When a loved one is diagnosed with Alzheimer’s disease, it is an extremely upsetting time for the family. The stress of dealing with the disease is made worse when he or she loses the majority of their mental capacity, without having taken the necessary administrative and financial steps to safeguard him or herself or the family members that might be affected by the condition.
In terms of contracts, investments and finances, you lose contractual capacity as soon as you lose the appreciation of what you are signing. This adds unnecessary pressure on the primary caretaker and makes managing finances and administration extremely difficult – particularly when the one diagnosed with Alzheimer’s has always been mainly in control of the household finances.
Here are some of the most common questions asked of Mella Fiduciary Services in this regard:
Will I be able to continue acting as under General Power of Attorney over my spouse’s affairs once he/she has lost his/her mental capacity?
No. A Power of Attorney is invalid once the person who signed it over is no longer fully capable of appreciating it. For this reason, the Power of Attorney is only of use in the early stages. In many instances, people do continue to act under such Power and very often without consequence. However, if any actions or contracts are entered into after the point when the grantor of the Power is no longer capable of appreciating the power granted, there is a danger that such actions or contracts would be set aside if challenged by a third party.
The South African Law does not yet provide for what is referred to in some jurisdictions in the world as an “Enduring Power of Attorney”. If this concept is introduced into our law, you would in that instance be able to continue to act under such Power.
Will I be able to withdraw funds or make changes to my spouse’s investment or bank accounts if he/she is of diminished capacity?
No. As the Power of Attorney has fallen away, the next step would be for you to make an application to the High Court to appoint a Curator to take over his/her financial and administrative affairs.
What is the difference between “Administration” and “Curatorship”?
- Administration: Taking over the “administration” of one’s affairs applies to persons with capital assets of less than R200,000 and income of up to R24,000 per annum. This is a relatively simple process and does not require a High Court application. Should one have assets and income over this amount, the Curatorship application will need to be considered.
- Curatorship: This refers to a situation where an administrator, or Curator, is appointed by the High Court to take over and manage another’s financial and administrative affairs. This is done by way of an application to the High Court, which sets out a three stage process:
- To appoint a Curator Ad Litem (one who managers court proceedings on behalf of the patient whilst the application for curator Bonis and/ Personae is in process);
- To declare the patient of unsound mind and incapable of managing his/her affairs;
- To thereafter appoint a Curator Bonis or Curator Personae or both.
There are two forms of Curatorship and one or both may be appointed:
- The Curator Bonis administrates the person’s property, including finances
- The Curator Personae takes personal decisions for the person, ie suitable accommodation for the patient or providing consent for an operation.
These applications can be time consuming and costly (anywhere from R40,000) and require submissions from two medical practitioners, one of whom must be a psychiatrist.
Can I be appointed as a Curator Bonis over my spouse’s life?
It is highly unlikely. The Master of High Court takes this very seriously and you can understand why – can you imagine the ramifications of removing somebody’s contractual status? It is a massive responsibility and can be open to abuse. It is therefore necessary to follow a stringent process to safeguard against abuse. The High Courts will generally only appoint an attorney who has significant experience in this type of role and who has a proven track record with the Master relating to other Curatorships.
Prevention is better than cure
There are steps that can be put in place before mental capacity is diminished in order to avoid this costly and time onerous exercise.
Every person’s situation is different and can depend on various factors. Ideally, as soon as you are aware that there is a problem with your or your loved one’s health, you should contact your Financial Adviser. They will assess the case and advise you how to remedy the situation, taking factors such as tax and estate duty implications into consideration.
As with all things financial, planning ahead is always preferable and the most likely way to avoid stress and nasty surprises.