With the advancement of medical science, and early diagnosis of degenerative illnesses such as dementia and Alzheimer’s, families are becoming better equipped to put mechanisms in place for the eventuality where their loved ones will no longer be able to handle their own affairs.
A popular mechanism is for a principal to grant a power of attorney to an agent, granting him the authority to complete a certain act or acts on his behalf. The danger with this mechanism, is that many people are under the erroneous impression that a power of attorney remains effective even after the principal becomes mentally incapacitated.
A power of attorney that does not terminate on the subsequent decision-making impairment of the principal, is called an enduring (durable or continuing) power of attorney. Unfortunately, in South Africa, an enduring power of attorney is not legally recognised. Despite recommendations from the South African Law Commission to introduce this as far back as 1988, the South African legal landscape has not developed to incorporate this concept. In this respect, South Africa is regrettably out of step with comparable legal systems.
What are the requirements of a valid power of attorney and when does it terminate?
The requirements for a valid power of attorney are the following:
- Legal Capacity: The principal must have contractual capacity when granting the power of attorney or must be properly assisted in the case of a minor. The agent must be legally competent to act as an agent.
- Possibility: The act or acts authorised by the power of attorney must be physically possible.
- Lawfulness: Only lawful acts can be made the object of a power of attorney.
- Formalities: If there are any prescribed formalities (e.g., in the case of a power of attorney to pass transfer of property), these formalities must be complied with.
- Suspensive conditions: Any suspensive condition to which execution of the power of attorney has been made subject must be fulfilled.
The power of attorney terminates in the following circumstances:
- Completion of the act or lapse of time: If authority was granted to perform a specific act, in the case of a special power of attorney, the authority lapses once the act has been completed. Or if authority was granted for a specified period only, the authority will lapse with the expiry of such period.
- Death: If the principal or agent dies, the power of attorney will lapse.
- Change of status: If the principal or agent’s legal status changes, then the power of attorney will lapse. Change in status refers to where one of the parties becomes insolvent or mentally incapacitated. Whether the mental capacity of either party has been impaired is a factual question, decided on a case-by-case basis. The onus of proving that an act is vitiated due to lack of mental capacity normally rests on the party alleging it.
- Revocation or renunciation: The power of attorney will lapse if the principal revokes it or if the agent renounces his duties.
What alternative options are available in the case of individuals with impaired decision-making capabilities?
The National Health Act 61 of 2003 makes provision for limited instances where you can consent to medical treatment on behalf of someone else who is legally incapable of consenting. This person can either be mandated in writing by the patient, be authorised in terms of any law or Court order or be the spouse, partner, or close relatives of the patient.
The Social Assistance Act 13 of 2004 makes provision for the South African Social Assistance Agency to nominate a person or welfare organisation to receive a social grant on behalf of an incapacitated individual.
The Older Persons Act 13 of 2006 makes provision for surrogate consent to be given on behalf of an incapacitated older person, to be admitted to a facility providing accommodation and 24-hour service to older persons.
Mental Health Care Act 17 of 2002
The Master of the High Court may appoint an administrator to care for and administer the property of a person with mental illness or severe or profound intellectual disability who is incapable of doing so himself. This does not include the management of the patient’s personal welfare.
The value of the patient’s assets must be below R200 000.00, or his income must be below R24 000.00 per annum. However, the Master has the discretion to appoint an administrator for an estate that exceeds these prescribed values, but in these cases the Master will first appoint an investigator, whose cost must be carried by the estate of the patient or the applicant.
Curatorship
Our common law provides that any interested party can make application to the High Court to appoint a curator on behalf of someone who is incapable of managing is own affairs.
The three types of curators are:
- A Curator personae is appointed to supplement a person’s lack of capacity relating to his personal welfare. The curator can either be appointed for general or specific purposes, e.g., to grant consent for a medical operation.
- A Curator bonis is appointed to supplement a person’s lack of capacity to contract. A curator bonis will take care of a person’s property and manage his financial affairs.
- A Curator ad litem is appointed to conduct civil legal proceedings on behalf of a person. A curator ad litem will first be appointed to assist a person in subsequently appointing a curator bonis or curator personae. They have no power over the person or property of the person whom they are appointed to represent, and their authority extends no further than the proceedings to which the appointment relates.
It is important to note that placing someone under curatorship does not in itself terminate that person’s active legal capacity. If at a given moment, the person is mentally and physically capable of doing so, they may enter into transactions without the assistance of their curator. The person’s capacity to do so will be determined by the facts at hand.
Discretionary Trusts
Registering a discretionary trust can be a useful tool to sidestep the complexities of appointing a curator or administrator. The individual can establish a trust while they are still mentally capable and nominate trustees to manage their affairs for their benefit. It is however important to consider other factors such as costs and taxes before embarking on this route.
If you are concerned about the validity of a power of attorney in your possession or want to know more about the various options available in assisting loved ones with impaired decision-making capabilities, please do not hesitate to contact us.
Sources
South African Law Commission Assisted Decision Making Report, December 2015
Mental Health Care Act 17 of 2002 and its Regulations
National Health Act 61 of 2003
Social Assistance Act 13 of 2004
Older Persons Act 13 of 2006
Written By: Anri van Niekerk, Candidate Legal Practitioner
Litigation | Claremont