Power of Attorney
A power of attorney (POA) is a document that allows you to appoint a person or organisation to manage your affairs.
All POAs are not created equal.
It is a legal document (highlighted in our civil law Articles 1856 up to 1890), also known as “prokura” in the Maltese Language.
In case of death, the mandate will cease to exist.
The Maltese Civil Law states that a ‘Mandate is either special, if it is for one matter or for certain matters, only; or general, if it is for all the affairs of the mandatory.’
Keep in view that
- The one who grants permission is called the “mandator” or “principal” whereas the person granted permission is called the “agent” or “mandatary”, both fully aware of the nature and effects of the power of attorney.
- The appointed person needs to be of legal age and in full mental capacity.
- The Maltese power of attorney will illustrate the relevant details of all the persons involved including their respective addresses.
- Setting up a power of attorney does not involve the transfer of ownership of the mandator’s assets onto the mandatary.
The different types of power of attorney give your attorney-in-fact (the person who will be making decisions on your behalf) a different level of control.
A general power of attorney gives broad powers to a person or organisation (known as an agent or attorney-in-fact) to act in your behalf. These powers include handling financial and business transactions, buying life insurance, settling claims, operating business interests, making gifts, and employing professional help. General power of attorney is an effective tool if you will be out of the country and need someone to handle certain matters, or when you are physically or mentally incapable of managing your affairs. A general power of attorney is often included in an estate plan to make sure someone can handle financial matters.
You can specify exactly what powers an agent may exercise by signing a special power of attorney. This is often used when one cannot handle certain affairs due to other commitments or health reasons. Selling property (personal and real), managing real estate, collecting debts, and handling business transactions are some of the common matters specified in a special power of attorney document.
Suppose you become mentally incompetent due to illness or accident while you have a power of attorney in effect. Will the document remain valid? To safeguard against any problems, you can sign a durable power of attorney. This is simply a general, special, or health care POA that has a durability provision to keep the current power of attorney in effect.
You might also sign a durable power of attorney to prepare for the possibility that you may become mentally incompetent due to illness or injury. Specify in the power of attorney that it cannot go into effect until a doctor certifies you as mentally incompetent. You may name a specific doctor who you wish to determine your competency, or require that two licensed physicians agree on your mental state.
Trust is a key factor when choosing an agent for your power of attorney. Whether the agent selected is a friend, relative, organisation, or attorney, you need someone who will look out for your best interests, respect your wishes, and won’t abuse the powers granted to him or her.
First and foremost, it is important for an agent to keep accurate records of all transactions done on your behalf and to provide you with periodic updates to keep you informed.
If you are unable to review updates yourself, direct your agent to give an account to a professionally renowned third party.
In case of abuse of power
As for legal liability, an agent is held responsible only for intentional misconduct, not for unknowingly doing something wrong. This protection is included in power of attorney documents to encourage people to accept agent responsibilities.
Agents are not customarily compensated; most do it for free.
Should you, a friend, or relative suspect wrongdoing on the part of your agent, report the suspected abuse to a law enforcement agency and consult a lawyer.
The law provides that in case of abuse of power carried out by the mandatary, and thus, no longer considered as fiduciary, the mandatary will be liable for fraud and damages.