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Insights // 14 January 2021

What is a Business Lasting Power of Attorney (LPA)? And Why They Can be Useful

Partner Caroline Casagranda, in our leading Wills, Probate, Tax & Trusts team, explains why a business Lasting Power of Attorney (LPA) can be an important and useful legal document.

What is a Lasting Power of Attorney (LPA)?

A Lasting Power of Attorney (LPA) is a legal document that allows those nominated as Attorneys to make decisions on the person's (Donor’s) behalf. LPAs came into force in October 2007, replacing Enduring Powers of Attorney.

If an individual made an Enduring Power of Attorney (EPA) before October 2007, it is still valid but only in relation to property and financial affairs.

Why have a business LPA?

It is important for any business owner to consider what would happen to their business and the day to day running of it if they were unable or unavailable to make decisions. Without an LPA in place, who may (temporarily or permanently) assume control and indeed have the authority to do so is less clear and may leave a business exposed to risk.

A business LPA can be used if a business owner:

  • is abroad on holiday or for business
  • has had an accident that means they are no longer capable of acting
  • has an incapacitating medical condition that means they are no longer capable of acting

What happens without a business LPA?

If any of the above situations arise and a business owner does not have a business LPA in place, an application to the Court of Protection to appoint a deputy to act on their behalf may be needed. There is no guarantee at this stage that the Court will appoint an individual who the business owner would have chosen. This process can also prove more costly and take time, exposing the business to greater risk.

Who is a business LPA is suitable for?

  • sole trader as they are not a separate legal entity to their business
  • a person who is self-employed as they are not a separate legal entity to their business
  • director of a company if a director’s incapacitation is not covered by the Articles of Association or Memorandum of Association
  • partner within a partnership if a partner’s incapacitation is not covered by the articles of association or memorandum of association

Blandy & Blandy can advise on whether a company’s articles of association or partnership agreement cover incapacity.

What are the types of LPA?

The LPA must be registered by the Office of the Public Guardian whilst the Donor still has mental capacity, to take effect.

A business owner may wish to consider a:

  • Personal LPA - Property and Financial Affairs
  • Personal LPA - Health and Welfare
  • Business LPA

The same document and process is followed for both a personal financial LPA and a business LPA. Each type of LPA can be tailored to meet an individual’s specific needs and requirements.

A person can have both a personal financial LPA and a business LPA, but should appoint attorneys that are suitable for each one separately.

A business attorney must be able to carry out the role of the donor in a business LPA, and donor should consider giving specific and detailed instructions on what powers a business attorney would hold.

Our expertise

Ranked as a top tier firm in the UK's leading guides to law firms, Chambers HNW and The Legal 500, we are recognised as one of the leading law firms advising on private client matters in the Thames Valley. We also provide a full range of commercial legal services to businesses of all shapes and sizes, and, naturally, their owners. 

For further information or legal advice, please contact or call 0118 951 6800. 

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Caroline Casagranda

Caroline Casagranda

Partner, Wills, Probate Tax & Trusts

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