Enduring Powers of Attorney

Priscilla Mifsud-Parker | 19 Sep 2017

Tep Admin

In Malta, the power of attorney, or "Prokura" in Maltese is a legal document where an individual, called the "mandator" or "principal" grants another person called "agent" or "mandatary" the legal authority to act on his or her behalf. The legal notion of power of attorney has long been a part of our civil law heritage; however, the notion of enduring power of attorney was only introduced in 2016 through an amendment which added Article 1864A to the Civil Code. Essentially, through an enduring power of attorney, the principal, who is a major, gives a mandate to another person, the mandatary, to represent his or her interests in anticipation of incapacitation.

The Enduring Power of Attorney – A significant development

Before the introduction of Article 1864A, a mandate would terminate should the mandatary become unsound of mind, thus considered incapacitated at law to take significant decisions. In such cases, the family members of the incapacitated person would need to undergo a costly and cumbersome process to apply for a certificate of incapacitation for the person concerned in order for a curator to be appointed. This process was not only burdensome and the cause of great grief for the family, but it also deprived the incapacitated person from being involved in the decision of who would administer his or her assets in case of incapacitation when he or she is still sound of mind.

Thus, the introduction of the EPA addressed this grim reality that was not being catered for by the type of mandate found in the Civil Code prior to this amendment. With increased longevity and Malta’s rising aging population, the introduction of the EPA, aids families of incapacitated persons by helping them avoid undergoing the distressing process of going to court. This is achieved through a pre-planned EPA. Moreover, the EPA provides a dignified solution to persons anticipating incapacitation, as well as anyone seeking a form of ‘insurance’ in case of an accident which might lead to incapacitation, as the EPA gives the peace of mind that a trustworthy person chosen by the mandator him/herself will be able to act on his/her behalf, take care of the mandator at his/her most vulnerable and administer his/her assets soundly in the eventuality of the mandator becoming unable to do so him/herself. With the operation of the EPA, there will be a person responsible for taking any future decisions for the mandator following incapacitation.

However, how broad is the scope of the EPA?

Broad scope of the Enduring Power of Attorney

When defining the scope of the EPA, article 1864A provides that a person of full age may give a mandate to a mandatary who shall “care for the mandator and administer his property”’. From the onset, it is evident that the law gives a very broad scope to the EPA, making it more similar to the Common Law notion of lasting power of attorney which is generally broader in scope than the Enduring Power of attorney as understood in English law.

The broad wording infers that the EPA can be extended in respect of all types of property, be it bank accounts, the payment of bills, managing investments or even purchasing or selling real estate, as well as care of the mandator. The addition of “care of the mandator” gives the mandatary a very broad and important role, however it may be slightly problematic from a legal perspective. While care would entail matters such as the type of health care and medical treatment of the mandatary, as well as general, everyday considerations such as residential care, dietary needs and routine, this extensive provision does not specify whether it empowers the mandatary to make critical decisions with respect to life-sustaining or extraordinary treatment. Ultimately, it would be up to the Courts to decide whether to interpret ‘care’ broadly or narrowly.

Setting Up an Enduring Power of Attorney

Those who wish to set up an EPA must be at least 18 years of age and have full legal capacity, which entails that they must be cognizant of the nature and effects of the document he or she is signing and the nature and extent of the estate therein. 

Primarily, a mandate must be drawn before a notary public in the prescribed form and in the presence of two witnesses, and must be registered with the Director of the Public Registry. Before registering the mandate, the mandator will need to obtain a medical declaration that circumstances require him or her to drawing up this mandate to ensure his or her best interest.

Start and Termination of the Enduring Power of Attorney

The performance of the EPA would be conditional upon the occurrence of incapacity and the obtaining of the necessary approval from the Court of Voluntary Jurisdiction. The law also provides that an EPA may be terminated if the mandator is no longer incapacitated. To terminate the EPA, the termination must be drawn by a notary public and registered in the same manner as the mandate, and it must be accompanied by a sworn medical certificate that confirms that the incapacity has ceased.

Picking your attorney when setting up your EPA – important considerations

In the eventuality of incapacity, a person would be essentially trusting their life in the hands of another. Thus, it goes without saying that when making such a crucial decision, appointing a trustworthy attorney is a must. Although an attorney may be a professional advisor such as a lawyer, notary and accountant, the attorney may also be a trusted family member or a friend. Whilst ensuring that an honest and dependable person is chosen, there will also be practical considerations which should be taken into account, such as the person’s level of skill and expertise depending on what he or she may be expected to do, time available to act on behalf of the mandator, and how geographically close the mandator will be to the mandatary.

Provisions against abuse

When creating the institute of EPA, the legislator included a provision that safeguards the vulnerable mandator from possible abuses carried out by the mandatary during incapacitation. At law, the chosen attorney will be considered as a fiduciary. The law itself removes any shadow of doubt by specifying that  obligations of a mandatary of a normal power of attorney also apply to mandataries under an EPA (other provisions which are applicable to mandate will not apply to the mandatories under an EPA).

The law provides that in the case of non-performance of his or her obligations to the mandator, the mandatary will be liable for damages and interests. Moreover, he or she will also be liable for fraud as well as negligence when carrying out his or her mandate. Negligence will not be enforced as strongly in cases where the mandatary is acting gratuitously and not receiving remuneration. 

The Court of Voluntary Jurisdiction may also enforce any conditions on the EPA as it may deem necessary, thus further safeguarding the mandator in his or her vulnerable position. One should note that the law does not specify whether the mandatary must apply to the aforementioned court when exercising acts under the EPA. This is an important point because while such a requirement would make the processes more secure for the mandatory, the mandatary’s role would be significantly less practical and highly similar to the curator’s role.

Trusts or EPA? Which should you opt for?

Trusts are not only ideal vehicles for wealth management and succession planning inter vivos, but they can also be structured to cater to the wishes of those seeking to make arrangements in the case of incapacitation.

One of the main differences between setting up a trust and setting up an EPA is that trusts are more broad in scope and can be used in cases other than the incapacity of the settlor. The main difference between the two institutes is that by its very nature, a trust entails that the settlor would need to transfer ownership of his or her assets onto a trustee that will be responsible for managing them for the benefit of the settlor during his or her lifetime, as well as the beneficiaries of the trust (generally the family of the settlor).

On the other hand, setting up an EPA does not involve the transfer of ownership of the mandator’s assets onto the mandatary, and will only become effective conditionally upon the incapacity of the mandatary, if this ever occurs. Thus, the EPA is a limited, yet simpler option with a specific purpose.

While one can opt for one or the other, depending on his or her needs, a third option when planning for the future is to use both trusts and the EPA together, with the EPA geared towards regulating who will care for you in the eventuality of incapacitation, and a trust regulating your property and assets.

Interested in setting up an enduring power of attorney?

As seen from the above, preparing an enduring power of attorney, should be considered when planning for long-term care.

Contact us for more information about how to prepare an enduring power of attorney in Malta, Europe. Our lawyers have extensive experience in the trusts law and estates management field, particularly in tax planning and in the setting up and management of trusts as well as the recognition in Malta of foreign trusts under the Hague Convention.

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Key Contacts

Dr Priscilla Mifsud Parker

Senior Partner, Corporate, Tax & Immigration

+356 22056122

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