LEGAL CAPACITY AND CURATORSHIPS – WORLD ALZHEIMER’S MONTH
With over 50 million people worldwide living with dementia in 2020, a figure estimated to rise to 82 million by 2030, the majority of whom in low to middle income countries. The topic of mental health, impaired decision-making ability and the legal options available to those who are living with or who are caring for persons living with mental impairment in South Africa is being discussed more so now, than ever before. September is World Alzheimer’s Month and is an international effort to bring awareness to dementia and the stigma around it.
What is legal capacity?
As South Africans our human rights are enshrined in and protected by The Constitution, and more specifically The Bill of Rights. Our capacity to have rights and to exercise those rights, to make decisions, to understand and appreciate the consequences of those decisions.
Once diagnosed with dementia, Alzheimer’s disease or any other mental illness, impaired decision-making ability and diminished legal capacity become an inevitable concern that one day, you may no longer be capable of managing your own personal or property affairs.
Important to note, is that decisional capacity may not necessarily be an “all or nothing” concept, it might fluctuate. The presumption is however that all adults are competent, until the contrary is proved. Mental impairment or lack of legal capacity as a result thereof is to be proven by medical evidence.
There are various legal options available, but for purposes of this article, we will discuss some of the most common ones hereunder.
Power of Attorney:
South African law of agency dictates that a principal cannot grant an agent more powers, rights, or duties than what she herself has.
So, although a power of attorney can be a fantastic, simple, and cost effective, option for someone who is for example due to some physical circumstance or absence from the country unable to attend to signature of documents or the daily administration and management of her bank account, to grant power of attorney to an agent to do so on her behalf, this power of attorney will terminate upon the principal becoming mentally incapacitated. South Africa, unlike countries such as the USA, does not legally recognize an Enduring Power of Attorney although there has been a continuous and ever increasingly loud call for law reform in this regard.
Unfortunately, however, there appears to be a general misconception in South Africa, most often amongst parents and children, and often in good faith, that a power of attorney will endure beyond the principal (often the parent) becoming mentally incapacitated and that a power of attorney is the solution upon diagnoses of dementia or Alzheimer’s for the future care and management of property affairs of the patient / principal. Sadly, this misconception puts the agent (often the child / caregiver) at risk for performing unauthorized acts or fraud.
Secondly, we have the common law curatorship system which involves bringing a High Court application to have a curator appointed. There are three types of curators, namely curator ad litem (represents the patient during legal proceedings), curator personae (takes decisions as to the care, custody, and welfare of the patient) and curator bonis (manages the finances, property, or estate of the patient).
Before a curator may begin, she will wait to receive Letters of Curatorship from the Master of the High Court. Once received, the curator will manage the estate in accordance with the court order, Letters of Curatorship, and provisions of the Administration of Estates Act, 1965.
The application process is cumbersome, lengthy, and costly and is an option not accessible to the majority of South Africans.
Mental Health Care Act – Administrator:
Then, there is the option to apply in writing to the Master of the High Court (in whose jurisdiction the patient resides) for the appointment of an administrator in terms of the Mental Health Care Act, 2002.
The applicant is usually a next-of-kin or person with an interest in the estate of the patient and the process is a lot quicker and less expensive because although legal assistance is advisable and recommended, it is not required to bring a formal court application.
If the patient’s property value is under R200 000 or their annual income is less than R24 000 the Master may make the appointment without an investigation. However, if the patient’s property value and/or income exceed the aforesaid thresholds then the Master will order an investigation into the merits of the application, the cost of which shall be borne from the estate of the patient.
Once appointed, the administrator’s powers and duties will be almost the same as those of a curator bonis.
Lastly, an option worth discussing is the use of a special trust. In a Binding Private Ruling (BPR 306) SARS dealt with the issue of donations tax in a donation of funds to a special trust and held that in this instance no donations tax was payable upon a donation of funds to a special trust by the applicant who created the trust after having been diagnosed with early onset dementia but was still capable of contracting and making decisions.
The applicant was the primary beneficiary of the trust, and the trust purpose was to provide for her future maintenance and wellbeing in the discretion of the trustees, after she herself, because of her mental illness, would become unable do so anymore. The secondary beneficiaries of the trust, who would benefit from the trust fund in the discretion of the trustees, only after the demise of the applicant, were the applicant’s descendants.
A special trust, registered as such with SARS in terms of the Income Tax Act, enjoys certain special and favorable tax considerations which are like those applicable to individuals as opposed to those applicable to other trusts not registered as special trusts with SARS.
The South African Law Reform Commission released a report on Assisted Decision Making in December 2015 wherein it highlighted how the current legal position in South Africa fails to recognize the autonomy of the mentally incapacitated and protect them from exploitation and abuse.
The report calls for reform and contains various suggestions and furthermore, a Supported Decision-Making Bill which aims for a better, more accessible, and affordable statutory system of supported decision making in South Africa. Unfortunately, the process of legal reform is a notoriously slow one.
So, in the meantime, what can you do? Discuss those options available to you with your legal representative and fiduciary law specialist. Have the hard conversation now, so that you can spare your loved ones and yourself the risk of falling victim to the shortcomings of the current law. Take control over that which is within your reach and hopefully together, we can build a better future for yourself and all those individuals who are living with mental illness or impairment or who may one day do so.
Article by Kelly Fourie (Associate), LLB.
For more information, kindly contact Kelly at firstname.lastname@example.org or 044 601 9900.
Nothing contained in this publication is to be considered as the rendering of legal advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel. This publication is intended for educational and informational purposes only.