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.
According to paragraph 7.8 of the MCA Code of Practice: “A donor should think carefully before choosing someone to be their attorney. An attorney should be trustworthy, competent and reliable. They should have the skills and ability needed to carry out the necessary tasks.”
As the donor, you can sometimes be blinded by loyalty, making decisions based solely on the closeness of your relationship with the individual.
However, it should be remembered that the attorney will also be responsible for the livelihoods of your employees, so they must be qualified to undertake the job.
Before going ahead, it is important to take a step back and evaluate the magnitude of the decision. If the attorney has a limited understanding of the work involved or your business, then it may be not the right appointment.
Of course, it is unlikely the attorney will have the same level of understanding and knowledge as you, but they must be competent in dealing with important business issues and know when to seek additional support.
Separation clauses
When it comes to drafting separation clauses in an LPA, it is important to ensure that these are clearly and precisely worded so that the scope of the Business LPA is limited to the donor’s business affairs.
The donor can make a separate LPA for the management of their personal financial matters, which would include a similar separation clause excluding from its scope decisions about business matters.
For donors with only one business, it may be wise to have a specific business LPA clause.
On the other hand, donors with multiple businesses may decide to adopt an open clause that covers all their businesses or alternatively, they may make separate LPAs which appoint separate attorneys to handle each business accordingly.
