Your Industry  

Why your client should set up a business LPA

  • Describe the reason for setting up a business LPA
  • Explain what happens when there is no business LPA
  • Identify what a business LPA does

The appointment of a deputy is also an expensive process – the combination of the long timescale and costs can significantly impact a business. 

On the other hand, putting a business LPA in place ensures that a person you know and trust will take the reins immediately, and can begin to deal with the usual running of the business without delay or unnecessary costs.

What it can be used for

Once a business LPA is in place, the trusted individual can oversee a range of important business functions and operations on behalf of the business owner, unless restricted on page five of the LPA. 

These key business decisions can be made across a range of areas, including:

  • 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
  • Litigation

For this reason, a distinction should be made in the LPA between running and working within the business, as LPA attorneys can only make decisions as authorised by the donor.

Without this distinction, you may not give adequate permissions to your trusted individual, resulting in the downfall of your business. 

As with a personal LPA for financial affairs, a business LPA may be used prior to the donor becoming mentally incapacitated. 

What you can expect

Once you have decided to implement a business LPA, it is important to be aware of the process that will follow and the questions that will be asked before it can be prepared. 

Firstly, it is the responsibility of legal advisers to conduct a thorough business evaluation, before taking the time to understand why the donor wants to make a business LPA.

The attorney’s suitability will then be assessed, and a business LPA separation clause drafted to exclude decisions about the donor’s personal financial matters.

Where applicable, a memorandum of wishes could also be drafted to ensure that the donor has clearly set out their wishes about how the attorney should operate the business. 

As the donor, it is important to think about and prepare answers for a number of questions, including how many businesses you have and if there are other business partners or owners.

It would be helpful if the attorney is made aware of your plans for the business. The lawyer preparing the LPA will need you to disclose any potential conflict of interest with the proposed attorney and provide detailed information about why they are a suitable choice to take control if needed. 

Therefore, as the donor, you should bring the following documents to the meeting with your lawyer: 

  • Copy of your business plan
  • The partnership agreement or company articles
  • Trading figures for the last three years 
  • Details of any existing powers of attorney made

These questions are designed to confirm the donor’s mental capacity and intentions, allowing the lawyer to draft the appropriate clauses for the benefit of your business. 

What makes a suitable attorney?

Whilst your choice of attorney may seem obvious, it is important to choose carefully as there could be other key factors to consider before making a final decision. 


Questions appear on the last page of this article.