The queries and comments I received about last week’s article require that I write a final one on the subject of powers of attorney, especially as it relates to the elderly.
Today I address the two main questions that have been posed to me. First, does a power of attorney really come to an end when the donor of the power loses mental capacity? The concern here relates to situations where an agent has been appointed to manage the financial affairs of the donor on a continuous basis.
Two hypothetical examples illustrate the situation:
First, the donor lives overseas and he has properties tenanted to people in Barbados. The agent is given power to collect rents, to bank money, to do repairs and generally to do what the owner of the premises would do for himself if he were in Barbados.
Secondly, on similar facts, the donor may be resident in Barbados but is not very mobile and needs assistance with these tasks.
The question being asked in the above examples is whether the authority to do the tasks continues even if the donor loses mental capacity. After all, he is still alive and may need the rent monies to assist with his daily living expenses.
A lot of confusion has occurred because the donor of the power may reside in a jurisdiction where you can make enduring powers of attorney. Most developed countries have a regime that permits a power of attorney to continue after the donor loses his mental capacity. For sure, in Canada, United Kingdom and the United States, the legislation exists.
In Barbados our legal position is essentially what it was in those countries before the introduction of the legislation to permit a power of attorney to continue after the donor of the power ceased to have mental capacity.
Since an agent is essentially exercising power delegated to him by his principal, when the principal loses his capacity the agent loses his as well. Of course, an agent may not know of the loss of mental capacity, but if he is aware, his legal duty is to cease to function as agent and, where necessary, to apply or where appropriate, have another person apply under the Mental Health Act to be appointed a receiver.
The second query I received concerns the procedure that obtains under the Mental Health Act and whether it would be effective.
As I mentioned last week, the decision to appoint a receiver is based first on the fact that the “patient” has lost the capacity to manage his own affairs through “mental disorder”.
This decision must be made on medical evidence. An affidavit of a medical practitioner deposing to lack of mental capacity to manage one’s affairs will be required.
Additionally, a court will be concerned that all interested parties are notified of the proceedings, including the “patient”.
In cases where consent of interested parties can be obtained, this should be done and filed with the court.
In cases where it is known that other interested persons object to the appointment, they should be served with proceedings so they can be represented at the hearing.
Apart from the above, it is important to produce to the court evidence of the needs of the patient on a weekly or monthly basis and other special needs that can be identified at the time.
If you had been acting as agent before, an account of the income and expenditure would be helpful. In this regard, monies received on behalf of the donor of the power should be kept separate from your own.
An agency relationship is a fiduciary one and you owe certain duties to the principal as a result of this.
The court has the power to make interim orders so it can ensure that a person’s financial needs are taken care of pending its final decision on the appointment of a receiver.
Another major benefit of an application under the Mental Health Act is that the court can use its wide powers to ensure there are limits placed on monies spent and that there are periodic accounts submitted to the court with respect to the monies authorised to be spent.
There is great potential for, and much evidence of, actual financial abuse of the elderly. In jurisdictions where there is provision for enduring powers of attorney, there has been significant abuse of the powers, mainly by relatives.
In my opinion no legislation can entirely prevent the financial abuse of the elderly. Perhaps what can be done to minimise the misuse or theft of funds belonging to the elderly is to have a regime that requires reporting on a periodic basis, with sanctions for non-compliance.
Cecil McCarthy is a Queen’s Counsel. Send your letters to Everyday Law, Nation House, Fontabelle, St Michael. Send your email to cnmcc@caribsurf.com.
