Family office founder-incapacity continuity drill

A family office founder-incapacity continuity drill should test who can make personal, company, trust, banking and investment decisions when the founder cannot. It should expose missing authority before an emergency, without assuming that one document gives a replacement decision-maker every power.

The exercise must use the family’s real entities, accounts, mandates and governing documents. A generic succession chart cannot prove that a bank, board or trustee will recognise the proposed authority.

Define incapacity without staging a medical judgment

Choose a realistic scenario, such as a sudden illness that prevents the founder from understanding or communicating a financial decision. State the assumed period and which decisions cannot wait.

The Mental Capacity Act 2008 provides Singapore’s legal framework for persons who lack capacity. The family office should not make its own informal declaration of incapacity or ask an employee to provide a medical conclusion.

Record who obtains the required medical evidence, where that person sends it and how the team protects sensitive information. The drill tests process and authority. It does not declare the founder to lack capacity.

Start with the Lasting Power of Attorney

The MSF Lasting Power of Attorney guidance explains that an LPA allows a donor to appoint one or more donees to make decisions if the donor loses capacity. The powers can cover personal welfare, property and affairs, or both.

Confirm that OPG registered the LPA and identify the chosen donees, replacement donees, powers, restrictions and joint or joint-and-several arrangement. Record how an authorised person obtains the accepted evidence when incapacity activates the process.

Do not copy the complete document into a general operations folder. Keep a controlled authority summary and a secure route to the official record.

Do not treat the LPA as universal authority

An LPA concerns decisions for the donor. It does not automatically appoint the donee as a company director, trustee, protector, fund director, investment-committee member or bank signatory for every entity.

Map each position separately. Read company constitutions, shareholder agreements, trust instruments, fund documents, committee terms and mandates. Identify death or incapacity provisions, appointment powers, quorum rules and reserved matters.

When a clause needs specialist legal interpretation, record the question and obtain advice. Do not let the family office invent authority simply because the family trusts the proposed replacement.

Include powers of attorney, nomination arrangements and letters of wishes in the document map, but label their legal effect accurately. A letter of wishes may guide a trustee without compelling the trustee to follow it.

Test the urgent decisions

List decisions due in the first 24 hours, seven days and 30 days. They may include payroll, loan payments, capital calls, tax deadlines, medical expenses, investment instructions, director approvals and communications with advisers.

For each decision, identify the legal person that must act, the governing authority and the alternate. If an institution can extend a deadline, record who asks and what evidence the institution requires.

Separate personal expenses from entity expenses. A company account should not fund a founder’s personal need merely because the founder normally controls both.

Challenge bank and platform access

Ask each material bank, custodian and investment platform what evidence it accepts when a donee or replacement officer needs to act. Record the current mandate, signatories, dual controls and contact route.

Do not test an emergency by attempting an unauthorised transaction. Use a tabletop enquiry or approved low-risk simulation. Never share passwords, tokens or another person’s credentials.

Check whether the replacement can receive statements and information, not only move money. A decision-maker who cannot see cash, liabilities or positions cannot act responsibly.

Test cut-off times and cross-border dependencies. An account may require an original certified document, a local contact or a review by another jurisdiction. Record the likely delay instead of assuming digital access is immediate.

Protect governance during the transition

Call a simulated board, trustee or family-council meeting under the actual notice and quorum rules. Ask participants to declare conflicts, record the founder’s absence and identify reserved matters that remain unavailable.

Keep the family, family office and operating-company decisions separate. A family preference is not automatically a company-board decision, and a family-office employee cannot exercise a trustee’s discretion.

Prepare a factual communication for staff and advisers. Limit medical details. State the interim authority, contact point and review date without announcing decisions that have not been made.

Use a founder-incapacity drill table

Remediate the exceptions

Record every missing signature, unclear clause, expired mandate, single-person dependency and inaccessible record. Rank the item by decision deadline and potential harm. Assign an owner and due date.

Have the proper adviser change legal documents through the correct execution process. Then align operating controls with the final authority. Never backdate a mandate or minute to make the drill appear complete.

Present the exceptions to the appropriate family, board or trustee body. Record each accepted risk and each action that a second signatory, documented delegate or accessible governing record can reduce.

The family-office succession guide supports the longer transition. The family office governance operating model is the pillar cornerstone.

Repeat the family office founder-incapacity continuity drill after a major entity, adviser, account or family change. The Family Office and UHNW Advisory hub connects the wider governance library.