Business Lasting Power of Attorney

A Business Lasting Power of Attorney (BLPA) enable the business owner (The Donor) to authorise an Attorney to make decisions concerning their business interests when they are unavailable or lack capacity.

Why should I have a Business Power of Attorney?

A BLPA promotes business survival.  Donors need to choose their Attorneys carefully, as they can have multiple responsibilities, to the Donor, the business, any other business owners, and the Donor's family, who mat rely upon the business' income. 

Without a BLPA in place, if the Donor loses capacity, the bank could freeze the business bank account, invoices would remain unpaid and contracts nullified, with creditors claiming against the business.  To manage the situation an application would have to be made to the Court of Protection to appoint a Deputy, which may take six months or longer.  Most businesses would not survive such a wait.

It is the Donors free choice to make a BLPA or run the risk that, if they lose capacity, a Deputy who may not be familiar with their business or their wishes may be making decisions on their behalf.


What can an Attorney do?

A BLPA Attorney may make decisions (unless so restricted in the LPA) relating to, for example:

  • Business contracts
  • Sale or acquisition of business property
  • Paying wages, tax or VAT
  • Hiring or removing employees
  • Control and management of business assets
  • Managing business health and safety issues
  • Marketing
  • Discharging debts
  • Litigation
  • Winding up of the business

A distinction should be made between running a business and working within the business.  The BLPA Attorneys can only make decisions in relation to running the business.

A Business Lasting Power of Attorney may be used prior to the Donor losing mental capacity.


What kinds of business owners are BLPA's useful for?

A BPLA can be useful for any of the below groups of business owners:

  • Sole traders
  • Partners
  • Members of a Limited Liability Partnership (LLP)
  • Directors

Who should you appoint as an Attorney?

The Attorney should ideally understand the Donor's business practice or work in a similar enterprise.  The Attorney should appreciate, in relation to the Donor's business:

  • Contractual obligations
  • Health and safety issues
  • Business insurance
  • Business risks
  • Tax and employment issues

This is not to say the Attorney should have expert knowledge in all these areas, but they need to realise when they should ask for further assistance when making decisions about the business.

Ideally, the Attorney should possess the necessary skills to run the Donor's business.


Should I appoint an Attorney from within the business?

The Donor may choose an Attorney from within the business, providing there are no conflicts of interest.  A perceived conflict could arise, for example, where the Donor owns 45% of the business and they appoint a fellow partner who owns 10%.

The Attorney then attends a meeting on behalf of the Donor.  Even though the other partners know the Attorney makes decisions using the Donor's 45% and their 10% separately, a perceived conflict might arise, as the Attorney may seemingly have a controlling vote of 55%.

Another perceived Attorney conflict might arise between husband and wife, or siblings.


Should I appoint an Attorney from outside the business?

Donors may wish to appoint their Accountants or Solicitors as Attorneys.  Alternatively, they could appoint someone who has similar business experience to them.

How can I get the Attorney to make the right decisions?


Business Donors may wish to have a Memorandum of Wishes drafted.  A  Memorandum of Wishes can contain information about the Donor's views and wishes regarding the BLPA.  It may highlight what type of business the BLPA relates to and set out the Donor's values and beliefs, while they still have capacity.

A Memorandum of Wishes is for information purposes only and cannot compel an Attorney to make decisions in a certain way.


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