What Is A Lasting Power Of Attorney?

A lasting power of attorney (LPA) is a legal agreement allowing designated people or persons to make decisions for you if you become incapacitated. Whilst they are a common legal practice for personal wills and circumstances, business LPAs also exist and are vital for business owners in certain circumstances. 

Business LPAs cannot be applied retrospectively, and if you don’t have one in place, you may need to apply to the court of protection for a deputyship, which can be very complicated and not quick to deal with.

They are commonly used for older adults where there is a risk of them becoming mentally incapacitated and unable to make decisions. However, they are also essential for business owners as there is a much higher risk of becoming incapacitated for a period than there is of dying early. Having a business lasting power of attorney in place for the instance that you ever do become incapacitated means that the business you have spent years building remains unaffected. 

Here, we take a look at business LPAs and how they can benefit your business in later years.

What Are The Different Types Of Business LPAs?

Financial LPA

Your Financial LPA details who will manage your finances and assets, such as money, shares, and bank accounts. It is common for business owners to have a designated person to manage their finances and a different designated person to manage their business affairs.

For example, your spouse may be happy dealing with your personal bank accounts and making payments, but would they be as confident making business decisions or financial decisions?

To make provision for this, a business LPA can stipulate who manages your personal finances and business affairs, which is often forgotten when creating a standard LPA.

Wellbeing LPA

The second type of business LPA is for your well-being, such as making decisions about your health, treatment you may need or third-party help that might be required if you are incapacitated. 

The designated person or persons can be the same as your financial LPA, or a different subject to your wishes.

A typical example for a business owner needing a more bespoke executive will would be that you own a limited company and are the signature at the bank. Your spouse isn’t a signatory on the account, and you become incapacitated. Who would log in to the bank account to pay the wages of staff? Who would make the monthly transfer of income to the family bank account to pay for living expenses and mortgage payments? If you are the only person authorised to access your account, the funds could be frozen, and it isn’t straightforward to get any bank to allow access to someone who isn’t registered.

A business LPA would be essential, as a spouse or another trusted person could contact the bank on your behalf and arrange your affairs for you while you are unable to. 

As you will be providing someone with permission to make decisions on your behalf, it is essential that you use the services of a professional. Many safeguarding features can be added to a business LPA to protect both you and your assets.

Do I Need A Business LPA?

Powers of attorney are powerful documents, and the same goes for business lasting powers of attorney. Once they have been created and registered with the OPG, they cannot be amended. To make changes, the LPA would need to be scrapped, and a new one applied, so getting them right the first time saves both time and money.

To find out more about a lasting power of attorney and why you might need one, get in touch with our team. We offer a free wills and estate planning review and cover a lasting power of attorney in detail as part of this. Remember, a will is great if you die, but a business LPA can help save your financial and physical life if you ever were to become incapacitated. 

To learn more about the difference between a will and an executive will and, as a business owner, why you might need one, contact our team via email or over the phone. We can talk you through the options and ensure you have a diligent plan specifically for a business owner.