Business Lasting Powers of Attorney (LPA) and why every business owner should have one.

In the dynamic world of business, it is essential to plan for the unexpected, yet many business owners overlook a critical aspect of business planning; the Business Lasting Power of Attorney (LPA).

While many people understand the importance of a Lasting Power of Attorney (LPA), the idea of putting a Business LPA in place is not as familiar.

This legal document can play a pivotal role in safeguarding a company’s future and ensuring its continued operation in unforeseen circumstances. Business owners who fail to establish a plan, risk decades of dedication and effort potentially jeopardising the financial stability of the business and the welfare of their nearest and dearest.

A Business LPA is crucial because it gives legal authority to a designated trusted individual (known as an attorney) to step in and make decisions on your behalf allowing continuity of operations should you ever become physically or mentally incapacitated due to illness, accident or other reasons.

Without a Business LPA, it can be an expensive and slow process to have someone else appointed to manage your business affairs and involves an application to the Court of Protection. It also means you have no say in who gets appointed. A Business LPA puts someone you trust in charge quickly and efficiently when it is vital to ensure the right people can step in.

It is also possible that in the absence of a Business LPA, disputes can arise among family members, partners or employees about who should take over the business. These disputes can lead to costly legal battles, which can be emotionally draining and detrimental to the company’s reputation.

Fundamental things to consider when putting in place a Business LPA:

  • Any plan should cover everyday operations and important tasks such as handling finances and contracts.
  • You should review any existing business agreements to avoid any conflicts.
  • You should choose your attorneys wisely – someone who understands your business and whom you trust to act in your best interests. This person should be willing and able to assume the responsibility when necessary.
  • Provide clear instructions in the LPA document and consider making separate LPAs for different business interests.
  • Seek professional advice from an estate planning specialist when setting up a Business LPA to ensure it meets your specific needs and works alongside any personal LPAs you may have.
  • It is important to review and update your Business LPA periodically, especially if there are significant changes in your business structure, ownership, or personal circumstances.

Preparation is key to ensuring the longevity and success of your company and a Business LPA is an essential component of that preparation. By designating a trusted individual to make critical decisions on your behalf, you can protect your business, assets, and legacy, ensuring that your hard work continues to thrive even in your absence.

Knowing that there is a plan in place in the event of an unforeseen circumstance provides peace of mind to business owners. It allows them to focus on their recovery or other personal matters without worrying about the fate of their company.

For advice or assistance in drawing up a Business LPA, contact Zoe Fleming, Partner and Head of Private client on 01204 527777 or by email at zfleming@kbl.co.uk.

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