A Lasting Power of Attorney (“LPA”) is a legal document that allows you to appoint a person or persons to manage your affairs, normally in the event of mental incapacity.
You can prepare two types of LPA, one for property and financial affairs and one for health and welfare. While a Property and Financial Affairs LPA allows an attorney to deal with business interests subject to any restrictions in the LPA, it is becoming increasingly common to have a separate LPA, known as a Business LPA, to deal with these.
Should I have a Business LPA?
You should firstly look at your business set up.
- If you are a sole trader, appointing an attorney under a Business LPA could assist with the continuation of your business if you were to lose mental capacity.
- If you are in a partnership, you should review your partnership agreement and consider whether it covers a scenario involving mental incapacity, or if there are any restrictions on an LPA attorney acting on behalf of a partner. If not it may be wise to have a Business LPA in place.
- If you are a company director, your company’s articles of association must be reviewed as they may provide for a termination of an appointment in the case of incapacity; however, if you are the sole director and become incapacitated, a Business LPA may be appropriate to enable your attorney to continue the day-to-day management of the company.
Our Corporate team can assist with reviewing your partnership agreement or company’s articles of association to determine whether a Business LPA is advisable in your circumstances.
Who should act as your Business LPA attorney?
It is important to consider if an individual has the correct skill set and attributes to be able to manage your business interests. If you have an existing Property and Financial Affairs LPA and/or Health and Welfare LPA, you may want to select a different person to act as your Business LPA attorney to keep personal affairs and business decisions separate, and reduce the risk of a conflict of interest between the roles.
Please note that if you do not have a Business LPA in place and lose mental capacity, an application must be made to the Court of Protection to appoint a Deputy to act on your behalf. This is a time-consuming and expensive process which will leave your business at risk whilst the Court considers your application.