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The business of capacity

Chris Graves and Adam Steen on navigating the challenges of declining mental capacity in senior family business roles

Given the aging demographics of populations worldwide and the increasing prevalence of dementia, advisors are facing a significant shift in the complexity of their roles. They are now required to support clients with declining mental capacity more frequently. In the context of business families, this shift is particularly challenging. For example, advising senior family business leaders on succession-related issues becomes additionally complex when the decline in mental capacity is a factor.

Currently, there is no universally accepted approach to defining and evaluating mental capacity. Evaluating mental capacity is challenging as it can be decision-specific (e.g., capacity to manage personal finances but not re-negotiate business loans), time-specific (e.g., temporary due to ill health but not permanent) and situation-specific (due to stressful circumstances or drugs/ medication). Take, for example, the patriarch Logan Roy’s sudden erratic, confused and abusive behaviour in HBO’s TV series Succession, which was attributed to a urinary tract infection that flared up his underlying dementia.

The complexities associated with evaluating mental capacity are exacerbated by the increasing use of digital technologies in varying aspects of commercial activities, online meetings (with the potential for ‘off-screen’ actors to influence decision-makers) and activities in multiple jurisdictions with differing legal requirements and protections. 


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