A business can cope with a slow month, a key client leaving, even a difficult tax enquiry. What it often cannot cope with is the sudden loss of decision-making authority when the owner is still alive but no longer has mental capacity. That is why a lasting power of attorney for business owners is not a side issue. For many directors, partners, sole traders and property investors, it is one of the most practical safeguards they can put in place.
Most people understand the need for a will. Far fewer realise that a will only takes effect after death. If you lose capacity through illness, injury or a condition such as dementia, your will does nothing to keep the business moving. Bank accounts may be frozen for practical purposes, contracts may stall, staff decisions may be delayed, and family members may discover they have no legal authority to step in.
Why business owners need more than a personal LPA
A lasting power of attorney allows you to appoint trusted people to make decisions on your behalf if you cannot do so yourself. In England and Wales, there are two types – one for property and financial affairs, and one for health and welfare. For business owners, the property and financial affairs LPA is usually the key starting point because it can cover financial management, payments, banking and wider commercial decisions.
The point that often gets missed is that your personal finances and your business interests are not always best handled in the same way. A spouse may be the obvious choice to help with household matters, but not the right person to deal with commercial leases, payroll, business borrowing, shareholder issues or a portfolio of rental properties held in a company structure.
That does not mean one approach suits everyone. A sole trader may want the same attorney handling both personal and business affairs. A company director with co-shareholders may need a more tailored arrangement. A property investor with several entities may need to think carefully about who understands the structure and where authority begins and ends.
What can happen without a lasting power of attorney for business owners?
If capacity is lost and no valid LPA is in place, relatives or colleagues cannot simply take over because it feels sensible. They may need to apply to the Court of Protection for a deputyship order. That process can be costly, slow and intrusive, and it may arrive too late to deal with pressing business decisions.
In the meantime, practical problems can build quickly. Supplier payments may be missed. Employees may be left without clear authority from management. Tenants may need urgent decisions on repairs or renewals. Tax filings and compliance deadlines do not stop because the owner is unwell.
For owner-managed businesses, the issue is often sharper because so much knowledge and authority sits with one person. If you are the signatory on the accounts, the person who approves transfers, or the only one who knows the full position on liabilities and cash flow, incapacity can create immediate disruption.
The business risks are legal and commercial
A lasting power of attorney for business owners is not only about legal paperwork. It is about continuity. Can invoices still be paid? Can a refinancing be signed? Can someone deal with HMRC, the bank, insurers or a managing agent? Can business assets be protected while the owner recovers or, if recovery is not possible, while longer-term plans are put in place?
The answer depends partly on the business structure. A sole trader’s position is usually more exposed because the business and the individual are legally intertwined. In a limited company, the company remains separate, but that does not remove the problem. If the person who runs it loses capacity, decision-making can still become stuck, especially where there are concerns around directorship, share ownership, banking mandates and constitutional documents.
Partnerships also need careful review. The partnership agreement may say something about incapacity, decision-making and authority. If it does not, the business may be relying on assumptions that fail under pressure.
Choosing the right attorney for business matters
This is where proper planning matters. The best attorney is not always the closest relative. You need someone trustworthy, capable, organised and calm under pressure. For business affairs, they should also understand the commercial realities of what you do.
In some cases, it makes sense to appoint one set of attorneys for personal matters and another for business matters. In others, you may want the same trusted person throughout, but with clear guidance about what they should do and when they should seek professional help.
There are trade-offs. Appointing a business colleague may bring commercial knowledge, but it can also create concerns about conflicts of interest. Appointing a family member may feel natural, but they may not know the business well enough to make confident decisions. The right answer depends on your structure, the complexity of your affairs and the people around you.
Separate business LPA or wider planning?
Many owners benefit from a separate LPA that deals specifically with business interests rather than trying to force everything into one broad arrangement. That can help ring-fence who deals with company or trading matters while another attorney handles personal banking, property and household finances.
This can be especially useful where there are co-directors, shareholders or family dynamics to consider. A carefully drafted LPA can reduce confusion and make it easier for banks and institutions to understand who has authority.
That said, an LPA should not be looked at in isolation. It needs to sit alongside your will, any trust planning, partnership or shareholder agreements, and your wider succession intentions. If one document says one thing and another points in a different direction, the people left dealing with the problem may face unnecessary delay and expense.
Common issues property investors should not ignore
Property investors often assume their assets are safer because rental income continues and bricks and mortar remain in place. The reality is less comfortable. If urgent repairs need authorising, tenancy matters need handling, mortgage payments need managing or a sale must proceed, incapacity can quickly become a serious obstacle.
This is particularly true where a portfolio is held across several vehicles or where one person informally oversees everything. If your family knows broadly what you own but not how it is structured, where the documents are kept or which decisions require formal authority, the pressure can escalate very quickly.
A well-prepared LPA does not solve every issue, but it gives someone legal standing to act. That can be the difference between preserving value and watching problems spread across multiple properties.
What business owners should review now
If you already have an LPA, it is worth checking whether it genuinely reflects your business affairs. Many standard arrangements are prepared with personal life in mind and do not properly address the realities of ownership, control and commercial decision-making.
Ask yourself some plain questions. If you were unable to act for six months, who could deal with banking? Who could speak to your accountant or solicitor? Who would know what income is due, what liabilities are outstanding and what contracts need attention? Would your fellow directors or business partners know exactly what authority they have?
If those answers are uncertain, the risk is not theoretical. It is already there.
Getting the drafting right matters
A badly chosen attorney or poorly considered document can create problems of its own. Restrictions that look sensible at first can make the LPA unusable in practice. Vague intentions can lead to disagreement. Overly broad powers without the right safeguards may feel uncomfortable.
That is why tailored advice matters, especially for business owners with property interests, trading companies or family wealth to protect. The right planning should be practical, clear and built around how your affairs actually work, not how a generic template assumes they work.
For many clients, this is less about preparing for the worst and more about keeping control by deciding in advance who steps in, what they can do and how the business and family are protected if life changes unexpectedly. That is exactly the sort of planning that gives peace of mind.
At The Legacy Wills, we often see how much easier these conversations become once the issue is framed properly: not as legal form-filling, but as protecting everything you have spent years building. If your business depends heavily on you, then putting the right authority in place is not something to leave until later. The best time to sort it is while you are well, clear-headed and fully in control.