Securing A Legacy: The Power of Business LPAs

Wills, Trust, Tax & Probate team |20 December 2023

As the years passed, Buddy and Chip’s workshop continued to flourish. Their workforce expanded, the orders rolled in and the annual client testimonials from Santa Claus were outstanding. As Buddy and Holly watched their little elves excitedly dance around their workshop, he basked in the vision that one day his children would take over his legacy.

Buddy was getting older, age wasn’t on his side. Running a business was becoming increasingly challenging and Buddy found that he was losing the capacity to manage his affairs. Chip did a great job running the business but it wasn’t possible to run it alone.

Fortunately, when working with the Nash & Co team to create his Will, Buddy had wisely been advised to set up a Business Lasting Power of Attorney (LPA). This crucial document, Buddy had come to realise, was more than just a piece of paper; it was a safeguard for his life's work.

A Business LPA is a legal tool that allows a business owner to appoint someone they trust – in this case, Holly – to make decisions about their business affairs. Although it can be used to delegate the decision making process when the business owner has capacity, it is more usual for the LPA to be restricted so that it can only be used when the business owner cannot make decisions for themselves.

The importance of this document became clear as Holly stepped in to make key business decisions, ensuring the workshop’s operations ran seamlessly. The Business LPA empowered her to co-manage financial transactions, oversee business strategies, and keep the workshop thriving, just as Buddy wanted. The scope of decisions that Holly could make under the Business LPA was defined when it was created.

Buddy had also learned the difference between Personal and Business LPAs. While Personal LPAs cover both health and welfare decisions and Buddy’s personal property and financial affairs, the Business LPA was focused solely on the management of his business affairs. This distinction was crucial, ensuring that personal matters and business decisions were handled appropriately and by the right people.

The impact of the Business LPA on their partnership agreement was another aspect Buddy had considered. It ensured that the workshop wouldn't face a leadership crisis, a common concern in joint ventures and partnerships. It provided a clear plan for continuity, protected both partners' interests and prevented unrest for their employees.

Regular reviews and updates of the Business LPA had formed part of Buddy’s plan. As the workshop evolved and circumstances changed, so did the LPA, ensuring it always reflected the current state of affairs and Buddy's wishes. For any business owner, setting up a Business LPA ensures that their business vision and operations continue to flourish, even when they’re not at the helm.

If you’d like to talk to our team about Lasting Powers of Attorney, you can get in touch here.