Business Lasting Power of Attorney – Why it’s essential

A Business Lasting Power of Attorney (LPA) can be a vital legal instrument for any business owner concerned about continuity and decision-making in their absence. As Wills and Life Planning Solicitors, we often assist clients in understanding how LPAs tailored for business use can safeguard their company’s future, operations, and compliance in the event of illness or incapacity.

In England and Wales, LPAs are often associated with personal affairs, but a growing number of business owners are turning to Business Lasting Power of Attorney to ensure uninterrupted control and protect key assets. Whether you’re a sole trader, partner, or director of a limited company, implementing an LPA for business purposes is a proactive step in your business continuity planning.

What is a Business Lasting Power of Attorney?

A Business Lasting Power of Attorney is a legal document that allows a business owner to appoint one or more attorneys to make decisions specifically relating to their business affairs. This is distinct from a personal LPA and focuses solely on commercial matters. Under the Mental Capacity Act 2005, it’s possible to make a separate LPA covering property and financial decisions, which can be restricted solely to business responsibilities.

Why might you need a Business LPA?

Business owners are often central to the functioning of their enterprise. If they lose capacity – whether temporarily or permanently – the business could be left vulnerable. Reasons to consider an LPA for business include:

• Safeguarding financial transactions and payroll continuity.
• Maintaining contracts, supplier relationships, and licensing obligations.
• Ensuring company bank accounts remain accessible.
• Avoiding disruption in leadership and decision-making.

Who can make a Business LPA?

Anyone who owns or runs a business in England and Wales can create a Business Lasting Power of Attorney, including:

• Sole Traders – where business and personal assets may be interlinked.
• Partners – in either traditional partnerships or limited liability partnerships.
• Company Directors – subject to articles of association and any shareholders’ agreement.

It’s crucial to check governing documents (e.g., partnership agreements, articles of association) before creating a business LPA to ensure there’s no conflict with appointment terms.

How to set up a Business Lasting Power of Attorney

1. Decide on the scope of authority (limited to business matters).
2. Select appropriate attorneys with commercial understanding.
3. Complete the LPA for Property and Financial Affairs form with business-only restrictions.
4. Register the LPA with the Office of the Public Guardian (OPG).

It’s advisable to consult a solicitor experienced in commercial legal planning to ensure the LPA fits your company’s structure and complies with the Mental Capacity Act 2005.

Case scenario

Sarah, a director of a small marketing firm, suffered a stroke that left her temporarily incapacitated. Without a Business LPA in place, her co-directors faced significant delays in accessing company accounts and authorising routine financial decisions. After recovery, Sarah worked with a solicitor to draft a business-specific LPA, ensuring future continuity. The agreement clearly separated her personal affairs from her commercial responsibilities, enabling the business to function smoothly even in her absence.

Expert insights: What solicitors recommend

Legal professionals often advise on the following when setting up a Business LPA:

• Review existing business contracts and legal documents before drafting the LPA.
• Appoint attorneys with relevant experience or internal knowledge of the business.
• Clearly define the scope and limitations within the LPA document.
• Ensure communication with other directors or stakeholders regarding the appointment.

Our Wills and Life Planning team and Corporate team are able to provide specialist advice to business-owners about setting up a Business LPA.

Contact us for more information.

Benefits and challenges of a Business LPA

• Benefits:
  • Ensures business continuity in absence or incapacity.
  • Provides legal clarity and structure for interim decision-making.
  • Prevents financial or reputational damage due to inactivity.
• Challenges:
  • Complexity in aligning with company governance rules.
  • Choosing appropriate attorneys with business acumen.
  • Potential for disputes if authority is not clearly defined.

What happens without a Business LPA?

If no Business LPA is in place and a business owner loses capacity, an application must be made to the Court of Protection to appoint a deputy. This process can be time-consuming and costly, potentially leaving your business unable to operate effectively in the interim. Unlike an LPA, attorneys are not pre-chosen and may not have the same understanding of your business.

Can a personal LPA cover business affairs?

Technically, yes – but it’s not recommended. A personal LPA may be too broad and create conflicts, particularly if attorneys do not have the commercial expertise necessary. A separate LPA tailored to business matters is more appropriate to ensure clarity and control.

FAQs

What is a business lasting power of attorney?

A business lasting power of attorney is a legal document that allows a business owner to appoint someone to manage their business affairs if they become unable to do so due to illness or incapacity.

Can I have both a personal and business LPA?

Yes. It’s often recommended to keep them separate to avoid conflicts of interest and to appoint attorneys suited for each specific role.

Who should I appoint as my business attorney?

You should appoint someone who understands your business operations, has relevant financial or commercial experience, and whom you trust to act in your best interests.

What are the steps to creating a business LPA?

1. Consult your solicitor to assess your needs
2. Review business documents like partnership agreements
3. Choose suitable attorneys
4. Complete and register the LPA with the OPG

Can company directors make a business LPA?

Yes, provided their company’s articles of association allow it. It’s important to review these documents to ensure compliance.

Table: Comparison of LPA vs Deputyship

This article was produced on the 8th August 2025 for information purposes only and should not be construed or relied upon as specific legal advice.