Last month, there was a reported story of an abandoned yacht left in the harbour at Stroustad, Sweden. After some two years of searching, the Swedish police were able to trace the yacht's ownership to a wealthy Norwegian man who had "forgotten" where he had left his yacht.
It appears that this wealthy Norwegian had lost sufficient mental capacity through dementia or other disease of the mind to "remember" where he had put a valuable asset and had to have a guardian (what we call a "Receiver") appointed to protect him from himself and preserve his assets.
Since 1986, when the Power of Attorney Amendment Act was passed in Bermuda permitting enduring powers of attorney to be used, the need for Receivership Orders has greatly declined.
Prior to the 1986 legislation, one could only use ordinary powers of attorney and, when a person lost his ability to manage his own affairs, the ordinary power of attorney became invalid.
The only option, when a person became incapable of managing his own affairs, was for a family member to apply to the Supreme Court for a Receivership Order under the Mental Health Act 1968.
A Receivership Order empowers a designated person to take over the affairs of the "patient".
An application to the Supreme Court for a Receivership Order is complicated, onerous and expensive as the following documents are required to be prepared and filed:
- Application for Appointment of Receiver enclosing all necessary supporting documentation;
- Consent of the Receiver to act and the consent of other family members who are or may be interested in the patient's estate;
- Affidavit of Kindred and Fortune setting out who the patient's immediate family members are, the assets and liabilities of the patient together with an income and expense report for the patient;
- Affidavits from two physicians who have recently examined the patient and in whose opinion the patient is no longer capable of managing his own affairs and stating specifically what the patient's medical condition is;
- Preparation of a draft Court Order for the Court's consideration;
- The application and supporting documents must be served on the patient and proof of service must be filed with the Court or an explanation why this was not, or could not, be done; and
- File at least annually a full statement of accounts on the patient's financial affairs for the past year.
So one can readily see that avoiding the necessity for a Receivership Order is not only important, but a large cost savings for the patient.
An enduring power of attorney "endures" or survives the donor's subsequent mental incapacity and will not become invalid on the donor becoming unable to manage his own affairs through dementia or other disease of the mind, as would be the case with an ordinary power of attorney.
So, if you begin forgetting where you left your yacht, get an enduring power of attorney made immediately, before you lose the mental capacity sufficient to execute one.
Article first published in The Royal Gazette, June 2014
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.