amandip Dhaliwal

E: adhaliwal@bird-lovibond.co.uk

T: 01895 256151