Lasting Power of Attorney

Lasting Power of Attorney from £250

Appoint one or more people to make decisions on your behalf.

A Lasting Power of Attorney (LPA) allows your loved ones to take care of you and your finances if you become unable to do so yourself.

There are two types of LPA :

A "Property and Financial Affairs" LPA allows your loved ones to deal with paying your bills, buying and selling your property and managing your bank accounts and investments.
A "Health and Welfare" LPA covers decisions about health and care and even deciding where you are to live. This can only be used if someone is incapable of dealing with such matters themselves.

An LPA ensures that, should you be unable to manage your own affairs, the people you have appointed can manage your financial life on your behalf. This can save a great deal of money and distress and will ensure that, as a vulnerable person, your affairs will be handled correctly and quickly.

According to the Alzheimer's Society, more than 1 million people in the UK will have dementia by 2025. More than 1 in 5 people over 85 already suffer from this, with rates significantly higher amongst women than men.

Accidents, strokes, brain injuries and Parkinson’s disease can also affect someone’s ability to make their own decisions. Handling your financial affairs can become virtually impossible, which is why charities who care for the elderly recommend everyone plans ahead. This could have the dual benefit of saving a great deal of money and easing the burden on their relatives.

Risks of not having an LPA

If you lose mental capacity without an LPA in place, your family must apply to the Court of Protection to have a deputy appointed to deal with everyday financial matters. This is a slow and very expensive process, costing thousands of Pounds. If you have to use a lawyer it could cost a lot
more. If you already have an LPA in place, this will not be necessary.

Joint bank, building society and business accounts can be severely restricted if ONE of the account holders loses mental capacity and there is no registered LPA in place.

"If one joint account holder loses mental capacity, banks and building societies can decide whether or not to temporarily restrict the use of the account to essential transactions only"

- British Bank Association

LPAs for business

As a business owner, it’s important to consider what would happen to your business if you were unable to make decisions. This may be if:

In such circumstances, who will authorize the payment of bills, sign cheques, service a business loan, or pay salaries? Don’t assume that a family member or a business colleague will gain the authority to make these decisions on your behalf — this assumption could leave your business exposed to risk.

To protect your interests, and those of your business, you should consider making a business LPA.

A business LPA will be appropriate in most circumstances, but it’s important to first consider the type of business you own.

If you are a sole trader, your business is not likely to have a separate legal entity from you. This means that appointing an attorney under a business LPA will be an effective way for you to make provision for the continuity of your business, in the event that you are incapacitated.

If you are a partner in a partnership that has several partners, check the terms of the partnership agreement. Some partnership agreements may already include provisions for what would happen should one of the partners become incapacitated. If such a provision exists, it may already
adequately provide for the continuity of the business, in which case, a business LPA wouldn’t be

However, if you’re in doubt about the provision made in the partnership agreement, or you feel that an LPA may be required, you should seek advice on the wording of the LPA, to ensure that it doesn’t conflict with the provisions already made in the partnership agreement.

Directors of companies: articles of association

If you’re a director of a company, check the company’s articles of association. Very often, articles of association will provide for the termination of a director’s appointment in the event that the director loses capacity. This is often done to protect the company’s interests. If such a provision is not included in the articles of association, you may want to seek advice and consider including such a provision.

If you are the sole director of a small private company, the articles of association are not likely to simply terminate the director’s appointment, or there would be no one else to continue running the company. In such circumstances, a business LPA would be appropriate.

Can you make an LPA covering your personal and business affairs?

It may be possible to have just the one LPA appointing attorneys to manage your personal assets and your business assets. However, it may not be appropriate for the same person to make both personal and business decisions, due to a potential conflict of interests. You could consider making an LPA appointing certain attorneys to manage your personal assets, and others to manage your business assets. But bear in mind that this could create confusion regarding the scope of the attorneys’ powers, and the Office of the Public Guardian is likely to reject the LPA.

Fortunately, it’s possible to make more than one LPA. You could consider making one for your personal affairs and a separate one for your business affairs. Often, people like to keep their business affairs separate from their personal affairs, so this option tends to appeal.

If you are considering making two LPAs, each should contain specific instructions limiting the scope of the attorneys’ powers — for example, a personal LPA should specify that your attorney will have general power in relation to your personal affairs, except for the relevant business assets in respect of which you have executed a separate business LPA. Your business LPA should contain specific instructions in this respect, too. Your attorneys will then be clear about their powers and will not encroach on each other’s responsibilities and decisions.

What happens if I don't make a business LPA?

If you’re unable to make business decisions in the future, and have not made a business LPA, it may become necessary to make an application to the Court of Protection for the appointment of a deputy to act on your behalf. The process can be expensive, and there’s no guarantee that the Court of Protection will choose someone you would have chosen. It could also take more than six months before a deputy is appointed, during which time your business may be vulnerable and at risk.

To avoid disruption, it should be part of any business owner’s continuity plan and crisis management strategy to consider making a business LPA.

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