A lasting power of attorney (LPA) is a fundamentally important legal document through which you authorise a chosen person to make certain decisions on your behalf. The decisions that you authorise your attorney to make can be either in relation to your finances, for which an LPA for property and affairs will be created or in relation to your personal life, where an LPA for personal welfare will be created.
An LPA is a very important document, as it ensures continuity in the management of your life and your finances, should you become unwell or lose the capacity to make decisions. You may feel that an LPA is not necessary, and assume that family members can step in, when necessary, to make decisions. But this is not the case; family members do not have the automatic rights to make decisions on your behalf.
LPAs for business
As a business owner, it’s important to consider what would happen to your business if you were unable to make decisions. This may be if:
- you were abroad on holiday or for business
- you were to have an accident
- you were to have a medical condition that incapacitated you
In such circumstances, who will authorise the payment of bills, sign cheques, service a business loan or pay salaries? Don’t assume that a family member or a business colleague will gain the authority to make these decisions on your behalf – this assumption could leave your business exposed to risk. To protect your interests, and those of your business, you should consider making a business LPA.
Can you make an LPA covering your personal and business affairs?
It may be possible to have just the one LPA appointing attorneys to manage your personal assets and your business assets. However, it may not be appropriate for the same person to make both personal and business decisions, due to a potential conflict of interests. You could consider making an LPA appointing certain attorneys to manage your personal assets, and others to manage your business assets.
Fortunately, it’s possible to make more than one LPA. You could consider making one for your personal affairs and a separate one for your business affairs. Often, people like to keep their business affairs separate from their personal affairs, so this option tends to appeal.
If you are considering making two LPAs, each should contain specific instructions limiting the scope of the attorneys’ powers – for example, a personal LPA should specify that your attorney will have general power in relation to your personal affairs, except for the relevant business assets in respect of which you have executed a separate business LPA. Your business LPA should contain specific instructions in this respect, too. Your attorneys will then be clear about their powers and will not encroach on each other’s responsibilities and decisions.
What happens if I don’t make a business LPA?
If you’re unable to make business decisions in the future, and have not made a business LPA, it may become necessary to make an application to the Court of Protection for the appointment of a deputy to act on your behalf. The process can be expensive, and there’s no guarantee that the Court of Protection will choose someone you would have chosen. It could also take more than six months before a deputy is appointed, during which time your business may be vulnerable and at risk.
To avoid disruption, it should be part of any business owner’s continuity plan and crisis management strategy to consider making a business CLPA.
If you or someone you know would like some advice on setting out an CLPA, Will Writing, Power of Attorneys and how we can help you, you can call Sara on 01304 577998 or email email@example.com.