Should You Consider a Business LPA?
Steve Worsfold explains the benefits of a business LPA.
LPAs are becoming more and more widely discussed and awareness is increasing generally with more stories in the media about people living longer and some of the horror stories that are publicised about what can happen if people lose capacity without having LPAs in place. Generally, people are aware that they can appoint attorneys to deal with their personal finances, as well as their health and welfare, but a subject less commonly discussed is Business LPAs (BLPAs).
Anybody with a business interest, whether that be as a sole trader, a partner or a shareholder, should consider creating a separate LPA solely to deal with their business affairs as part of their business continuity planning. Without a BLPA in place, if someone with an interest in a business is unavailable, e.g. if they regularly spend time out of the country, or lacks mental capacity, it may not be possible to pay staff and suppliers, complete unfinished transactions or enter into new contracts, all of which would be likely to significantly hinder the day-to- day running of the business.
Who would you want to make decisions about Your business?
Often in a personal LPA, people will choose to appoint a spouse or family member as their attorney, but they might not be the most suitable person to manage business interests as well. Business interests are usually more complex than personal affairs and can require specialist knowledge and experience that personal attorneys may not have. The Mental Capacity Act 2005 Code of Practice governs this area and states that ‘an attorney should be someone who is trustworthy, competent and reliable. They should have the skills and ability to carry out the necessary tasks.’ Naturally, this means that careful consideration should be given when appointing an attorney to manage business affairs, to ensure that they have the necessary expertise and skills to be able to make decisions in relation to the business in the same way that the donor would have done.
Are you planning for the future of your business?
Regardless of current health, all business owners should be thinking about their planning for the future and LPAs should form part of that planning in every case in order to protect both their business and personal finances should the unthinkable happen.
Business LPAs can be completed alongside personal LPAs. The personal LPA will specify that it only relates to personal affairs and does not extend to business affairs. The business LPA will specify the opposite – that it can only be used in relation to business affairs and not personal. The registration process remains the same.
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Steve Worsfold has been an Affiliate Member of the Society for 15 years.