A Power of Attorney, as the name implies, is a written authorisation for an appointed person to represent or act on another’s behalf with regard to his/her private affairs, business, medical, health or other legal matters. Anyone can be appointed to act on your behalf provided they have the legal capacity to do so. It is not about choosing the person closest to you, but rather the one who can represent your wishes the best and won’t abuse the powers granted to him or her. The key is that you trust that person implicitly.
Establishing the purpose of the POA and then who would be best to act on your behalf is a good starting point, advises PJ Veldhuizen, MD of boutique commercial law firm Gillan & Veldhuizen Inc. “It is fundamental to clearly define and stipulate the precise ‘powers’ the person, Agent, will have in order to carry out the various legal acts on behalf of you, the Principal,” he states.
There are different types of POAs and you can set up more than one of them depending on what your needs are; however, this may be confusing and you are advised to revoke any previous POAs when preparing a new one.
General Power of Attorney
A General POA is an effective tool if the Principal will be out of the country and needs someone to handle certain matters, or when the Principal is not physically capable of managing personal affairs. They are also often used when selling property, collecting debts, handling certain business transactions or when you cannot oversee certain matters due to other commitments.
Special Power of Attorney
A Special POA serves a specific purpose in that it grants very limited and concise powers to the Agent. In other words, it relates to a specific act or acts and nothing else – these powers are controlled according to the Principal’s preferences. A Special POA is often used when the Principal cannot handle certain affairs due to other obligations which render his or her physical presence impossible.
Usually a POA is valid until it is replaced or revoked but you can stipulate a specific termination date if you so desire, after which the POA would then become invalid.
Here’s where it gets a bit tricky, though. It is important to note that South Africa does not have a Power of Attorney that is ‘enduring’. What that means is that for a POA to remain valid the Principal must be of sound mind and alive. “The minute the Principal’s mental capacity diminishes below the legal limit or in case of death the POA falls away and is no longer valid,” explains Veldhuizen. A Power of Attorney in this instance is of no value to someone who fears a weakening mental capacity or that it may be weakened in the future, and who wants someone to act on their behalf if and when that situation arises.
An option would be to apply for a court-appointed administrator or a curator, depending on the circumstances. But, Veldhuizen cautions, this can be costly, time-consuming and the process makes the person’s state of health and financial affairs public. “Another alternative would be to set up a family trust, but this also takes time and could be very complex,” he adds.
Abuse of power
Should the Principal or any interested party suspect wrong-doing, misconduct or abuse of power on the part of the Agent, they must act quickly and seek legal advice; the Principal should also revoke the POA immediately. As in any agency relationship the Agent can be called upon to account for all action taken in terms of the POA and the Agent is advised to keep full records of all actions taken and to retain these until called upon to to provide them to the Principal.
A Power of Attorney is not just another legal document but an all-powerful tool and can be extremely dangerous in the wrong hands. Seeking the assistance of an attorney is highly recommended when drawing up a POA to safeguard against and make provision for any potential misuse or abuse.