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Home > News > Always be Prepared: Incapacitated Business Owners

Always be Prepared: Incapacitated Business Owners

01 December 2017 | Heledd Wyn

Lasting Powers of Attorney (LPAs) are something that many business owners will consider, and then try to avoid thinking about. After all, no one wants to consider a time in the future when they will be unable to make positive and conscious decisions about their business, let alone themselves. But it is vital to be prepared for the worst to prevent personal health problems becoming corporate problems.

There is not a single person that physical or mental incapacity might not affect, and unlike some areas of illness, they can occur at any age, affecting people indiscriminately irrespective of gender, religion, or social status. In some situations, there will be no warning: a genetic lottery, a sporting accident or a car crash could affect anyone one of us. These unforeseeable situations can place a person in a state incompatible with managing their personal and business affairs. The question is, who then takes over the reins of a business?

Unfortunately, there isn’t one single template for this process; it will very much depend on the legal structure that the business – which that means that the individuals you may want to take over your decision making aren’t actually those who will have the legal authority to do so.

Sole traders

A sole trader should make preparing a Lasting Power of Attorney a priority for future-proofing their business, to ensure that someone responsible – and potentially already connected to the business – can make vital day to day decisions on business management, such as stock purchases, invoice payments, and management of client contracts. Whether this is a family member or professional is up to you, but it should be someone who has a level of professional experience and expertise, who may not end up being a member of your family.


A partnership agreement may have this specified within itself, with provision for what decisions need to be made in the event of one member becoming incapacitated. Without clarity within the partnership arrangement, it may be that an application to the Court to arrange how management of the partnership continues may be the only option – and so appointing an attorney with a keen understanding of your business, and one who you feel confident can make commercial decisions for you, may be the best course of action.


When it comes to the removal of a director who is incapacitated, the company’s legal documentation such as Articles of Association and/or shareholders agreement will typically cover this process. The shares owned by the director in question will need to be considered, to assesses whether there will be an issues with whoever takes control of those shares from influencing the votes within in a way different from the director and company goals.

An LPA is a big decision

Beyond the initial emotional difficulty of considering a future in which you are unable to make business decisions, it is a big responsibility to choose an individual that you would wish to make considered and informed decisions about your company. You may decide to have two separate LPAs: one for your personal affairs, and one for your business affairs.

However, without a legally agreed Power of Attorney, the Court of Protection would need to be applied to for a person to make decisions for you: a time consuming and expensive process. By choosing and formalising a Lasting Power of Attorney now, no matter what happens in the future, your business will be able to continue in its success.

We are ready to help you draw up your Power of Attorney and our CoCo team are ideally placed to advise on arranging your business affairs to ensure that in the event of incapacity that your business dfocumentation provides the support you need, so get in touch now for impartial and expert advice.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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