A Lasting Power of Attorney (LPA) is a document in which the donor authorises someone, or various people – called an attorney or attorneys, to make certain decisions on his or her behalf.
Many people have personal powers of attorney in place to cover their own affairs. They will probably have both an LPA for their finances (property and affairs) and for their health (health and welfare).
If you own a business as a sole trader, in a partnership, as a shareholder of a limited company or any other legal entity, you should consider making Business LPAs.
As the owner of a business, you should consider what would happen to your business if you were to:
Under any of these circumstances your chosen attorney or attorneys may make business decisions for you. This is obviously of paramount import to keep the company running as it should.
Your attorneys may also be required to carry out practical issues in relation to the business, like signing cheques, authorising payments, using business bank cards etc.
We would advise you to have one if you are a business owner and have no LPAs in place. In theory, if you have LPAs for your personal life, these can extend to your business too; so you may consider you don’t need a business LPA. But consider that most people choose family members as their attorneys for their personal affairs, and these people might not be the people to make decisions on your behalf in relation to your business.
Often colleagues, co-owners or employees will make a better choice of attorney for business matters. This is because they:
So if you consider you need to appoint specific attorneys to look after your business decisions (as opposed to your personal affairs), then yes, you need one.
You can also appoint a professional attorney like your solicitor who is best placed to make totally independent decisions on your behalf.
If, for any of the reasons set out above, you cannot make business decisions yourself, or play a practical role in the business, and have not made a business LPA, a Court of Protection Application to make decisions or determine practical solutions may well be required.
This process takes more than six months (during which time your business may suffer hugely if no one is authorised to make decisions) and is in its own right expensive; and further, the Court may appoint someone who you would not have chosen to look after the business’ interests. Not having a business LPA is therefore not an option for many business owners.
A Power of Attorney is a document in which one person (the Donor) appoints another person (the Attorney) to act for him or her. There are many reasons why you might decide to use a power of attorney. For example, if you are going to be out of the country for a lengthy period of time, you might want someone to do your banking while you are gone. If you are approaching old age, you may want to give a Power of Attorney to a person you trust so that he or she can manage your property for you.
In England and Wales there are 2 main types of powers of attorney. The first type is called an ordinary or general power of attorney. With ordinary powers of attorney, Donors can appoint attorneys to look after financial/property matters only. Unless otherwise specified, an ordinary power of attorney will come to an end when the Donor loses capacity.
The second type of power of attorney is called a Lasting Power of Attorney (LPA). With an LPA, Donors can appoint attorneys to act in either personal welfare matters or property matters. An LPA only becomes effective once it has been registered. Provided the LPA was created while the Donor was mentally capable, the LPA can be registered at any time. The LPA replaced the Enduring Power of Attorney in October 2007.
An Enduring Power of Attorney (EPA) is a type of power of attorney which allows the Donor to appoint someone to act on the Donor’s behalf in matters that relate to the Donor’s property and affairs. The EPA remains valid even if the Donor later becomes mentally incompetent. In contrast, a Lasting Power of Attorney (LPA) allows the Donor to appoint someone to act on the Donor’s behalf in matters that relate to the Donor’s property and affairs and/or the Donor’s welfare.
If the Donor becomes unable to make financial decisions, the Enduring Power of Attorney must be registered before it can be used or, if it is already in use, before it can continue to be used. Lasting Powers of Attorney will become effective as soon as they are registered and they may be registered any time after completion.
Lasting Powers of Attorney replaced Enduring Powers of Attorney in October 2007 when the Mental Capacity Act 2005 came into force. However, Enduring Powers of Attorney which were created before October 2007 will still be valid.
An LPA for Property and Affairs allows your Attorney to manage your property and affairs. This may include buying or selling your home, managing your investments or carrying on a business.
An LPA for Personal Welfare allows your Attorney to make health and welfare decisions for you. This may include consenting to certain medical treatment or making decisions about where you live.
Your Property and Affairs Attorney can make decisions on your behalf while you still have capacity as well as when you lack capacity. Your Personal Welfare Attorney can only make decisions on your behalf when you lack the capacity to make them yourself. Both powers of attorney only take effect when they have been registered with the Office of the Public Guardian.
Your Attorney has the following responsibilities:
An LPA made in England and Wales is not legally binding for use in other countries (including Scotland and Northern Ireland). It is up to institutions (such as hospitals and other health care facilities) in other countries to decide whether to recognise the LPA.
Your Attorney cannot do any of the following on your behalf:
More information on these exclusions is available in the Mental Capacity Act 2005, sections 27 – 29. You can view the legislation by clicking here
Your LPA can be registered at any time after it has been completed and properly signed. The advantage to having it registered right away is that the LPA can be used by your Attorney whenever it is needed. If a long time passes before your LPA is registered, your circumstances may have changed and your LPA may no longer reflect your needs. If this is the case, you will not be able to modify your signed and completed LPA. You will have to create a new LPA.
Either the donor or the donor’s Attorney(s) may apply to register the LPA as long as the proper forms have been completed and all people who are to be notified have been notified.
If your document is intended to be used in a foreign nation, you may have to have it notarised, “authenticated” or “legalised”. This is a process whereby a government official (e.g., the Secretary of State, the Foreign Office, the Office of the Attorney General – depending on where you live) certifies that the signature of the authority by a Notary Public on your document is authentic and should be accepted in the foreign nation.