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But not everyone knows what a business LPA is and how it can be used to protect businesses if something serious happens to the business owner. Given the ongoing health crisis, a business LPA could act as a safety net should something occur.
One of the key reasons retail businesses don’t have an LPA in place is because they are unaware such a thing exists. Without one, the business will have to rely upon the Court of Protection to appoint a deputy, which is often a lengthy process.
Being unable to access business bank accounts or make decisions for months could precipitate a quick demise for many businesses, adding to the owner’s problems.
It is often best to have an LPA in place, even if never used, so it is there should something serious befall the business leader.
The person trusted to step up and run the business can oversee the business bank accounts and immediately deal with issues such as invoices, wages and tax matters, as well as assessing and signing contracts.
Sensible precaution
As a business owner, if you become unable to make decisions for any reason, it could severely impact a large number of people and ultimately the fate of your business.
The benefits of having an LPA in place for your business are therefore apparent; every person your business comes into contact with, from suppliers to customers and employees, could benefit from you having a trusted individual nominated to keep things running should you become incapacitated for any reason.
The people closest to you can also take peace of mind from knowing there are measures in place to ensure the continuity of income from the business (from its continued operation) should something happen.
So why are LPAs for businesses so uncommon? Lack of awareness seems to be a key reason, with many business owners simply unaware this is an option.
Some people fear that even a temporary period of mental incapacity may lead to them permanently losing control of their business interests. The Mental Capacity Act 2005 deals with this concern, requiring the attorney you appoint to “so far as reasonably practicable, permit and encourage the person to participate, or to improve their ability to participate, as fully as possible in any act done for them and any decision affecting them.”
Others are content that in circumstances where capacity is lost, the Court of Protection will appoint a deputy. While this is true, it can also present some serious issues.
Appointing a deputy can take several months, during which time, the decision-making processes and daily operations of a business, without leadership or direction from the top, can fall apart.
The appointment of a deputy is also an expensive process – the combination of the long timescale and costs can significantly impact a business.
On the other hand, putting a business LPA in place ensures a person you know and trust will take the reins immediately and can begin to deal with the usual running of the business without delay or unnecessary costs.
Time to act
A business LPA can be straightforward to organise. A Form LPF1 must be completed and signed by a witness, the chosen attorney and a “certificate provider”. The form is then registered with the Office of the Public Guardian.
At time of writing, the fee for registering a business LPA is £82. If you arrange a personal LPA alongside a business LPA, then your personal LPA should stipulate that it does not cover your business affairs. Your business LPA must state that your nominated attorney has power only over your business affairs.
The choice of attorney to be appointed requires careful consideration. It is recommended to consult an experienced team of legal advisors, who will offer support in making this decision, and the factors to consider.
Ultimately, the long-term security of your business and employees is at stake. Without an LPA, you risk jeopardising everything you have worked hard to build over the years.
About the author: Sarah Nash is an associate director and the head of Ansons’ wills, probate and trusts team. She has more than 19 years’ experience advising on a wide range of private client matters, including lasting powers of attorney and deputyship.
About the firm: Ansons is a firm of solicitors with offices in Cannock, Lichfield, Halesowen and Sutton Coldfield, West Midlands, providing a complete range of legal services to businesses and individuals. Services range from advising on commercial property and corporate matters to family law and wills, probate and tax planning.
