Opinion: What if you became permanently mentally incapacitated?

A farmer all his working life, my grandfather Dick died late last year, having suffered with Alzheimer’s disease for a decade or more.

I will remember him only as a mild-mannered, immensely kind gentleman, but his slow decline into permanent internal anguish was not easy for any of us – none more-so than my doting grandmother Janet – to watch so helplessly. 

See also: Opinion – Labour’s anti-farming policies just keep coming

With an ageing population, most of us now have experience directly or indirectly of someone affected by Alzheimer’s.

One in 13 over-65s have it, rising to one in six over-80s. It is a terrible disease that robs sufferers of their dignity and of their passions. 

Powers of Attorney

The loss of your faculties over such a long span of time can also have enormous ramifications for those left to run any family business.

There are mitigation measures that can be taken, such as signing Powers of Attorney when you are still able, which allows others, usually family, to sign documents on your behalf to maintain the business status quo. 

Naively, you might think this would protect the business and allow the remaining partners to continue driving it forward.

And while this is fine in the short term, as we were to come to find out, it is certainly no replacement for having a partner with all of their faculties remaining.

Let’s say that you were to lose your mental capacity for a decade or more. That’s a long time in agricultural policy.

Would you want your remaining business partners to invest in enterprises over those years to continue to drive the business forward?

Or take advantage of changing tax incentives to alter your partnership structure?

Or perhaps you have the next generation, in their 20s or 30s, coming home brimming with new ideas and wanting to join the business?

At best, all of these things become a lot more difficult.

At worst, they become nearly impossible because you cannot do anything that a hard-nosed, independent solicitor might deem as outwith the direct financial interests of the incapacitated.

“Why would they want to risk capital?” they might ask. “And why would they want to reduce their share to enable another partner to join?”

This is the case even if all signatories are in total agreement that, had they been of sound mind, it is exactly what they would have wanted.

Succession

You might all have very much been singing from the same hymn sheet when all parties were compos mentis, but the tune can quickly change when one of you is unable to sing it. 

While I in no way support the government’s inheritance tax proposals, that businesses are talking pragmatically about succession more while all are still able to is a huge positive.

Most accountants’ historic advice has largely been that for tax purposes, farmers “should die with their wellies on”, which clearly no longer applies.

While you’re at it, I’d extend this discussion to what happens should you become permanently incapacitated too. 

Back home, and we’ve invested – in a convoluted fashion – in a lot of infrastructure over the past few years.

On numerous occasions my grandmother has come into the yard – usually mid cold-store construction – and said: “Wouldn’t your grandfather have loved it?”

I think he would have done, too, which is why I suspect that were he to have his time again, and knowing what we know now, he would have structured things very differently.