Lasting Powers of Attorney (LPAs) have been around for some time and allow one person to empower another person to make decisions on their behalf if they are physically or mentally disabled. Leila Goodarzi, partner at national award-winning law firm VWV, shares her views on the importance of LPAs.
There are two kinds. A Health and Welfare LPA covers decisions related to medical treatment and care, and a Property and Financial Affairs LPA covers real estate deals, pensions, running bank accounts, etc.
Usually LPAs are considered under the umbrella of “personal affairs”, but there is one place where an LPA can also deal with corporate financial affairs – a Business LPA (“BLPA”).
Use a BLPA
With a BLPA, business partners, members of an LLP, sole proprietorships, and directors can ensure that someone else can do so when a key decision maker is unable to act. The person creating the BLPA (the “Donor”) can indicate what duties the attorney can perform, such as: B. entering into business contracts, dealing with employees, managing business assets, etc. Essentially, these are matters relating to running the company rather than working for the company. When using a BLPA, the attorney must act in the best interests of the donor and the company, and the donor can use the BLPA to determine the decisions that the attorney should make. It may also be helpful for the donor to write a separate memorandum outlining their wishes and views on the business to assist the attorney in getting the BLPA up and running.
Who should i choose?
The person chosen must be someone who understands the donor’s business and how it works. This could be someone who already works in the company itself, provided there are no conflicts of interest, or a third party from outside, possibly in a related field. The Mental Capacity Act Code of Conduct recommends that an attorney should be trustworthy, knowledgeable, reliable, and have the skills and ability to perform the required duties.
I already have an LPA – why do I need a BLPA?
An attorney appointed under an LPA specializing in personal property and financial matters can make business decisions. However, does this person have the skills to do this? A BLPA allows the donor to appoint someone specifically to make business decisions, and that appointment takes precedence over the personal LPA for business matters. The attorney appointed under the personal LPA can then focus on the donor’s personal affairs without the added complications of running a business.
What if I don’t have a lawyer?
In the worst case, the donor could cease operations if he loses the capacity to run the business. The commercial bank account can be blocked and the staff unpaid, contracts not concluded and claims made against the company for its failure. In this case, an application would have to be made to the Court of Justice for the appointment of an alternate. This process can take many months and is much more expensive and restrictive.
Leila Goodarzi is a partner in the national, award-winning law firm VWV. Leila can be contacted on 07909 682 364 or at [email protected].
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