- Business Lasting Power of Attorney (LPA)
Business Lasting Power of Attorney (LPA)
Business Lasting Power of Attorney (LPA)20th June 2022 - Published by Kuits Tax Team
What is an LPA?
An LPA is a document under which you can choose who you would want to ‘step into your shoes’ to make certain types of decision on your behalf, in the event you were unable to make those decisions for yourself. For example, if you had become mentally incapacitated, or if you were temporarily unable to take decisions; if you were abroad or if you were tending to other matters.
Types of Decisions that can be taken
There are two types of LPA. An LPA for Health and Welfare matters (relevant only in the event of mental incapacity) and an LPA for Property and Financial Affairs.
You can put in place more than one LPA for Property and Financial Affairs. One of these LPAs can deal with your business affairs, and a separate LPA can deal with your personal financial affairs. You can choose different Attorneys to act under each of the powers, and you can therefore select those people who are best able to take the relevant types of decisions.
Why is it important to make a Business LPA?
If you were to become mentally incapable, without having a Lasting Power of Attorney in place, an application to the Court would need to be made to appoint a Deputy to act on your behalf. Until a Deputy is appointed by the Court, your assets are inaccessible, and the ordinary running of your business may not be possible. Deputyship applications to the Court can be expensive and can take months. The Court may also appoint someone as your Deputy who you would not have personally chosen to manage your affairs.
If you were incapacitated, could your staff be paid? Could contracts be fulfilled? Could the necessary authorisation be given to undertake essential tasks? If not, a business Lasting Power of Attorney is crucial to your business risk strategy.
Even if you have an LPA in place for your personal affairs, the person appointed as your attorney may not have any understanding of the workings of the business and not feel able to make decisions in relation to your business affairs.
It is important to take specialist advice when putting in place a Business LPA to ensure that it dovetails correctly with your company articles or partnership agreement. If you would like to find out more about putting a Business LPA in place, please contact our Tax and Estate Planning team on 0161 832 3434 and we can arrange a no-obligation initial meeting.