A person ('the donor') who has a self employed business or is the director of a company can make a business Lasting Power of Attorney, whereby should they lose mental capacity, their nominated attorney or attorneys can make business decisions on the donor's behalf. The attorneys are legally required to act in the donor's best interests.

   The attorney or attorneys would be chosen by the donor, taking into account relevant factors, for example, their reliability and trustworthiness, their business skills and their experience in managing a business. The attorneys have a duty of care when making decisions.

  It is fairly common for a donor to appoint two or more attorneys, one of whom is their spouse or partner.. The donor's LPA would specify that the attorneys must make decisions jointly or alternatively that they can act jointly and severally, which allows each attorney to act on their own.

  The 'jointly and severally' option provides greater flexibility. For example, the donor's business LPA may specify certain key decisions, such as whether to take on a member of staff and whether to sell the business, that have to be made jointly (requiring both attorneys to agree), whereas on other business matters, the attorneys can make decisions individually.

  With the LPA in effect, the attorneys would be able to manage the business and make contracts for the sale and purchase of goods and services, collect monies, pay bills and authorise payment of wages to employees. Having the LPA in effect should remove the risk of the bank freezing the business bank account.

  The attorneys would be in place to see to the business meeting its legal and contractual obligations. They also could take actions to protect the interests of the business. Having the LPA attorneys in place may protect the good standing of the business insofar as customers and suppliers are concerned.

  The donor can put instructions in the LPA about what the attorneys can and cannot do. The LPA can also include the donor's preferences with regard to the decisions that the attorneys make. Instructions are binding. Preferences are not binding, so allow the attorneys more flexibility in the way they make business decisions.

  If the donor wishes, a business LPA can also allow the attorneys to make decisions on the donor's behalf whilst the donor still has capacity. This could be part of a phased approach, involving the donor taking time to familiarise the attorneys with the business and the donor's goals for the business. It might be the situation of the business owner having an accident or suffering an illness that makes them temporarily unable to run their business or that the owner wishes to semi-retire.

  A person who is self employed or a director of a company, may give consideration to making a business LPA as a measure towards the continuity and stable management of the business.

  For information about having a Business LPA prepared, tailored to your particular circumstances, please contact us.