Most people turn to the ever popular Power of Attorney to empower a person (“agent”) to act on their (“principal”) behalf. The Power of Attorney not only authorises the agent to act on the principal’s behalf but provides security to third parties that the principal will be bound by the acts performed by the agent.
The problem is, the very reason one considers a Power of Attorney, may very well render the Power of Attorney ineffective. A Power of Attorney is valid for as long as the principal has capacity to act – in other words “the agent cannot do that which the principal himself has no capacity to do”. In South Africa the Power of Attorney will cease to be effective upon the principal passing away, becoming incapacitated or insolvent.
The actions performed by virtue of a Power of Attorney on behalf of a principal who has become mentally incapable may not be recognised. In this instance an application must be brought in the High Court for the appointment of a curator bonis or curator ad personam to manage such principal’s affairs.
Countries such as the UK, New Zealand and Canada, to name a few, have introduced an enduring Power of Attorney which will remain in force despite the incapacity of the principal. South Africa has yet to adopt this into legislation.
Other options to explore to cater for the impending mental disability of the principal may be the creation and registration of a special trust – which option should be exercised through the correct professionals equipped to set up such a trust in the best interests and in the most efficient way for the principal turned beneficiary.