10.6% of all UK company directors – 626,000 out of 5.8 million directors in the country – are now past the state pension age of 67, shows new research by TWM Solicitors, the leading private wealth law firm.
Improved life expectancy means that many business owners are having to work longer to fund their longer retirements.
TWM’s research also shows that 7.7% of UK company directors (423,000 individuals) are over the age of 70, 1.7% (103,000 individuals) are older than 80, and 0.2% (11,000 individuals) are older than 90 years old.
One of the downsides of this trend is that business owners who are working well past their state pension age could potentially be at greater risk of suffering from a sudden debilitating health issue, which could jeopardise their ability to manage their business. That could put the success of the businesses and the well-being of employees at risk.
Caroline Foulger, Partner and Head of Private Client at TWM Solicitors, highlights the importance of company owners working into their seventies arranging ‘Lasting Powers of Attorney’ (LPAs) to prevent ‘chaos’ in their businesses if they lose mental capacity.
Caroline Foulger says: “With more people working into later life, there’s now a very real problem of companies running into difficulties in the event their owner has medical problems.
“More people now think about how their personal investments will be handled if they lose capacity but too few business owners think about what will happen to their businesses. A power vacuum or a lack of direction can see your business lose value very quickly. That can impact both you and your heirs, as well as your employees, customers and suppliers.”
LPAs are a legal means of appointing an individual to make decisions on someone’s behalf if they lose mental capacity. This could happen through an accident or a medical problem like a stroke or dementia.
LPAs have become more common over recent years for people’s personal financial affairs, such as through appointing a spouse or child as an attorney. Caroline Foulger explains that it is equally important for business owners to arrange LPAs that cover their business affairs as well.
“LPAs can make sure the right person – a family member, a colleague or a trusted adviser – can take the reins of your business if you’re unable to.
“The Attorney appointed to manage matters relating to operation of the family business can be different to the attorneys appointed to manage more personal financial affairs.”
Caroline Foulger adds that it is important for owners of family businesses to understand the two different responsibilities of directors and majority shareholders in the event of a crisis.
Caroline Foulger continues: “Directors of family companies should have the Articles of Association of their businesses reviewed by legal advisors when they arrange an LPA. If the two documents conflict, it can easily result in disputes between a shareholder’s attorney, other company directors or management.
“Under many Articles of Association, Company Directors who lack capacity are automatically retired. This is often not appreciated. A director can only appoint an attorney to carry out their directors’ duties under an LPA if the Company Articles allow it.”
10.6% of all UK company directors – 626,000 out of 5.8 million directors in the country – are now past the state pension age of 67, shows new research by TWM Solicitors, the leading private wealth law firm. Improved life expectancy means that many business owners are having to work longer to fund their longer Read More HR News