Why your power of attorney won't protect you after cognitive decline

South Africa is confronting a growing crisis: dementia, Alzheimer’s disease and stroke-related cognitive decline are rising sharply, exposing gaps in public awareness and leaving families financially unprepared for the long-term care that follows, according to Ricardo Teixeira, managing director of BDO Wealth.

He says Alzheimer’s South Africa estimates that more than 190,000 South Africans are currently living with dementia – a figure expected to climb steeply as the population ages. This mirrors global trends, where someone develops dementia every three seconds, with the fastest growth occurring in developing regions.

According to Teixeira, Stroke remains a major driver of cognitive decline locally. Research published in BMC Public Health shows that nearly 60% of stroke survivors in sub-Saharan Africa experience cognitive impairment, affecting memory, reasoning and decision-making abilities.

“We regularly see people trying to do the right thing for a loved one, only to discover that the tools they believed would protect them simply don’t apply when cognitive decline sets in. Without preparation, families can find themselves locked out of their own financial affairs at the very moment they need access the most,” he says.

A common misconception is that a general Power of Attorney (POA) continues to apply after the principal becomes mentally incapacitated. It does not, he says.

Kyle Abrahams, in-house attorney at BDO Wealth, says: “A power of attorney is only valid while the person who granted it is still mentally capable. Once that capacity is lost, the document automatically lapses. The agent cannot act for someone who is no longer able to consent.”

Despite this, many South Africans continue using POAs without realising their limitations. Banks have tightened their requirements, with several insisting on their own POA formats and applying a “reasonableness test” if there is any uncertainty about a client’s capacity, says Abrahams.

“Transactions performed after the loss of capacity can be challenged. Families often discover this too late – usually when they are already in crisis,” Abrahams says.

Globally, many countries recognise lasting or enduring powers of attorney, which remain valid after incapacity. South Africa proposed legislation in 2015 (Project 122), but it has yet to be introduced or passed, says Teixeira.

According to Teixeira, an enduring power of attorney would give families a straightforward, humane and cost-effective way to prepare for cognitive decline. “As professionals in the sector, we would welcome progress in this area.”

At present, South Africans have only two legal routes when someone becomes incapacitated:

1. Curatorship – A High Court application requiring medical reports, legal representation and extensive documentation. It is slow, costly and can take months or even years. “We’ve seen families wait more than a year for a curatorship to be confirmed and ordered by the Court,” says Abrahams. “During that time, assets are effectively frozen, even when funds are needed for medical care.”
2. Administration – A more accessible process through the Master of the High Court, usually for smaller estates (under R250,000). It is quicker and less expensive but still requires medical confirmation and ongoing reporting. This route is only available for patients in cognitive decline as defined by the Mental Health Care Act.

Both mechanisms carry emotional and financial strain, and they often create space for conflict, particularly when family members disagree on who should be appointed,  Abrahams says. Although the legal environment remains limited, families are not without options. BDO Wealth recommends several proactive steps:

• Use joint accounts or dual signatories to ensure someone can transact in an emergency.
• Consider co-ownership of certain assets while being mindful of the practical implications.
• Explore an inter vivos trust, which allows trustees to continue managing assets if one becomes incapacitated.
• Act early if there is a family history of cognitive decline.
• Work closely with a financial planner – ideally before, but especially at the first signs of impaired decision-making.

“Cognitive decline can be sudden, and the financial consequences are often immediate. A financial guide can help families put the right structures in place before they’re needed – and support them if they find themselves navigating this difficult grey area,” says Teixeira.

PERSONAL FINANCE