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Do you need a Business Lasting Power of Attorney?

Nick Latimir, Associate in the Wills, Probate & Trusts team at Coodes Solicitors explains.

Lasting Power of Attorneys enable someone to make
important decisions about your finances and personal arrangements if you ‘lose
capacity’, perhaps as a result of getting dementia or through an accident. Less
well known are Business LPAs, which apply the same principle to your business.
Nick Latimir, Associate in the Wills, Probate & Trusts team at Coodes Solicitors explains.

 

What is a Business LPA?

A Business LPA means someone – or more than one person - could step in
as an attorney to take care of the business should you be unable to do so in
the future. This could be because of an accident or a condition such as
dementia.

 

A BLPA is especially important for a small company with a single
director. It will ensure someone else could make decisions and continue the day
to day running of the company.

 

Who should I
appoint as my attorney?

Clearly, it would be important that whoever you choose is familiar with
the business concerned and is someone you trust with your affairs. If you
already have an attorney for your personal financial affairs, it would not
necessarily be advisable to choose the same person for your Business LPA.

 

Where appointing more than one attorney, you would need to decide
whether the attorneys have to act together in all decisions or whether they can
potentially act independently of one another.  I would recommend the latter option, which can
provide greater flexibility, particularly if one of the attorneys is unable to
act for whatever reason.

 

What if I am a
sole trader?

If you run your business as an individual and the business does not have
its own separate legal identity from yours, then you are a sole trader. It is
important for provision to be put in place for the running of the business and
protection against risk if you go on holiday, become seriously ill or lose mental
capacity. A BPLA will enable the attorney to continue paying bills and ensure
that there is no loss to the business.

 

What if my
business is a partnership?

Before looking to make a BLPA, you should should consult your
partnership agreement as this may already have provision for the mental
incapacity of the one of the partners.

 

If a BLPA is still required, the document should be carefully drafted so
as to avoid any conflict with the Partnership Agreement. At Coodes, I work
closely with our Corporate and Commercial team to ensure that the partnership
documentation is compatible.

 

How do I know if I
need a Business LPA?

 

In order to determine whether a BLPA is required, the first port of call
is the company’s articles of association. This may provide for the termination
of a director’s appointment on incapacity in order to protect the company’s
interest. If this is the case, a decision may be made that a BLPA is not
needed. If your company’s articles do not make these provisions, it might be
better for the articles to be amended rather than for a BPLA to be put in
place.

 

This is a sensitive area. If company documentation requires that a
director must relinquish his or her directorship on the grounds of mental
capacity, the company may find itself subject to a discrimination claim.

 

A good lawyer can talk through the options and ensure you find the best
way possible of securing a future for your business, whatever happens.


For advice on any aspect on Business Lasting Power of
Attorney please contact Nick Latimir at Coodes Solicitors on 01872 246200 or nick.latimir@coodes.co.uk

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