France’s richest woman was forced to surrender her 31 per cent stake, reportedly worth €15 billion , to her daughter, Francoise Meyers-Bettencourt, according to media reports. A court ruled that after three years of bitter fighting with her family, she must relinquish control on the grounds of suffering from dementia and Alzheimer’s disease. Liliane Bettencourt will be placed under guardianship, and her daughter and grandsons will be responsible for her assets and property.

“This type of situation could easily have been avoided,” said Stephen Richards, a solicitor at law firm Withers. He explained that there is a certain squeamishness when it comes to discussing succession which must be overcome.

"It remains important for individuals to address those tricky questions of what will happen when I can no longer look after my own affairs, or what do I want to happen to my estate when I die? As a rule people tend to not talk about these issues either informally with friends or family or formally with their professional advisers. But families and family advisers need to get much better at sitting down and addressing what will happen if they cannot look after their own affairs so everyone is clear what should happen and why," said Richards.

He said that in the UK there is quite a long-established system as to how we protect those who are vulnerable and to ensure they are looked after by those who they want to be looked after by. The Mental Capacity Act came into force on 1 October 2007 in the UK, allowing the creation of lasting powers of attorney, replacing the older enduring powers of attorney. These powers can be as wide or as restrictive as you want, which means this sort of situation occurs less frequently in the UK now, then in countries where there is still forced heirship, like France, Spain and Italy.

In England you can make powers of attorney that survive the onset of mental incapacity . These powers can concern both your property and finances and, since October 2007, your health and welfare. Within the instrument you can provide direction and guidance to your attorneys and even restrict what they can and cannot do. The French version is the 'Mandat de protection future'," he added.

But despite Bettencourt having a Mandat de protection future in place, appointing her lawyer, the French Court still felt it was more appropriate for her family to be those who look after her affairs, pointed out Richards. It appears there had been a breakdown between the family and Bettencourt's lawyer that necessitated the involvement of the Court, an unusual situation.

Mark Keenan, a Partner in Mishcon de Reya's private department and a professional deputy of the Court of Protection, agreed that human nature is such that people are reluctant to accede power over their affairs to another, or even discuss it.

He added: “Without clear and unequivocal instructions in place, family disputes invariably arise when, following the family head's incapacity, competing rival family members vie for control.

Living longer

Sue Medder, a partner at Withers, said that better healthcare and lifestyle is changing the dynamics of succession planning. "As people are living longer, there are more cases where a person may lose their mental capabilities before their physical health. People need to adjust their plans accordingly," she said.

She added that the L’Oreal case may bring back into focus the need for better succession planning worldwide. "It is important for individuals and families to try at an early stage with the help of professional advisors if necessary the sort of planning they should do to help them manage their affairs.It is not always possible, given the dynamics of some families, but where it can be done it should be moved up the agenda - talking about it now whilst difficult will be a lot less painful than the emotional pain of a family dispute where a loved one has lost capacity or died," she added.

The news adds weight to a survey published by SEI last month, which showed less than half of UK high net worth families surveyed have a formal wealth transfer plan in place.

Only 46 per cent of those families polled said they had worked out a wealth transfer strategy, while for 38 per cent their planning had gone as far as wills being drawn up and nothing else.

A significant 8 per cent of respondents have done nothing about wealth transfer thus far – this in spite of the fact that an overwhelming 97 per cent of the 100 HNW individuals surveyed agreeing that the future generation has the ability to continue creating wealth and improving the lives of their families.

Despite most of those surveyed not having formal family wealth transfer plans in place, the vast majority said they expect to pass on their wealth to direct family members.

"A wealth transfer plan is crucial to a family's ability to sustain wealth long term and yet many wealthy families don't have one. We see this as part of a larger disconnect in financial communication in wealthy families,” said Michael Farrell, managing director for the SEI Wealth Network.