Many spouses and registered partners assume that if one partner becomes incapacitated, the other partner automatically has power of representation. This is only partially true. According to the law, only the ordinary management of assets is covered. If a property is to be sold, whether because of an impending move to a care home or due to a need for liquidity, this is already classified as extraordinary asset management and the consent of the adult protection authority must be obtained.
Many parents also feel secure in the knowledge that if they become incapacitated, their descendants will certainly be appointed as their authorised representatives by the Child and Adult Protection Authority (KESB). However, we have received the feedback from several clients that this is not the case and that, despite the existence of descendants, an external official guardian can get appointed.
A large proportion of our customers wish to be cared for at home for as long as possible in the event of incapacity. Some want 24-hour care. Such care solutions can be very costly. It is therefore important that this arrangement is explicitly stated in the advance care directive. This can prevent subsequent discussions between the care representative and the KESB regarding costs.
When a lasting power of attorney comes into effect, it is validated by the KESB and a corresponding document is handed over to the attorney. This document is presented to authorities, banks and third parties and authorises the attorney to act on behalf of the person who lacks legal capacity.
If the document is presented to the bank, the bank grants the representative the right to sign. If the bank feels that a payment represents a conflict of interest, it can refuse to make the payment. In our experience, banks do not always cooperate in such cases.
If the person who is unable to act was the head of the family and bore financial responsibility for the family, the representative under the advance care directive generally has the same duties and powers. However, to avoid queries from banks regarding payments relating to general family maintenance, it is advisable to include explicit provisions to this effect in the advance care directive.
A lasting power of attorney always covers issues such as the conclusion of a care home contract by the attorney and the clearance of the original residential property. But what if a property is to be replaced by a new property in the future? And what if the descendants are named as agents in the advance directive and are also to take over the construction of the new investment property? In such situations, it is essential to include detailed instructions in the advance directive. If this is not done, there is a risk that the agent's powers will lapse by law because of a conflict of interest.
