As a business owner, you are the driving force behind your company’s success. However, many entrepreneurs overlook one important area of planning: what happens if you become incapacitated due to illness, accident, or other unforeseen circumstances? One of the most effective ways to ensure your business can continue operating smoothly in your absence is by setting up a Lasting Power of Attorney (LPA).

An LPA is a legal document that allows you to appoint trusted individuals (known as “attorneys”) to make decisions on your behalf if you lose the mental capacity to do so. There are two types of LPAs: the Property and Financial Affairs LPA, which covers financial and business-related decisions, and the Health and Welfare LPA, which addresses decisions related to medical care and living arrangements.

For business owners, the Property and Financial Affairs LPA is crucial as it ensures your financial and business matters are handled in your absence.

Key Reasons for Business Owners to Have an LPA

1. Business Continuity

If you become incapacitated, an LPA allows your appointed attorneys to step in and manage critical aspects of your business—such as handling finances, signing contracts, and making operational decisions. Without an LPA, the process of appointing someone to manage your business could be delayed by a court application, risking operational disruptions.

2. Prevent Legal and Financial Complications

Without an LPA, your family or business partners may need to apply for a deputyship through the Court of Protection, this costs nearly three times as much as an LPA and it is a time-consuming process which often takes over 12 months. The court may also appoint someone who lacks the specific knowledge of your business operations.

3. Protecting Business Value

A business is often tied to its owner. In the event of incapacity, without clear instructions through an LPA, your company’s value and reputation could suffer due to leadership uncertainty. A well-drafted LPA ensures continuity and protects the business’s financial health.

4. Minimising Stress for Loved Ones

An LPA can ease the burden on your family and business partners during an already difficult time. It provides a clear legal framework for decision-making, reducing confusion and ensuring business decisions are handled by trusted individuals.

LPA’s are often set up in advance of a problem. It’s best if the 4 months it takes for that LPA to be registered, is done in anticipation of that problem and before it is crucially needed.

Conclusion

Having a Lasting Power of Attorney in place is a crucial step for business owners. It ensures the smooth operation of your business, protects its value, and provides peace of mind, knowing that your business will continue to thrive even in your absence. Taking this simple but vital step today can safeguard both your personal and professional future.

Contact Farleys’ private client team to discuss setting up a Lasting Power of Attorney on 0845 287 0939, contact us by email, or use the online chat below.