Lasting Power of Attorney and Business Decisions

LPA assists with decision making for financial decisions and this covers all usual steps that a person or individual will take their personal financial dealings.

A common issue to arise with any financial LPA is the extent to which attorneys are empowered to take business-related decisions.

When should you have a Business LPA?

A standard LPA will involve appointing persons as a spouse and/or adult children to act.

However, for business-related decisions, such as for those people in a business partnership or company position, it can be difficult for family members to act correctly and properly.

Common issues can include:

• the chosen family Attorney may have little or no involvement and experience in the Donor’s business affairs;
• not only that, but it can then be daunting for the family ‘Attorney’ to have the power to make decisions under the usual LPA; and
• it can be unsettling for those partners/co-directors to have the family Attorney making decisions on behalf of their partner/co-director and without apparent direction or instruction, other than under the normal LPA powers.
• finally, the business set up (and regulation/insurance requirements) may make it difficult or impossible for a spouse, partner or children to make decisions on your behalf. There is no guarantee that your business would be able to operate successfully if you have not made appropriate arrangements.

How will a Business LPA differ from the standard Financial LPA

Under the standard LPA, your spouse or children make day to day decisions about your finances and that is within their reasonable remit, no doubt.  A Business LPA will differ from the standard financial LPA in that you can appoint and earmark specific personnel to undertake certain important functions relating to the Business.

The Business LPA – its scope

Consider therefore making two separate LPAs for financial decisions. One LPA covers specifically your business and the other to cover other personal (non-business) decision-making.

A Business LPA could be helpful for:

• Authorising payroll
• Making payments to your suppliers
• Contract decisions – signing a contract or engagement on behalf of the business
• Ensuring secure and trusted access to the business bank accounts for making payments and ensuring transactions are completed. Giving CHAPS payment authorisation or other significant payments outside of the standard scope.
• More important decisions such as those relating to the status and structure of the business, including sale and transfer of shares.

An existing LPA for financial decisions may not be appropriate or indeed, practicable for some or all of the above.

Also consider:

If you are a member of a partnership or LLP or a director of a company with another person or entity, what are the wider considerations?  How is decision-making made within that business? Do ensure that you carry out a review and check your understanding of your existing partnership agreements/shareholders agreements (if you have them). Are there specific director duties that need to be factored in – or decisions as shareholder?

Please seek our advice to ensure that your Business LPAs are in keeping with your business continuity and succession planning.

Choosing your Attorneys

Business Attorneys are usually your most trusted people relating to the business.  You may have more than one person and it may be necessary to detail the scope of operations of the roles you wish to subscribe them to.

You can appoint a single sole Attorney or two or more Attorneys. It is also possible to appoint substitutes in the event that any of your primary Attorneys are unable to act. You will have the choice of deciding whether joint attorneys can act jointly and independently of each other (with just one signature for example) or whether they have to act jointly together (with both having to sign).

We will advise and guide you through those choices so you make an appropriate choice that suits you best.

Contact Us

Please contact us to discuss drawing up your Business LPA.  See also our more detailed notes of guidance.