A plan for death is not a plan for incapacity

The event the structure was not built for

A corridor structure is engineered against two events, and incapacity is neither of them. It is built to be tax-efficient, and it is built to pass on cleanly at death. Both are planned for, priced and papered. Incapacity is the third event, and it is the one a family treats as remote until it happens, because unlike death it can arrive at any age, from a stroke, a serious accident or the early onset of a degenerative illness, and it does not transfer control to anyone.

The owner remains the owner. The director remains the director. The settlor remains the settlor. What changes is that the one mind through which every signature, vote and instruction flows can no longer give any of them, and nothing in the will, the shareholders agreement or the trust deed moves control to another hand by itself.

The reason this is missed is that death is visible in every plan and incapacity is not. A family that has paid for wills in two jurisdictions, a trust, a foundation and a set of holding companies has usually never been asked what happens if the person at the centre of all of it has a stroke at 61 and lives another fifteen years without the capacity to sign.

The answer, in most cases, is that the machine stops, and the more elaborate the machine, the more places it stops at once. In the corridor structures that reach us for review, it is rarely the tax or the succession that has been left undone. It is this.

The instruments that restart it are national, and they do not travel. What England provides stops at the UAE border. What the UAE provides is a court process that freezes the assets while it runs. And the common-law centres that families assume mirror England provide for the will and not for the living. Each of those is worth taking in turn.

What the English instrument does, and where it stops

The English answer to incapacity is the lasting power of attorney, and it works only if it was made before capacity was lost. Under the Mental Capacity Act 2005, a lasting power of attorney for property and financial affairs lets a person appoint an attorney to manage their money, property and financial dealings, but it has to be made while the donor still has capacity and registered with the Office of the Public Guardian before it can be used. The health-and-welfare power is a separate document; the property and financial affairs power is the one that governs the assets.

Where no lasting power exists and capacity is already gone, the only route is the Court of Protection, which can appoint a deputy to act. That is the outcome the lasting power is designed to avoid, because a deputyship is slower, supervised, more expensive and controlled by the court rather than by a person the family chose. For a straightforward estate it is an inconvenience. For a live business and a cross-border structure it is a period of paralysis measured in months.

A lasting power reaches the assets the donor owns personally, and it reaches their shares. What it does not do is put the attorney into any office the donor holds, and that limit is where the most expensive surprises sit.

A directorship is a personal office no attorney can hold

A director's office cannot be exercised by an attorney, because it is personal to the individual and cannot be delegated under a lasting power. The power lets the attorney deal with the donor's property, including voting the donor's shares as a member, but the role of director, the person who actually runs the company and signs for it, is not property and cannot be handed over. The attorney stands in the shareholder's shoes, not the director's.

What the attorney can do is use the votes attached to the incapacitated person's shares to remove the director and appoint a replacement, and a shareholder's statutory power to remove a director by ordinary resolution sits in section 168 of the Companies Act 2006. The sequence matters. The attorney acts as shareholder to change the board, and the new director then runs the company. That works cleanly where ownership and management are held by different people, or spread across several. It does not work at all where they are the same single person.

The acute failure is the sole director who is also the sole shareholder, which is how a great many owner-managed corridor companies are held. If that person loses capacity and has no lasting power in place, there is no shareholder capable of voting to appoint a new director and no director capable of running the company, and the only way out is an application to the Court of Protection for a deputy who can then act on the shares.

Incapacity does not even clear the incapacitated director out of the way on its own. Since the Mental Health (Discrimination) Act 2013 amended the model articles, a director vacates office on incapacity only where a registered medical practitioner treating them gives the company a written opinion that they have become incapable of acting and may remain so for more than three months, and companies with older or bespoke articles may provide something different again. The office does not empty itself. Someone with authority has to act, and incapacity is precisely the state in which no one has it.

The UAE has no lasting power of attorney

The UAE does not recognise an enduring or lasting power of attorney, so the instrument that solves the problem in England does not exist on the other side of the corridor. An ordinary UAE power of attorney is an agency, and under UAE civil law an agency terminates automatically on the death or the loss of legal capacity of the principal. That was Article 954 of the 1985 Civil Transactions Law, and the framework has carried into the recodified Civil Transactions Law, Federal Decree-Law No. 25 of 2025, in force from 1 June 2026.

A UAE power of attorney is therefore at its most useless at the exact moment an English lasting power is at its most useful, because the event that would activate the one revokes the other.

A lasting power made in England does not fill the gap either, because it is not automatically recognised in the UAE. The Hague Convention of 13 January 2000 on the International Protection of Adults, which exists to carry capacity arrangements across borders, has been ratified within the United Kingdom for Scotland only and not for England and Wales, and the UAE is not a party to it at all. A foreign power can sometimes be used over UAE assets after full legalisation and a certified Arabic translation, but acceptance is at the discretion of the particular bank, court or registry, and a document that depends on discretion is not a plan.

What happens in practice when a person with UAE assets loses capacity is that the family applies to a UAE court for an interdiction order and the appointment of a guardian to manage the person's affairs. While that runs, bank accounts and assets can be frozen and significant transactions require the court's approval, so the family faces the same standstill as an English deputyship, in a second language, under a different legal system, and often at the same time as the English one. Recent mental-health legislation improved the procedural protections around this process, but it did not create a lasting power of attorney the family could have used instead.

The common-law financial centres do not close the gap, because their private-client machinery is built for succession and not for incapacity. The DIFC and ADGM wills registries let a non-Muslim register a will and have it recognised, which is a genuine advance for what happens on death, and it is set out in the note on cross-border wills across the corridor. Neither centre offers a lasting power of attorney for the living. A family that has carefully registered wills in Dubai has planned for the day it dies and not for the longer, harder period in which it cannot sign.

Continuity is not a signature. It is a structure that survives the signatory

The arrangement that survives incapacity is one where the assets are owned by an entity that has its own governance, not by an individual whose signature the law can suspend. Every difficulty above comes from routing control through one human being, and every fix that depends on that human, a lasting power, an agency, a signature, shares the human's fragility. The structural answer is to move the assets into an entity, a foundation or a trust, whose council or trustee continues to function regardless of the state of any one person, and to reduce the individual to a role that is designed to pass.

A foundation or a trust owns its assets in its own name, and its decisions are taken by a council or a trustee under a document that already says who acts if a named person cannot. Where significant UAE assets sit inside a DIFC, ADGM or RAK ICC foundation, the incapacity of the founder does not freeze the assets, because the founder is not the owner. The foundation is, and the council carries on. The choice between a foundation, a company and a trust for this purpose is the subject of the note comparing the foundation, the company and the UK trust, and the foundation's use as a holding vehicle is set out in DIFC and ADGM foundations for wealth holding.

Where a family has kept powers in the founder's or settlor's hands, and many do, the deed has to say what happens to those powers on incapacity, or they freeze with the person. Good trust law anticipates this. The DIFC Trust Law (DIFC Law No. 4 of 2018, Article 85) provides that if a settlor or protector who holds reserved powers becomes incapacitated, those powers are exercised during the incapacity by the protector or by a person the trust instrument or the court designates, so the reserved power does not become a lock.

A reserved power with no incapacity fallback is a single point of failure dressed as control. Whether the family should hold those powers through a private trust company rather than in an individual's name is examined in the private trust company analysis.

Below the ownership layer sits the operational one, and it is the cheapest to build and the most often neglected. Successor and alternate signatories on every bank mandate, so no account depends on one person's authority. Successor and alternate directors on every operating company, so no board can be reduced to a single incapacitated member. Replacement council members named in a foundation's by-laws. And the constitutional documents, the articles, the shareholders agreement, the trust deed and any lasting power, drafted so they say the same thing about incapacity rather than three different things, because conflicting documents produce deadlock at exactly the moment speed matters.

Who is most exposed, and why it is the sophisticated ones

The families most exposed to an incapacity are usually the ones with the most elaborate structures, because complexity multiplies the number of signatures a single failing mind is required to give. A person with one bank account and one house has one problem.

A person who is the sole director of a UK trading company, a shareholder in a holding company, the founder of a Dubai foundation, the protector of a trust and the primary signatory on accounts in three countries has that many separate points at which control can seize, and each sits under a different legal system with a different fix.

The corridor makes this worse before it makes it better, because each jurisdiction runs its own capacity regime and none of them recognises the others automatically. England has the lasting power of attorney. Ireland rebuilt its own system under the Assisted Decision-Making (Capacity) Act 2015, in force since 26 April 2023, which abolished the old wards of court process and introduced enduring powers registered with a Decision Support Service.

The UAE has court-appointed guardianship and no lasting power at all. A family whose life and assets are spread across all three has three separate incapacity regimes to reconcile, and reconciling them is not a document but a design.

The standard that removes the exposure is not complicated, and it is built entirely in advance.

• A registered lasting power of attorney for property and financial affairs in England, and an equivalent enduring power in Ireland where there are Irish assets, made while capacity is intact.
• The assets that matter held through an entity with its own governance and named successors, not in the sole name of the individual who runs everything.
• Reserved powers in any trust drafted with an explicit incapacity fallback, so control passes rather than freezes.
• Successor and alternate signatories, directors and council members in place across every account, company and foundation, with the constitutional documents aligned to one another.
• A current record of what is owned, where, and who is authorised to act on each, held where the family can reach it under pressure.

None of it can be built once capacity is in doubt, because every instrument here requires the capacity it is meant to protect against losing. That is the whole difficulty in a sentence. The planning and the capacity to do it expire together.

Frequently asked questions

What is the difference between planning for death and planning for incapacity?

Death transfers control and incapacity freezes it. On death a will, a succession plan and the terms of a trust or foundation move assets and authority to named people. On incapacity nothing moves. The person remains the legal owner of their assets and the holder of their offices, but can no longer exercise any of them, and unless an instrument was put in place beforehand to let someone else act, control simply stops until a court appoints a substitute. A structure can be well prepared for death and completely unprepared for incapacity, and most are.

Does a UK lasting power of attorney work in the UAE?

Not automatically. A lasting power of attorney made under the Mental Capacity Act 2005 governs assets in England and Wales, but the UAE is not a party to the Hague Convention on the International Protection of Adults, and England and Wales has not ratified it either, so there is no treaty that carries the power across. A foreign power can sometimes be used over UAE assets after full legalisation and a certified Arabic translation, but whether it is accepted is at the discretion of the specific bank, court or registry, so it cannot be relied on as the plan for UAE assets.

What happens to a UAE company if the owner loses mental capacity?

Control of it can freeze until a court acts. The UAE does not recognise a lasting power of attorney, and an ordinary power of attorney terminates automatically on the principal's loss of capacity, so any authority the owner had granted falls away at the moment it is needed. The family then has to apply to a UAE court for the appointment of a guardian to manage the person's affairs, and while that runs the company's bank accounts and assets can be frozen and significant decisions can require court approval. Holding the business through an entity with its own governance and named successors avoids this.

Can my attorney run my company for me if I lose capacity?

No, not as a director. A directorship is a personal office and cannot be delegated under a lasting power of attorney, so your attorney cannot step in and run the company in your place. What the attorney can do is vote your shares as a shareholder, which allows them to remove the incapacitated director and appoint a replacement under section 168 of the Companies Act 2006. This works where there is a shareholder able to vote and a replacement director available, and it fails where you are the sole director and sole shareholder, in which case a court application is usually the only route.

What happens in the UAE if there is no power of attorney and someone loses capacity?

The family applies to a UAE court for an interdiction order and the appointment of a guardian. The court assesses the person's incapacity on medical evidence and appoints a guardian or trustee to manage their personal and financial affairs, with major transactions typically needing the court's approval. Bank accounts and assets can be frozen until the order is made. The process is court-controlled, takes time, and produces an outcome the family did not choose, which is the position a lasting power of attorney is designed to avoid but which the UAE does not offer.

Does registering a will in the DIFC protect against incapacity?

No. A DIFC or ADGM registered will governs what happens to assets on death, which is a real and worthwhile protection, but it does nothing during a person's lifetime while they are alive and lack capacity. Neither centre offers a lasting power of attorney or any equivalent lifetime instrument. A family that has registered wills in Dubai has provided for its succession and left the incapacity period, which can last many years, entirely unaddressed, so the will and the incapacity plan are two different pieces of work.

How does holding assets in a foundation or trust help if I lose capacity?

It moves ownership away from the individual whose capacity can fail. A foundation or a trust owns its assets in its own name and acts through a council or a trustee under a governing document that already provides who acts if a named person cannot, so the incapacity of the founder or settlor does not freeze the assets. Well-drafted trust law reinforces this. The DIFC Trust Law provides that reserved powers held by an incapacitated settlor or protector are exercised during the incapacity by the protector or a person the instrument or the court designates, so control passes rather than locks.

Who is most at risk from a lack of incapacity planning?

The owner-manager who is a company's sole director and sole shareholder, and the principal whose interests span several jurisdictions. The first because there is no one else who can vote the shares or take a board decision if they cannot, so the business can halt entirely. The second because each jurisdiction has its own capacity regime and none recognises the others automatically, so a person with assets in the UK, the UAE and Ireland has three separate systems to satisfy. In both cases the exposure is highest for the most capable and busiest people, who are the least likely to have addressed it.

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Critical advisory. Incapacity is the single point of failure in most corridor structures, because it is the one event no one is asked to plan for. Whether yours survives it turns on how each asset is held, which offices and reserved powers run through you personally, and whether the instruments were made while you still had the capacity to make them.

Mapping where control would seize, moving the assets that matter into structures that govern themselves, and putting the powers and successors in place before they are needed is work we do in-house across the UAE, the United Kingdom and Ireland. If continuity depends on one signature, secure it while that signature can still be given.

This article is general information and not legal, tax or financial advice, and your own position should be confirmed against your specific facts before you act.