Power of Attorney 101 – Taking Control When You Can’t Be There
Life can be unpredictable. Illness, travel, or simply the demands of a busy schedule can make managing your financial and legal affairs challenging. A Power of Attorney (POA) offers a solution, allowing you to appoint a trusted individual, called an agent, to act on your behalf.
Why would you need to grant Power of Attorney?
A Power of Attorney (POA) provides a safety net for various life circumstances. It allows you to appoint a trusted individual to handle your financial and legal affairs when you’re unable to do so yourself.
For instance, if illness or incapacity strikes, a POA ensures your affairs are managed smoothly without unnecessary stress on your loved ones. It can also prove invaluable for frequent travellers who need someone to handle routine matters while they’re away.
Beyond these practical reasons, a POA offers peace of mind, knowing that your affairs are secure and that a designated person can act in your interest when required.
Types of Power of Attorney
South African law recognises two main types of POA:
- General Power of Attorney: This grants broad authority to the agent, allowing them to handle a wide range of matters on your behalf, such as managing bank accounts, selling property, and dealing with tax issues.
- Special Power of Attorney: This limits the agent’s authority to specific tasks, such as signing a particular contract or selling a specific asset on your behalf.
What can your agent do?
The specific powers granted to the agent depend on the type of POA. However, some common actions an agent might perform on your behalf include:
- Managing bank accounts and investments
- Handling property transactions, buying and selling assets
- Overseeing tax matters
- Signing contracts and legal documents
- Conducting business transactions
What you need to know about creating a valid Power of Attorney
For a POA to be valid in South Africa, it must meet certain requirements:
- Written document: The POA must be in writing. Verbal agreements are generally not enforceable.
- Clear and specific grant of authority: The document should clearly outline the powers granted to the agent. Vague or ambiguous language can lead to disputes.
- Signature of principal: The principal must sign the POA to validate the document.
- Mental capacity: Both the principal and agent must be of sound mind and understand the implications of the document. This is particularly critical as mental capacity can fluctuate.
- Witnesses: While not always legally required, having two competent witnesses sign the document adds credibility and can prevent disputes.
- Notarisation: While optional, notarisation can provide additional assurance of the document’s authenticity, preventing disputes.
Termination of Power of Attorney
A General POA is automatically terminated if the principal becomes mentally incapacitated, insolvent, or passes away. The principal can also revoke it at any time. A Special POA ends when the specific task is completed, the predetermined period expires, or the principal revokes it.
Additional factors to consider when creating a POA
- Enduring Power of Attorney: This is a specific type of POA designed to remain valid even if the principal becomes mentally incapacitated. It requires specific wording and often involves additional legal formalities.
- Registration: While not mandatory for the validity of the POA, registering it with the Master of the High Court or the Deeds Office can provide public notice of the agent’s authority and protect the agent from potential liability.
- Duration: The POA should specify its duration. It can be for a specific period, until a certain event occurs, or until revoked.
- Revocation: The principal has the right to revoke the POA at any time. The method of revocation should be clearly outlined in the document.
Planning for the future – putting a POA into play
A Power of Attorney can be a valuable tool for managing your affairs effectively. By understanding the different types and legal requirements, you can ensure your agent has the authority to act on your behalf when needed. For assistance drafting a POA tailored to your specific needs, consult with Hammond Pole today.
Blog by: Katlego Mthembu
For more information, please contact Hammond Pole attorneys:
Katlego Mthembu – KatlegoM@hammondpole.co.za