Is there any power behind a Power of Attorney in South Africa?

Many of us will one day find ourselves in a situation where we or our loved ones are temporarily unable to manage some or all our affairs, for a whole host of reasons. When this happens, you might want to grant a trusted family member, close friend, attorney or financial adviser the authority to do so on your behalf.

Having a power of attorney in place can give you peace of mind and ensure that your affairs are properly managed. However, as we explain below, in certain circumstances this may give you a false sense of security.

In this article, we will explain when it makes sense to have a power of attorney, how to prepare it and when it would no longer be valid.

In South Africa, it's against the law for someone to act on behalf of another person without authorisation to do so. This authorisation usually comes in the form of a legal document, called a power of attorney (POA). The POA gives the chosen person, known as the agent, the legal power to make decisions and take actions on behalf of another person, known as the principal. The POA outlines the agent's powers and shows that they have the intention to make binding agreements and decisions on behalf of the principal. Importantly, for a POA to be valid, the principal must have the legal capacity to sign it.

There are two types of POAs in South Africa. A general POA allows the agent to do a range of specific things on behalf of the principal, and it can either have a set period of validity or only end when the principal dies, becomes insolvent or loses mental capacity. A special POA, on the other hand, limits the agent's powers to a specific act identified by the principal. Once that act is done, the POA is no longer valid.

So when does it make sense to have a POA? There are a few reasons why you might want to have one:

• If you're moving away from South Africa and need someone to handle your affairs here, a POA can make things simpler. Just remember that if you sign a POA outside of South Africa to be used here, it needs to be done in front of a notary public and might need additional authentication, depending on where it was signed.
• If you're going to be out of the country for a long time, a POA can let someone with legal or financial expertise make decisions and handle things on your behalf.
• If you need help managing your affairs or making decisions (in general), a POA can give someone the authority to do that for you.

It’s important to remember that the principal can cancel the POA at any time and it automatically ends if the principal dies, becomes insolvent, or loses mental capacity. If a POA comes to an end, the agent can no longer act on behalf of the principal. If they do, they might be personally responsible for any damages because they no longer have legal authority to act.

When a POA is no longer valid

Many people incorrectly think that they can put a POA in place so that when they are no longer compos mentis (i.e., of sound mind), their appointed agent can continue to manage their affairs. Unfortunately, this is not the case. South African law doesn't have a provision for an enduring POA, meaning that the POA no longer stays valid if the principal were to pass away or become mentally incapacitated. If someone can't make their own decisions anymore, due to a decline in mental capacity, the POA is no longer valid. In that case, you might need to take other legal steps. The person might need to be put under curatorship or administration. This is currently a big gap in South African legislation.

If you're worried about your own or someone's mental capacity and their ability to make decisions and take care of themselves, you would need to follow a process to appoint a curator. This matter is taken very seriously since it affects a person’s status and involves a High Court application. Appointing a curator can be a complex and time-consuming process. It involves legal proceedings and assessments to determine if someone needs a curator and the delays in appointing one can put the incapacitated person at risk and expose them to harm or exploitation. Another issue is the potential abuse of power by curators when there is insufficient oversight or accountability.

If all the requirements are met, the court might appoint a curator bonis (this type of curatorship involves the managing and safeguarding of the financial resources of the incapacitated person) or a curator ad personam (to handle personal affairs like medical / healthcare decisions and living arrangements).

The Master of the High Court can also appoint an administrator under the Mental Health Care Act No. 18 of 2002. This is a simpler and less expensive alternative to curatorship, but it's only available if the person has been diagnosed with a mental illness or severe/profound intellectual disability. It's also only for smaller estates with assets up to R200,000 and annual income up to R24,000.

It is for these reasons that a trust may be a better solution and an effective estate planning tool. This allows you to get your affairs in order while you're still able to. The trustees of the trust can manage the financial affairs of the trust and provide support for you, but remember to think about the costs, taxes, and other factors before making that decision.

Even though POAs are useful for managing your affairs, they can't help if you can't manage your affairs anymore because of conditions like advanced dementia or Alzheimer's disease. It's important to include plans for managing your affairs in case of mental incapacity. That way, you can make sure there are appropriate solutions in place.

And don't forget to keep your will and beneficiary nominations up to date. If you become mentally incapacitated, you won't be able to update or sign a new will or make changes to beneficiary nominations.

Although information has been obtained from sources believed to be reliable,  Investec Wealth & Investment International (Pty) Ltd or its affiliates and/or subsidiaries (collectively “W&I”) does not warrant its completeness or accuracy. Opinions and estimates represent W&I’s view at the time of going to print and are subject to change without notice. Investments in general and, derivatives, in particular, involve numerous risks, including, among others, market risk, counterparty default risk and liquidity risk. The information contained herein is for information purposes only and readers should not rely on such information as advice in relation to a specific issue without taking financial, banking, investment or other professional advice.  W&I and/or its employees may hold a position in any securities or financial instruments mentioned herein. The information contained in this document does not constitute an offer or solicitation of investment, financial or banking services by W&I . W&I accepts no liability for any loss or damage of whatsoever nature including, but not limited to, loss of profits, goodwill or any type of financial or other pecuniary or direct or special indirect or consequential loss howsoever arising whether in negligence or for breach of contract or other duty as a result of use of the or reliance on the information contained in this document, whether authorised or not.  W&I does not make representation that the information provided is appropriate for use in all jurisdictions or by all investors or other potential clients who are therefore responsible for compliance with their applicable local laws and regulations. This document may not be reproduced in whole or in part or copies circulated without the prior written consent of W&I.


Investec Wealth & Investment International (Pty) Ltd, registration number 1972/008905/07. A member of the JSE Equity, Equity Derivatives, Currency Derivatives, Bond Derivatives and Interest Rate Derivatives Markets. An authorised financial services provider, license number 15886. A registered credit provider, registration number NCRCP262.