Business Lasting Powers of Attorney (LPA) – Why do you need them?
A LPA is a legal document that allows a person to appoint another individual to make decisions on their behalf, should they lose mental capacity. This is particularly important if the person who lacks capacity is part of a business partnership. If a LPA is not in place, this can severely impact those individuals left running the business.
Creating a business LPA is a vital part of setting up a partnership because if a partner lost mental capacity and could not act for some reason, it is very difficult to remove them as a partner. If the situation is not addressed, this could result in claims of negligence from those adversely affected. All of these consequences can be avoided if a LPA is created.
How do you create a business LPA?
A business LPA differs from a standard LPA because it is much more in depth and requires careful consideration of the needs and nature of the business and other legal considerations, such as the partnership agreement itself. The LPA should also take into account the general aims and interests of the business and the circumstances and needs of the partners.
Business owners may feel these documents are quite daunting to draft and consider, as there are a lot of legal issues that need to be addressed. It’s often time well spent though, as a well written LPA provides peace of mind to yourself, your family and everyone associated with the business, should a partner lose capacity.
Registering a business LPA
Once a business LPA has been created, it must be registered with the Court of Protection before it can be used. If a business LPA is not in place, the court has to appoint a deputy to make managerial decisions on behalf of the incapacitated partner and this process can take several months, during which time the business may struggle to remain viable.
The good news is that creating a business LPA is an allowable taxable expense. Should you wish to safeguard your business, MS Rubric can support you through the process, ensuring your business LPA is fit for purpose. To find out more, please do not hesitate to contact the Private Client Department at MS Rubric on 01454 800008.