Are you in a family-run business and need advice about succession planning due to a risk of declining mental capacity?
There are steps you can take to ensure business can continue smoothly, jobs are kept safe and clients' expectations continue to be met.
It is essential to have a plan in place to prepare for the potential loss of capacity of any key decision makers in the business, both in relation to day-to-day decisions or those made at shareholder level.
Stephanie Chung, Associate in the private client team at Wake Smith Solicitors looks at the issue and offers advice.
Top tips are:
- Plan and address the possibility of diminished capacity early on. This includes updating legal documents and creating a succession plan outlining who takes over decision-making responsibilities, if a key family member becomes incapacitated.
- Open discussions within the family about potential scenarios and the importance of planning can help mitigate conflicts and ensure everyone is on the same page.
- Involve legal professionals for advice and to help navigate the complexities of mental incapacity ensuring all aspects are covered.
- Implement legal safeguards like power of attorney, healthcare directives, and trusts can protect the business and the individual’s interests. Read more about powers of attorney here (link to LPA article)
- Choose appropriate attorneys for different areas of responsibility – this avoids putting everything on one person's shoulders.
- Ensure all relevant business documents have contingency plans such as partnership agreements, articles of associations, shareholders agreements, trust deeds for potential loss of capacity.
- Document the senior family business leader’s wishes, values and preferences re: future care and treatment, running of the family business in the event of diminished mental capacity.
- Regularly review and update the plan ensures it remains relevant and effective as circumstances change.
Your next move
We can guide you through the process of succession planning including LPA, Wills and Trusts.
For further information please contact Stephanie Chung at Wake Smith Solicitors on 0114 224 2114 or email [email protected]
