How a business lasting power of attorney can protect you and your business


Lasting Powers of Attorney (LPAs) have been around for a while, and enable a person to authorise someone else to make decisions on his or her behalf, in the event of physical or mental incapacity. Leila Goodarzi, partner at national, award-winning law firm, VWV, shares her views on the importance of Business LPAs.

There are two types. A Health and Welfare LPA covers decisions relating to medical treatment and care, and a Property and Financial Affairs LPA covers property dealings, pensions, operating bank accounts and so on.

Usually, LPAs are looked at under the ‘personal affairs’ umbrella, but there is a place for an LPA to deal with financial matters in business too – a Business LPA (‘BLPA’).

Using a BLPA

A BLPA enables partners in a business, members of an LLP, sole traders and directors to ensure that if a key decision maker is unable to act, someone else can do so. The person making the BLPA (the ‘Donor’) can specify what tasks the attorney can undertake, for example entering into business contracts, dealing with staff, managing business assets and so on. Essentially, these are matters relating to running the business, as opposed to working for it. When using a BLPA, the attorney must act in the best interests of the Donor and the business, and the Donor can specify in the BLPA the decisions he or she would want the attorney to be able to make. It can also be helpful for the Donor to make a separate memorandum to set out his or her wishes and views about the business, as guidance to assist the attorney if the BLPA has to be put into operation.

Who to Choose?

The person chosen needs to be someone who understands the Donor’s business and how it operates. This could be someone already working in the business itself, assuming there are no conflicts of interest, or a third party from outside, possibly in a related field. The Mental Capacity Act Code of Practice advises that an attorney should be trustworthy, competent and reliable, with the skills and ability to carry out the necessary tasks.

I Already Have an LPA – Why Do I Need a BLPA?

An attorney appointed under a personal Property and Financial Affairs LPA can take business decisions, but does that person have the necessary skills to do so? A BLPA enables the Donor to appoint someone specifically for the purpose of taking business decisions, and that appointment takes precedence over the personal LPA for matters relating to the business. The attorney appointed under the personal LPA can then concentrate on the personal affairs of the Donor, without the additional complications of running a business.

What If I Don’t Have an Attorney?

At worst, if the Donor loses capacity to run the business, it could cease to operate. The business bank account might be frozen and staff unpaid, contracts uncompleted, and claims made against the company for its failures. In that case, an application would have to be made to the Court of Protection for the appointment of a Deputy, a process which can take many months and is much more expensive and restrictive.

Leila Goodarzi is a partner at national, award-winning law firm, VWV.  Leila can be contacted on 07909 682 364 or at