Lasting Power of Attorney For Business Owners
16 October 2023
What is a lasting power of attorney?
A lasting power of attorney (LPA) is a legal agreement granting permission to a trusted attorney to make decisions on your behalf if you cannot do so for yourself. Often, these are used by older individuals planning for later in their lives or the circumstances preventing them from maintaining their mental capacity.
LPAs can be arranged for a range of purposes, providing the opportunity to prepare provisions for a range of eventualities. In a previous article, we discussed the various LPAs for financial and healthcare decisions and the many reasons why ageing individuals may want to set up an LPA.
For more information on LPAs and their purposes, get in touch with Redkite Solicitors. We are here to provide legal advice and services to a range of clients in England and Wales. Get in touch to speak with one of our legal experts today.
What is a business LPA and why are they important?
A business-lasting power of attorney is a type of LPA that specifically designates an individual to make choices about your business, its assets and critical financial decisions if you cannot do so. This may be due to a loss of capacity or other reasons, such as being overseas and unable to return or loss of capacity by illness or injury.
Should you succumb to an accident or long-term illness, your business is at risk of being left without a leader or decision-maker. This could put your team in a difficult position and have lasting effects on your customers, suppliers, and other meaningful business relationships. Without an alternative plan in place, your business could face severe problems and financial consequences.
A business LPA can help you avoid several problematic situations that would otherwise result in the downfall of your company. They enable you to secure the following:
- Peace of mind that your affairs are in order
Having a business LPA in place can give you peace of mind that you have taken steps to protect your business should you become unavailable to conduct the affairs yourself. If you become ill or cannot return to the country, it can be nerve-wracking to think about what will happen to your business in your absence. Who would have the authority to sign contracts, manage payroll, or access important documents and bank accounts?
Business owners have a plethora of crucial responsibilities to consider, making it vitally important that there is somebody who can step in to lead the business and conduct essential tasks on your behalf. A business LPA can assure that a trusted individual will take care of your business.
- Leave your business in safe hands
Business LPAs can provide peace of mind that your affairs are taken care of should you be unable to do so yourself. It also allows you to hand-pick the person you trust most to make decisions on your behalf, rather than leaving it up to discussion or a legal decision-making process.
Many trust their friends and family to take care of their personal interests, but it can become far more complicated when business affairs are involved. This is particularly true for businesses with multiple stakeholders, as there may be a conflict of interest if the LPA designates one specific individual to make decisions on behalf of the company. Therefore, by legally agreeing with a trusted colleague, partner or acquaintance, you can ensure that your trusted attorney will handle the business the way you intend.
- Protect the continuity of your decisions
After building a successful business over many years, you will want to ensure that decisions continue being made in a way that reflects your original vision and values. This can be difficult to achieve if your business is left without a clear leader during a time of crisis.
A business LPA allows you to appoint someone you trust to make decisions in a way that is consistent with how you would make them yourself. This helps to protect the continuity of your business, and ensures that it can continue to operate successfully even in your absence.
How to set up a Business LPA
When working alongside a chartered solicitor, creating a lasting power of attorney for your business is simple and stress-free. The document must be correctly worded to avoid future ambiguity or validity issues. Companies with several stakeholders will find it particularly important to provide clear instructions to prevent a higher risk of disputes.
Redkite Solicitors can offer practical guidance for setting up a business LPA to maintain the smooth running of your business. We will guide you through making your intentions clear to those who may question the decisions made in your absence. Contact us here to arrange your consultation and receive expert advice.
- Choose your attorney
Your attorney is the person you select to make decisions on your behalf. This can be anyone over 18 that you trust, including a family member, friend, or business partner. Depending on your preference, you can appoint more than one attorney to act together or independently.
You must carefully consider who you would like to appoint as your attorney. They should be somebody you trust implicitly to make decisions in your best interests and in accordance with your wishes. They should also be aware of the enormous responsibility they are undertaking on your behalf.
- Complete the legal documentation
Either online or paper forms need to be completed and signed by both you, the attorney, and the witnesses. To simplify this process, your solicitor can complete the form for you or work with you to ensure that all agreements are clear and legally valid.
- Register the Lasting Power of Attorney
Once you’ve decided upon your attorney and informed them of their duties, the documentation can be registered with the Office of the Public Guardian (OPG). Again, your solicitor can submit the documentation and update you regarding the approval or objection to the LPA to make the process simple and hassle-free.
It generally takes around twenty weeks to register an LPA, although this time frame may change according to issues with your application. The fastest way to implement your LPA is by working with a professional solicitor. Once approved, your LPA comes into effect upon loss of capacity. The LPA then grants your attorney(s) authority to conduct decisions on your behalf.
A business LPA is a vital tool for protecting your business in the event of losing capacity. By appointing a trusted individual to make decisions on your behalf, you can ensure that your business will continue to be run in accordance with your wishes.
Working with a professional solicitor is the best way to ensure that your LPA is correctly worded and registered without any fuss. Redkite Solicitors has extensive experience in helping our clients to protect their businesses and interests. We can provide guidance and support when setting up your LPA, from start to finish.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.