What is a Business Lasting Power of Attorney (BLPA) and why are we raising awareness of it?
A Business Lasting Power of Attorney is a legal document that allows a business owner to appoint someone they trust (an Attorney) to make business decisions for them if they are unable to act themselves (for example because of illness or a car accident).
Appointing a business Attorney, which I will refer to as a ‘Business Guardian’, means that even if something unforeseeable happens to the owner of the business, the company can still legally function until the owner/director gets better.
I don’t have an LPA for my business. Why is this risky?
If you are unable to make business decisions due to illness or accident, unless you have appointed a ‘Business Guardian’ to deal with your business during your absence, the cost and disruption to your business could be enormous. For example:
- The business’ bank account could be frozen leaving your employees, suppliers and other outgoings unpaid.
- An overdraft could be recalled and the ability to enter into future contracts could be lost.
- The existing contract could be void or voidable making the company open to legal challenge.
- Confidence in your business could be lost very quickly affecting future business relationships.
- Important: if you are one of the directors in a limited company, you should consider appointing a Business Guardian as your fellow directors are no longer allowed to remove you from decision making due to the lack of mental capacity which often brings matters to standstill.
Why not just let the Court deal with things?
- If you have not put in place a BLPA and lose mental capacity, then a “Deputy” would need to be appointed by the Court of Protection.
- This is a very costly process but more importantly it takes on average 6 -12 months to get someone appointed by the Court.
- The business owner would have no input into the selection and appointment of the Deputy and how the Deputy runs the business.
Okay, it sounds like a reasonable thing to have, but what’s in it for me?
There are several advantages to getting your business’s legal basics in order.
- Although, BLPA is mostly used in the event of a business owner losing mental capacity, it can also be used (with the owner’s permission) while they are fit and healthy but want someone else to look after their business for a while (long holidays, succession planning, testing how children cope with running the business etc). BLPA can become a very useful tool and as such it affords flexibility to business owners.
- When a valid BLPA is in place business owners send clear signal to their investors and clients that if anything unforeseeable happens to them, as far as they are concerned, it is business as usual.
- Most importantly BLPAs provide the business owner’s family and employees with peace of mind.
Is an LPA for business tax deductible?
Absolutely, obtaining a business LPA is a valid business expense.
What if I change my mind about the person appointed to be my business Guardian?
BLPAs are very flexible documents. You can specify when and how you would like your ‘Business Guardian’ to act. You can cancel your existing BLPA and/or create a new one at any time providing you have mental capacity.
So, how does it work?
Creating a BLPA with us is easy! It starts with a mini business audit which usually takes one hour. We will take your instructions, advise you accordingly and draft the relevant documentation. We will also provide the necessary certificates and help with execution of the prepared documents. If required, we will also apply for the registration of the LPA on your behalf.
This article is intended to provide a general overview and is not a substitute for professional advice.
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