By Denis Lloyd and Jerome Veldsman of Walkers Inc. (http://www.walkers.co.za/)
Due to the vagaries of life, especially old age, many a person (let’s call her “Amy“) has difficulty managing her own financial affairs. If Amy is fortunate, there is a family member or friend (let’s call her “Betty“) to manage Amy’s financial affairs under a power of attorney.
However, once Amy’s mental capacity diminishes to below the legal threshold (often due to dementia, Alzheimer’s and/or vascular), when she is wholly incapable of managing her own financial affairs, by law, Betty’s power of attorney automatically terminates. There is no enduring power of attorney under South African law. In many cases Betty will continue as if it is business as normal, but it is not. Betty is acting illegally, and could face fraud charges, or worse.
Currently, the only legal solution is the appointment of a curator bonis. The latter is a person appointed by a court to manage the assets and financial affairs of another person unable to do so because of mental or physical incapacity. The term “bonis” means “goods” (as in assets) in Latin.
The appointment of a curator bonis requires two connected court applications. The legal costs of a straightforward matter could be in the region of R50 000 to R100 000. The medical costs are also substantial.
The first application (with say Betty as the applicant) to the High Court is to appoint a legal practitioner (let’s call her “Cami“) to represent Amy in the court proceedings. In this application, Betty must provide medical evidence (reports by a psychiatrist and another medical practitioner) that indicates that Amy’s mental capacity may have diminished to below the legal threshold.
Once Cami is appointed, she must investigate the matter, and submit a written report to the High Court. In the second application, the court considers Cami’s report and the other evidence, and must rule on whether, or not, to appoint a curator bonis for Amy. The court appoints a practicing attorney (let’s call him “Dan“) as curator bonis for Amy. Hopefully, Betty did proper research to make certain Dan is the correct person for the job. It is not an easy one, the responsibility can be enormous, and the pay is not that great.
A curator bonis must furnish security to the Master of the High Court, as a guarantee for doing the job properly. Practicing attorneys hold Fidelity Fund certificates that satisfy this requirement; so, with rare exceptions, only practicing attorneys are appointed as curators bonis.
Many an Amy is confused, and makes the strangest demands. Dan must be a diplomat and a gentleman.
Amy may have greedy family members keen for an early ‘inheritance’. Dan may have to sue those who illegally took assets or money from Amy prior to his appointment. Dan must be firm.
Amy may have complicated investments and/or own a trading company. Dan has to take care of it all. He must have good commercial experience. He also has to arrange and pay for caregivers, medical and dental care, and the like. It would be great for Amy and Dan if Betty remained on call to assist informally.
Dan requires prior consent from the Master for certain transactions, such as selling immovable property. Dan must also annually render a full account to the Master of all income received, expenditure incurred, and the capital assets under curatorship. The control measures are not fool-proof. Dan must be a man of integrity. Betty would have done well to appoint a director of a well-established law firm.
As for the pay, Dan is entitled to a maximum fee of 6% on income, and no capital fee. This can be a problem if Amy’s assets do not produce income. A residential home, farmland not in use, gold coins, jewellery, and many other assets do not produce income. On special application, supported by adequate motivation, the Master may approve an additional (special) fee. When the curatorship terminates (usually when Amy dies), Dan will be entitled to an additional 2% fee on the then capital value of Amy’s estate.
A curator bonis is concerned only with the financial affairs of the person. Amy may also be incapable of managing her own personal affairs, such as deciding where she is to live, whether she needs to be consigned to an institution, whether she is to have medical treatment such as an operation, and by whom it is to be performed, and generally the control over her personal day to day living.
Currently, the only legal solution is the appointment of a curator ad personam. The latter is a person appointed by a court to manage the personal affairs of another person unable to do so because of mental or physical incapacity. The term “ad personam” means “for the person” in Latin. This is a story for another day.