What Happens to Your Business if You Can’t Make Decisions for Six Months?

For many business owners and directors, the focus is understandably on growth, clients, and day‑to‑day operations. Planning for a temporary loss of capacity whether due to illness, accident, or burnout often sits firmly on the “I’ll deal with that later” list.

But even a short period of incapacity, such as six months, can have serious consequences if no arrangements are in place.

Incapacity Isn’t Always Permanent, but the Impact Can Be.

Loss of capacity doesn’t only arise later in life. It can result from:

• A serious accident or injury

• A stroke or sudden illness

• Mental health crises or extreme stress

• Post‑operative recovery or medical treatment

You might be perfectly capable in the long term but unable to make legally binding decisions right now. For a business, that gap can be critical.

Key Decisions That May Be Put on Hold

If you are the sole director, controlling shareholder, or key decision‑maker, the absence of authority can quickly cause problems, including:

• Inability to sign contracts or renew agreements

• Issues accessing or managing company bank accounts

• Delays in paying staff, suppliers, or taxes

• Missed commercial opportunities

• Breaches of regulatory or contractual obligations

Banks and third parties will not usually accept informal arrangements or assurances from family members. Without formal authority, they are often compelled to freeze decision‑making altogether.

If There Is No LPA in Place

Without a Lasting Power of Attorney (Property and Financial Affairs) that specifically covers business interests, those close to you even fellow directors or your spouse may have no legal authority to act.

The alternative is usually an application to the Court of Protection, which can be:

• Time‑consuming

• Expensive

• Administratively complex

• Ill‑suited to the pace of commercial decision‑making

For a business that needs day‑to‑day decisions, six months can feel like an eternity.

Using an LPA to Protect Business Continuity

A well‑drafted LPA allows you to plan ahead by appointing one or more attorneys who can step in promptly if you lose capacity. For business owners, this can mean:

• Ensuring continuity of management

• Protecting staff, clients, and contractual relationships

• Preserving the value of the business

• Avoiding unnecessary disruption or disputes

Crucially, the LPA can be tailored so that your attorneys’ powers activate only in relation to incapacity, and only within carefully defined limits.

Appointing a Trust Corporation as Attorney

For some business owners, appointing a spouse or family member may not feel appropriate — particularly where the business is complex, regulated, or closely scrutinised.

In these cases, it may be sensible to appoint a trust corporation as attorney, either alone or alongside an individual.

A trust corporation can offer:

• Professional, impartial decision‑making

• Continuity (the authority doesn’t lapse due to illness or death)

• Experience in handling financial, property, and corporate matters

• Reduced risk of conflicts between family and business interests

This option is often attractive where:

• The business is substantial or multi‑layered

• There are multiple shareholders or stakeholders

• Family dynamics are sensitive

• The owner wants reassurance that decisions will be made objectively

The trust corporation’s role can also be limited to business matters, leaving personal financial decisions to individual attorneys if preferred.

Planning for the Unexpected, Not the Worst Case

Putting an LPA in place is not an admission that something will go wrong. It is a contingency plan, much like insurance or shareholder agreements designed to ensure stability if life takes an unexpected turn.

For business owners and directors, the question is often not whether the business could cope without you for six months, but how easily that period could be managed with the right authority already in place.

Getting the Structure Right

LPAs involving businesses require careful thought and precise drafting. Factors such as company structure, governing documents, banking arrangements, and regulatory obligations all need to be considered.

Taking advice early allows the LPA to work alongside your wider business planning — rather than against it.

If you are unsure how loss of capacity could affect your business, or whether appointing a trust corporation as attorney might be appropriate in your circumstances, a conversation with a solicitor can help clarify the options long before decisions need to be made.

To receive legal advice on whether an LPA is right for you, or to get the process started, call us on 0203 835 4965 or send an email with your enquiry to dmillward-stone@scomo.com