When Supporting Loved Ones With Mental Incapacity, the Law Requires More Than Good Intentions

Dementia is on the rise globally – and South African families are feeling the impact. The World Alzheimer’s Report estimates that over 55 million people are living with dementia worldwide, a number projected to more than double by 2050. In South Africa, although national data is limited, estimates suggest that one in five people over 80 already live with some form of dementia – most commonly Alzheimer’s disease.

What many don’t realise is that the emotional and medical toll of cognitive decline is only part of the challenge. The legal and financial consequences can be just as overwhelming.

When a person loses the mental ability to manage their finances, a signed power of attorney becomes invalid. From that moment on, family members can’t simply take over — no matter how urgent the situation. “A major misconception is that a power of attorney gives ongoing authority,” says Carin Meyer, Fiduciary Product Head at FNB. “In South African law, that authority ends the moment someone can no longer fully understand the consequences of their decisions.”

She explains that to act on such a person’s behalf, loved ones or fiduciary experts must be legally appointed, either through the High Court, which appoints a curator bonis, or via the Master of the High Court, who appoints an administrator under the Mental Health Care Act. “These aren’t just formalities,” says Meyer. “Without legal authority, any financial actions – even well-intentioned ones – can be considered unlawful.”

Once appointed, fiduciaries assume full legal responsibility for managing the person’s finances. To fulfil their duties, they must:

• List all assets and income,
• Manage budgets for care and living expenses,
• Keep detailed records of all transactions,
• Seek court approval for major financial decisions.

“This isn’t a role you take lightly or informally,” Meyer explains. “You are accountable to the courts, and every decision must be legally sound and clearly in the person’s best interests.”

Fiduciaries in these positions are also held to a high ethical standard. They must avoid conflicts of interest, never use funds for their own benefit and act with honesty and care in every transaction. Failure to meet these obligations can result in removal or legal action.

The legal appointment processes also carry costs. A High Court curatorship can cost between R50 000 and R100 000, while a simpler application to the Master of the High Court – typically used for smaller estates – can cost R5 000 to R20 000, depending on whether an attorney is involved. But the alternative of being locked out of a loved one’s financial affairs with no authority to act can be far more costly.

Adding to the expenses, while these formal processes are underway, families often face immediate costs, such as medical assessments or emergency care. Matthew Green, Product Portfolio Manager at FNB Life explains that this is why appropriate critical illness cover is essential. “Some critical illness policies include progressive neurological conditions like dementia,” he says, “and this means families can receive a lump sum payout to help cover specialist care or medical evaluations while legal appointments are still pending.”

Ultimately, though, being prepared for the possibility of mental incapacitation makes all the difference. She says that there are three critical points at which people can act. First, while the person is still mentally capable, they should update wills, consider trusts, and put formal structures in place.

The second action stage is after diagnosis but before full incapacity. This is often the last window to establish a Special Trust Type A, which provides long-term protection and tax benefits. These trusts are recognised by SARS and offer the same tax treatment as natural persons, which makes them more cost-effective for managing long-term care. Third is the point after mental capacity is lost, at which stage the only route is legal appointment through the courts.

“Too often, people assume they can help out informally,” says Meyer. “But without a legal appointment, even small decisions can have legal consequences – especially if something goes wrong. A formal process protects everyone involved, including the person who is vulnerable. The best approach is to talk to your family, update your documents, and make sure you understand the limits of a power of attorney. Because once capacity is lost, everything changes – emotionally, financially and legally.“

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Author: Thokozile Skhosana from FNB on behalf of FNB.

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