Understanding a Power of Attorney: A Guide for 60 Plussers
As we grow older, maintaining a balance between independence and preparing for the future becomes increasingly important. For those over 60, one effective way to ensure your wishes are respected in instances where you need assistance is by obtaining a Power of Attorney (POA). This legal tool can help prevent future complications and provide peace of mind that someone you trust can act on your behalf in situations where you might not be able to.
What is a Power of Attorney?
In terms of our law, no one may act on behalf of another person without proper authorization. A Power of Attorney is a legal document that allows one person, known as the principal, to authorize another person, known as the agent or attorney, to act on their behalf. The agent is obligated to act in the best interests of the principal and within the limits of the authority granted.
When Might You Need a Power of Attorney, and Who Can Be an Agent?
There are many situations where a Power of Attorney becomes useful. Whether due to aging, health issues, or practical concerns, a principal may need someone to manage their personal, financial, or legal affairs.
Importantly, the principal must have full mental capacity when signing the POA. If someone has already been declared mentally incapable, they cannot grant a POA. Likewise, the agent must have contractual capacity, meaning they are legally capable of entering into agreements on behalf of the principal.
Although the term “attorney” is often used, the agent does not have to be a lawyer. Any competent, trustworthy adult over the age of 18 can serve as an agent. For example, an elderly parent might choose a child to manage their affairs. The key is selecting someone reliable and capable of making sound financial and legal decisions, acting in your best interests.
Types of Power of Attorney
There are two main types of POAs, each serving different purposes:
- General Power of Attorney
- Grants the agent broad authority to act on behalf of the principal.
- Covers a wide range of matters, including property transactions, managing finances, entering into and signing contracts, handling tax matters, managing insurance policies, managing and operating bank accounts or settling debts.
- Can be revoked by the principal at any time, as long as they remain mentally competent.
- Becomes invalid if the principal becomes incapacitated (e.g., due to illness or disability).
- Often used when the principal is unavailable for extended periods, such as while traveling abroad, or undergoing rehabilitation.
- Special Power of Attorney
- Grants authority for specific tasks or situations.
- Limits the agent’s authority to one or more clearly defined matters, such as selling a specific property, handling a single financial transaction, signing documents relating to a specific event or representing the principal in court.
- Time-bound or task-oriented, lasting only until the specific task is completed or for a set period.
- Like the general POA, it can be revoked if the principal is declared mentally incapacitated.
Formalities and Legal Requirements
The POA must be in writing. While oral agreements may hold some informal influence, they do not carry legal weight. Specific purposes may have additional requirements. For instance, under South Africa’s Deeds Registries Act, a POA for deeds registry transactions must be signed in the presence of two competent witnesses or a magistrate, justice of the peace, commissioner of oaths, or notary public. Additionally, some POA’s intended for use outside South Africa require notarization and authentication.
Risks of Abuse
While a POA is a practical tool, it carries risks if misused. Potential abuses include:
- Financial mismanagement or fraud by the agent.
- Unauthorized decisions outside the agent’s scope of authority.
- Neglect of duties or coercion of the principal.
To minimize these risks, it is vital to carefully select an agent you trust.
Duration of a Power of Attorney
In South Africa, and as stated above, a POA remains valid only while the principal is mentally capable of understanding the concept and consequences of the arrangement. If the principal becomes mentally incapacitated, the POA is automatically invalidated. In such cases, guardianship or administration may be required to manage the principal’s affairs.
Choosing a Trustworthy Agent
Selecting the right person to act as your agent is crucial. Consider the following qualities:
- Trustworthiness and proven integrity.
- Understanding of legal and financial obligations.
- Willingness and availability to fulfil the role.
- Lack of potential conflicts of interest.
- Accountability and transparency, with mechanisms for regular updates.
Conclusion
A Power of Attorney is a valuable tool for 60 plussers planning ahead and delegating authority. By carefully choosing a reliable agent and understanding the scope and limitations of a POA, you can safeguard your interests and enjoy peace of mind in your golden years. To learn more about a Power of Attorney and explore your options, consider consulting with our experienced legal team. Our team can guide you through the process and ensure your wishes are clearly defined and properly executed, providing you with the protection you need.
FOR ENQUIRIES:
Meyer de Waal
MDW INC meyer@mdwinc.co.za
021 461 0065 & 083 653 6975
Jan Pretorius
jan@perpetualservices.co.za
082 889 4000
Daniela Papa
daniela@mdwinc.co.za
021 461 0065 & 083 783 8494
Topic: The Power of Attorney – not necessarily what you think
