USING A GENERAL OR SPECIAL POWER OF ATTORNEY
I am often asked by family members to advise on the use of a Special or General Power of Attorney in the case where there is an elderly relative or spouse who has signed such a document and is now mentally incapacitated.
The short answer is that our law of agency specifies that an agent cannot do that which his principal has no capacity to do himself. As soon as a person loses mental capacity the Power of Attorney which they signed during a period of full mental capacity is automatically revoked and is of no further force and effect.
I am sometimes confronted with outrage when I deliver this news! The agent feels that their principal gave them the capacity to act on their behalf whilst they were in possession of their full mental faculties and now, they are faced with the problem of how to deal with bank accounts, transact shares or immovable property and the like.
There is a solution. But this solution is really only worthwhile if the principal’s estate is quite substantial. The solution is to make an application to court for the appointment of a curator. First of all, any interested party (usually a family member) will approach the court to have a Curator ad Litem appointed. This curator then interviews the incapacitated person and also gets input from doctors and psychiatrists and reports back to the court. In the event that the court accepts the Curator ad Litem’s report they will then appoint a Curator Bonis who will then look after the affairs of the person so curated.
It does happen that many people continue to rely on the Power of Attorney that has already been signed. They run the risk, however, of having other family members suing them for failure to properly administer that person’s affairs and perhaps of unduly benefiting themselves.
If the incapacitated person’s estate is small, then the curator bonis option is too expensive and other ways of dealing with that person’s affairs will have to be found.
A BIG WARNING though: Do be careful if you decide to ignore the fact that the Power of Attorney has lapsed. Many agents have unwittingly exposed themselves to personal liability for any losses which may be incurred by a third party as a result of transactions concluded through the void power of attorney.
We do not have the benefit of what is known as an Enduring Power of Attorney which some countries do allow. The South African Law Commission was tasked with examining this gap in our law in 2004, but nothing has yet come of their recommendations.
Contact Mike Forsyth at MGF Attorneys, Hilton, for assistance with your Power of Attorney. Call 033 343 1100 / 082 800 5257, he will be glad to assist you.
About the author: Mike is a long time Hilton resident and is an Attorney and Conveyancer specialising in Conveyancing, Contracts, Wills and Estate Planning.
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