"Dementia is the plague of our time, the disease of the century" (Unattributed)
Dementia is a widespread medical condition that affects people of all ages but particularly the elderly, and includes conditions like Alzheimer's. One of the most significant challenges of dementia is the loss of mental capacity, making it difficult for individuals to make crucial decisions, including those related to their legal affairs, finances and care. This can be particularly problematic when family members are unprepared or unaware of the practical and legal implications.
Beware the Power of Attorney myth
One common misconception is that a signed Power of Attorney (PoA) can authorise a family member to take control of the individual's financial affairs in perpetuity. In fact, a PoA is only valid as long as the person who granted it maintains "legal capacity", in other words an understanding of its implications. If and when dementia kicks in, the PoA automatically becomes invalid.
Enduring Powers of Attorney, which continue even after someone loses legal capacity, are valid in some countries but are unfortunately not yet recognised in South Africa.
So, what are your legal alternatives for dealing with dementia?
You will typically have three legal options available -
1. Curatorship: This involves appointing a curator bonis through the High Court order to manage the financial affairs of the person with dementia (a curator ad personam may in rare cases also be needed to manage the person's personal affairs). This process can be complex and expensive, but in some cases it may be the only viable option available.
2. Administration: Similar to curatorship but less complex, less expensive, and quicker, this involves an application to the Master of the High Court for the appointment of an Administrator.
It is only available when your family member is a "mentally ill person or person with severe or profound intellectual disability", which excludes cases of purely physical frailty or disability, and suggests that in cases of mild dementia or mild cognitive impairment only curatorship is an option - but take legal advice on your specific circumstances. An extra element of cost and delay applies in larger estates, in that the Master must commission an investigation into any application where the assets involved are over R200,000 and the annual income is over R24,000 p.a.
3. Special Trust: An alternative option is to consider a trust or special trust, which can be established if your family member suffers from an early onset of dementia but is still lucid and has legal capacity. All trusts have advantages in that they allow individuals the freedom to choose upfront who the trustees will be and what powers and duties they will have, whilst special trusts come with significant tax benefits over ordinary trusts. Individualised professional advice is essential here.
Understanding the available legal avenues can help you navigate this difficult journey, and with proper planning, personalised legal advice and early action, you can ensure that your family member's legal and financial well-being is protected at all times.