The Care Power of Attorney: Who, What and, Most Importantly, When?

Who will take care of your financial and personal affairs if you are no longer able to do so yourself? Through a care power of attorney, you can already decide today who may assist you in the future and which decisions that person will be authorised to make on your behalf. We often like to plan for the future, yet we do not always consider the possibility that one day we may no longer be able to manage our affairs independently. Ageing, illness or an accident may make it difficult to pay bills, manage property or make important financial decisions. A care power of attorney allows you to anticipate such circumstances. You decide who you entrust with this responsibility and which powers that person will receive. But how does a care power of attorney work in practice, and when is the best time to put one in place?

What is a Care Power of Attorney?

A care power of attorney enables you to grant one or more persons, referred to as attorneys-in-fact or agents, the authority to perform certain acts in your name and on your behalf.

You determine the scope of those powers yourself. For example, you may authorise an agent to manage your bank accounts, pay invoices, collect rental income or make certain decisions regarding your real estate assets. To the extent permitted by law, you may also regulate certain aspects of your personal affairs.

You may furthermore include specific conditions and instructions. For instance, you may stipulate that your home may be sold if the proceeds are required to cover your future care expenses.

A care power of attorney therefore allows you to retain control over how you will be represented in the future.

How Does a Care Power of Attorney Work?

You may determine when the care power of attorney will take effect: immediately upon its execution or only when certain conditions are met, for example when you are no longer capable of adequately managing your own affairs.

If you wish the care power of attorney to remain effective in the event of incapacity, it must be registered in due time in the Central Register of Mandate Agreements through a notary.

Professional guidance is strongly recommended. Proper drafting is essential, particularly if you own real estate, intend to make gifts, or wish to take into account your marital situation, children or future estate planning objectives.

A care power of attorney does not, however, grant unlimited discretion to the agent. The powers conferred and the instructions contained in the mandate must be respected. If the arrangement fails to provide adequate protection or if mismanagement occurs, the Justice of the Peace may intervene.

When Should a Care Power of Attorney Be Put in Place?

The most important rule is simple: establish your care power of attorney while you are still capable of making decisions independently and with full understanding.

There is no need to wait until you are older or facing health concerns. Even if you are currently in good health, an accident or unexpected illness may suddenly leave you unable to manage your own affairs.

Once you have become legally incapable, you can no longer validly execute a new care power of attorney. It is therefore prudent to consider, well in advance, whom you trust and which arrangements you wish to put in place.

What Happens If I Become Incapacitated Without a Care Power of Attorney?

If you have not executed a care power of attorney and are no longer able to manage your own affairs, the Justice of the Peace may appoint a judicial administrator. Such an appointment may be made at the request of an interested party or, where legally permitted, on the initiative of the Justice of the Peace.

The judicial administrator will be tasked with managing your assets and, where necessary, representing you in relation to certain legal acts. Depending on the circumstances, the Justice of the Peace may also appoint an administrator for specific aspects of your personal affairs. The court determines the scope of the protection required and the powers granted to the administrator.

Although judicial administration provides important protection, it involves court proceedings and additional formalities. Moreover, it is the Justice of the Peace who determines the necessary protection and appoints the administrator. Consequently, you retain less control over the process than if you had previously established a care power of attorney.

As a matter of principle, the law gives priority to extra-judicial protection measures, such as a care power of attorney, where such measures provide sufficient protection. A judicial protection measure may only be imposed where necessary and to the extent that the existing protection is inadequate. A care power of attorney therefore enables you to determine in advance whom you trust and how your interests will be managed. In doing so, you retain the greatest possible degree of control over your personal affairs and assets.

How Can Fairway Help You?

A care power of attorney is more than a practical authorisation. It can play a key role in your estate and wealth planning and should be tailored to your personal circumstances and future objectives.

At Fairway, we help you make informed decisions, ensure that your wishes are properly documented from a legal perspective, and take into account the implications for your assets and your family.

Would you like to establish a care power of attorney or have an existing one reviewed? Please feel free to contact one of our specialists in inheritance law and wealth planning.