By Hannah Myburgh
Life often presents situations where one must grant another person authority to act on their behalf. These scenarios may include physical incapacity due to illness, extended travel abroad, or delegating property management to an agent. A general power of attorney, as the term suggests, empowers the appointed agent to perform a broad range of legal actions on behalf of the principal. This includes opening bank accounts, entering into contracts, overseeing business affairs, and ensuring seamless management during the principal’s absence or incapacity.
In South Africa, there is no standardised form for a power of attorney, making it crucial to seek expert guidance to ensure the document accurately reflects the powers you intend to grant. The power of attorney must identify both the principal and the agent and explicitly outline the scope of authority conferred upon the agent. Notably, for banking purposes, most South African banks do not accept general powers of attorney. Instead, they require the principal to sign a specific power of attorney tailored by the bank, ensuring compliance with their internal policies and procedures.
The need to grant power of attorney may arise for various reasons. Elderly individuals, particularly those physically incapacitated, often authorise their adult children to manage their affairs. Similarly, frequent travellers or those working abroad for extended periods may find it practical to delegate authority to a local attorney or financial advisor. This arrangement ensures that important matters, such as financial or legal affairs, are handled efficiently in their absence, providing peace of mind and continuity in managing their personal or professional responsibilities.
Emigration is a lengthy and complex process, and emigrants who have departed but left local affairs unresolved may benefit from granting a local power of attorney to expedite matters. However, it is important to note that a power of attorney signed outside South Africa typically requires authentication by a notary public to be considered valid within the country. This ensures compliance with local legal requirements and facilitates efficient management of outstanding matters.
Important to note is that a power of attorney automatically falls away in circumstances where the principal loses mental capacity on the basis that an agent is only authorised to do that which the principal is capable of doing. If the principal lacks contractual capacity on the basis that he no longer has the mental capacity to appreciate the consequences of his actions, then the mandate automatically falls away.
Caring for parents diagnosed with dementia or Alzheimer’s can be particularly challenging, as it often leaves caregivers unable to manage their parents’ financial affairs when it is most critical. While legal alternatives exist, such as appointing a curator bonis or administrator or establishing a special trust, these options can be cumbersome and costly. This is especially problematic when the estate is modest, and the primary need is simply assistance with routine financial management, creating frustration during an already difficult time.
When a power of attorney is terminated for any reason, the agent's legal authority to act on the principal's behalf ceases. While the agent is properly authorized under a valid power of attorney, they are legally protected from liability for actions taken within the scope of their mandate. However, if the agent is not duly authorised—such as when the principal loses mental capacity—the agent may be held liable by third parties for breach of authority, while the principal is absolved of any legal responsibility.
If you plan to grant someone power of attorney over your affairs, it is crucial to seek professional advice due to the risks involved. Additionally, all legal requirements for a valid power of attorney must be met, including confirming your full contractual capacity at the time of signing, to ensure the document’s enforceability and safeguard your interests.
* Myburgh is a financial planner at Crue Invest (Pty) Ltd.
PERSONAL FINANCE