There may be many reasons why you are unable to deal with your affairs in life. You may become mentally incapacitated and be legally incapable of carrying out certain transactions. You may acquire an illness or disability that restricts your ability to make objective decisions. If you become incapable of dealing with your affairs, for whatever reason, there are various legal arrangements you can make to have someone else do these things on your behalf. It is important for everyone to be aware of their options should a circumstance such as this arise.
The choice of legal arrangements open to you, depends on your precise Legal matters or circumstances. Some of the arrangements are very simple to make and have limited effect - for example, appointing an agent to collect your social welfare pension. Others are much more complex and require the help of legal and medical professionals - for example, executing an enduring power of attorney. It is advisable to take legal advice before entering into the more complex arrangements.
You must make all of these arrangements - with the exception of the Wards of Court procedure - while you are mentally competent. Some arrangements are only effective while you remain mentally competent; some, notably the trust, continue even if you become mentally incompetent, while others, specifically the enduring power of attorney, are designed for dealing with the legal situation that arises when you cease to be mentally competent. The Wards of Court procedure differs from all the others in that it may be imposed on you.
You are making an agency arrangement when you appoint another person to represent you in certain dealings with third parties. You are called the principal and the person you appoint is called the agent or appointed representative. The most usual example is where a pensioner nominates someone to collect social welfare pension payments or other allowances from the post office.
Another example of an agency arrangement is where you appoint a friend or family member as an agent to manage your financial affairs, pay bills, insure the house, etc., while you are abroad for a period. You may appoint a professional to do these things and pay for the service - this is not an agency arrangement but a contract for services.
If you are suffering from physical incapacity, your bank may allow you to carry out a third party mandate. This authorises your agent to perform certain functions, for example, to write cheques on your behalf.
You may only make an agency arrangement while you are mentally competent and the arrangement usually only lasts while you remain mentally competent. The arrangement does not have to be in writing unless the agent is required to sell property on your behalf. It is nevertheless advisable to put the arrangement in writing so that both you and the agent are clear about what is intended and what powers the agent has.
Agency arrangements for Social Welfare payments
The Department of Social and Family Affairs has the power under social welfare legislation to make payments to a third party acting on behalf of a social welfare recipient. The legal status of a social welfare agency relationship is different from the general agency relationship in that the social welfare agency may be put in place or may continue in operation if you become mentally incapable.
If an agent is appointed to collect the money, it is still your money and there is a legal duty on the agent to use it on your behalf and for your benefit. There is no formal mechanism however in place for ensuring that agents use the money on your behalf. Neither is there any requirement that the agent account for how the money was spent. The Department of Social and Family Affairs may end the agency arrangement if it has reason to believe the money isn't being used for your benefit but it isn't clear how they became aware of this.
There are two different types of social welfare agency arrangements:
Type 1 Agency
If you are getting your pension in the form of a Book of Payable Orders which you cash at the post office or bank and you are physically unable to cash the order or you move into a nursing home, an agent may be appointed to collect the money for you. You must nominate the agent in writing. There are no specific restrictions on who the agent may be. The agent may be a person in charge of your nursing home. You may cancel or revoke this arrangement at any time and you may appoint another agent or change the method of payment.
- You may appoint a temporary type 1 agent for a short period – usually not more than three weeks – if you are temporarily unable to collect the money.
- A temporary type 1 agency may be created when you sign the back of the payable order. You nominate the person to whom the money is to be paid and that person signs the order in the presence of a post office employee.
- If you get your payment by using your Social Services Card at a post office, an agent may be appointed only if you are suffering from a serious illness.
Type 2 Agency
A type 2 agency arises where a social welfare officer decides (usually as a result of representations from family members and medical practitioners) that you are incapable of acting and that an agent should be appointed. Before making such a decision, a social welfare officer will usually call to assess your circumstances and needs and medical certification of incapacity is needed. The agent nominated is often a family member or the matron of a nursing home or hospital.
A type 2 agency usually arises where there is some mental incapacity. The agent deals with all aspects of the social welfare payment.
In the case of a ward of court or an attorney appointed under an enduring power of attorney, the Department of Social and Family Affairs will make payments directly to the Committee of the Ward or to the Attorney by nominating the Committee or the Attorney as agent for the social welfare recipient.
Type 2 agents have the same legal duty to ensure the money is used for your benefit. They are also obliged to deal wtih other aspects ofyour social welfare payment. This includes notifying the Department of Social and Family Affairs of changes to your means if you are on a means tested payment, or informing them of changes in your dependents.
Power of Attorney
A power of attorney is a document in which you (the donor) authorize another person (the done or attorney) to act for you in certain matters - on your behalf and in your name - in accordance with the terms set out in the document. So, for example, you may give a power of attorney to someone to buy or sell property. This may be a very wide power or it may have extensive conditions attached. A power of attorney can be special (limited to a particular purpose, for example, sale of your house in your absence) or general (entitling the attorney to do almost everything that you yourself could do, for example, to manage your business while you are abroad).
Unlike an agency arrangement, a power of attorney must always be in writing.
There are two kinds of power of attorney - a general or common law power of attorney and an enduring power of attorney. You may wish to execute both a general power of attorney and an enduring power of attorney - if so, they must be clearly separately executed in separate documents.
At common law, a power of attorney is automatically revoked when the donor becomes mentally incompetent, dies, marries or becomes bankrupt. An enduring power of attorney (EPA) is one that contains a statement by you that you intend the power to operate even if you become mentally incapable and that meets other legal requirements. In fact, the main advantage of the EPA is that it provides a means for you to organise your affairs in advance of and in spite of mental incapacity. Read more about how to create a power of attorney, registration, the role of the courts, etc. in our document on Power of Attorney.
Property, including money assets, may be held in trust on behalf of another person or to achieve a particular purpose. A trust exits when a person (the trustee) holds the property of another (the settlor) for the benefit of named people. The beneficiaries may be the settlor him or herself or may be other people.
By creating a trust you can ensure that, should you subsequently become mentally incompetent, your affairs will be managed in a particular manner. The trust property continues to be administered by the trustee for your benefit without the necessity to have you made a ward of court.
A trust is also a useful tool if you have a child with a disability and you want to ensure that he/she will be cared for if you become incapable and after your death.
Trusts are legally complex and have tax implications. There are different kinds of trusts of which the most usual are express trusts and discretionary trusts. Discretionary trusts are especially useful if you want to provide for an incapacitated child without affecting his/her entitlement to state benefits.
Wards of Court
If you become incapable of managing your legal affairs or are of unsound mind, you may be made a Ward of Court. There are a number of different procedures available depending on the precise circumstances. Usually, a petition is made to the High Court to have an inquiry into your capacity. The petition should be served on you and you can object to the inquiry or demand that it be held before a jury.
Medical evidence must be provided from two medical doctors and a medical visitor (an independent doctor appointed by the court). If the court is satisfied that you are incapable, it may appoint a Committee of the Person (who may be one or more people) to deal with your personal affairs and a Committee of the Estate to deal with your business interests.
The Committee of the Person is similar to a guardian in that it has a duty to look after your physical welfare. People appointed to the Committee of the Person are usually relatives or friends. The Committee of the Estate has limited powers. Both Committees are subject to the supervision of the High Court.
Where To Apply
Registrar of the Ward of Courts
Four Courts, Dublin 7
+353 (0)1 8725555