When your loved ones are no longer able to manage their own finances, a general or special power of attorney will not entitle you to continue to manage their finances on their behalf. The reality is that, under South African law, if your loved one is no longer able to make his/her own decisions, the general or special power of attorney will fall away.
Unlike some other jurisdictions, South African law does not provide for what is known as an ‘enduring power of attorney’ which continues after the individual who granted it has become incapable of acting legally. Under our law, your can never have more rights on someone else’s behalf than the person who granted the rights to you, so if your loved one is no longer of sound mind and they cannot act from a legal point of view, their power of attorney to you will become void and will fall away.
This clearly leaves those looking after a loved one who has lost mental capacity in a predicament, if funds needs to be accessed to provide for the individual’s personal care.
Alternative solutions:
One potential solution is to apply for the incapacitated individual to be placed under curatorship or administration. The process of applying for curatorship in terms of Rule 57 of the High Court Rules is usually cumbersome and long, and it can be very costly.
An incapacitated person can be looked after from a financial point of view by the trustees of a trust when he/she is a beneficiary of that trust. The trustees remain legally capable to act on that person’s behalf in terms of the trust deed, even if that person cannot do so himself/herself any more. This may prove to be practically the best solution in these circumstances. A trust of which an incapacitated person is the only beneficiary of while he/she is alive, may be registered as a special trust to enjoy lower rates of taxes than most other trusts.
If you would like to have a conversation about the above or need further advice with regard thereto, please contact marteen@fidelisvox.co.za or tamryn@fidelisvox.co.za.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)