ייפוי כוח מתמשך
HOW YOU CAN LEVERAGE THE NEW ISRAELI DURABLE POWER OF ATTORNEY TO WORK FOR YOU AND YOUR FAMILY
Whatis the difference between a Power-of-Attorney [POA] and a DurablePower-of-Attorney [DPOA]?
Powers of Attorney["POAs"] are familiar and convenient legal documents, by which aperson [called the " principal"] can designate another person[called the " agent"] to carry out in his place certain acts,duties, or transactions. Common scenarios for use by individuals are: when theprincipal goes abroad for a period of time, or may be undergoing a briefmedical procedure, or for the elderly who find it difficult to run errands, goto the bank, etc.
Aregular POA is a routine legal document, drafted in the privacy of a lawyer'soffice, printed out, signed by the principal only, designating the agent, andcountersigned by a notary. It can sit in a drawer and no one besides theprincipal, the agent, and the notary will know it even exists until it is used.If the agent designated is the lawyer before whom it signed, then even a notaryis not required, and only the principal and the agent/lawyer will know itexists. In all other cases, e.g. where the agent is not the same lawyerverifying the signature, all POAs must be notarized by Israeli Law. If the POAgrants sweeping, general authority to the agent, it also must be notarized evenif a lawyer is the agent.
However,and despite its reputation, the Power of Attorney is actually by definition avery limited document:
- A regular POA is honoredonly for financial and legal transactions. It has no force whatsoever regardinga person's medical condition or other personal decisions. If your loved onebecomes hospitalized, his POA making you his agent will not help you one bitregarding medical decisions and cannot authorize you to do anything.
- A regular Power of Attorneyis also limited in time to 10 years from the date of signing.
- A regular Power of Attorneyis void once the principal has died. Transactions or acts carried out afterthat date are null and void and will be nullified even ex post facto[“b'dieved" in Hebrew] by any court.
- Most importantly, the powerof a regular Power of Attorney is conditional on the principal's mental health.Even before death, if the principal loses his mental capacity to continuesupervising, confirming, and/or approving the actions of the agent, then thePOA is void. For that reason, the Power of Attorney of any person who has losthis ability to communicate [e.g., after a stroke] or suffers from dementia,Parkinson's, Alzheimer's or even any other undefined physical or mental state whereby he no longercommunicates and/or can express his wishes, is no longer valid even if itwas signed long before any problem arose with his capacity. Acts and transactions carried out by theagent after that point in time can be nullified even ex post facto["b'dieved"] by the court.
- For this reason, you mayhave already experienced difficult and logistically inpossible situations wherebanks no longer honor a regular Power of Attorney since the elderly client hasnot appeared in the bank branch for years and the bank is skeptical whether theprincipal is still of sound mind.
The new Israeli Durable Power of Attorney
Until2017, the only way under Israeli Law to deal with the gap in time starting fromthe point in time of loss of legal capacity until death was by appointing aGuardian. One can petition the court to receive Guardianship over anotheradult, regarding his person or his property, or both. However, the courtproceeding is not simple, and is spread out over at least 2 months and usuallymore. Even if granted, it creates an obligation on the Guardian to keep strictfinancial records which must be reported twice yearly to the court if not more.The file becomes subject to the intervention of the Attorney General's Office,and the court defers in almost all cases to whatever conditions or objectionsthe AG might find with decisions made by the Guardian, and the latter may seemarbitrary and invasive.
Bycontrast, in other countries this difficult interim period in the later yearsof a person’s life is often dealt with not by Guardianship, but by what isknown as a Durable Power of Attorney. [ Note: in other foreignjurisdictions a Durable POA may be known as a "Lasting POA" or a"Continuing POA".
Thankfully,in March 2017 the Knesset passed a major revision to the Guardianship andAgency Laws, and allowed for the first time the possibility of a DurablePower of Attorney in Israeli Law. An Israeli Durable Power of Attorneycontinues to be valid even if the principle has lost mental capacity, sotherefore Guardianship is no longer necessary in most cases.
Drafting a DPOA
Thedrafting of a Durable Power of Attorney [a"DPOA"] is radically different from drafting of a regular POA. Due tothe considerable weight and scope of a DPOA, while the Knesset did pass the lawin 2017 permitting DPOAs, it nevertheless set up several strictures regardingthe drafting of a DPOA:
- Only certain lawyers, whohave passed a special course by the Justice Ministry and Israel Bar Association,and received their accreditation, are authorized to draft a DPOA and file itwith the authorities.
- The drafting lawyer is notallowed to be the agent. This protects the principle from being exploited by alawyer and/or the agent, since an impartial lawyer is now supervising theestablishment of the relationship.
- The agent himself mustagree to be the agent and to all the conditions and limitations in the DPOA,and he also signs the DPOA.
- In short, at least threedifferent parties partake in creating the DPOA, creating a balance of power.
- The DPOA is not a regulardocument which can be drafted freely and then kept private. It is a form whichexists only online in the Justice Ministry website. While its content can befilled out online and offers great freedom to create and insert highlypersonalized conditions and terms, it can be created only online.
- Once the DPOA draft isready, it is printed out, signed by [a] the principal [b] the agent(s)designated and [c] the special accredited lawyer, who testifies that all thestringent conditions of the law have been fulfilled. This includes, among otherthings, an appraisal by that lawyer regarding the mental acuity of theprincipal.
- After signing, the DPOA isscanned, and then registered by the accredited lawyer online in the website ofthe Justice Ministry. It becomes a government record, but remains private andis not viewable by a third party until the principal decides to activate it.
- The DPOA is subject toconfirmation by the Ministry. Even after confirmation, it is supervised, andevery few years the Ministry checks on the principal.
- The DPOA is not necessarilyirrevocable; the principal can notify in the Ministry in writing that he hasdecided to cancel the DPOA, assuming he still of sound mind to do so.
- The DPOA can kick intoforce immediately, or at a defined point in the future whose conditions can bepre-defined by the principal
- You can specify that onceyou've lost the capacity to judge, you cannot cancel the DPOA, and any suchorder you may give in the future will be disregarded by the court. Thiscondition can be important for dementia patients who often make unpredictableand self-harming decisions. Since this is a pretty extreme measure, it followsthat only people who know that on the one hand their agent will always work totheir benefit and on the other hand that they are suffering from a degenerativemental or emotional condition which will affect their own trust, judgement, or emotions should considerthis.
- Regarding financialmatters, The DPOA remains in force for 90 days after your death. This is acritical attribute of the DPOA, and it solves the well-known crises in manyfamilies, where the deceased’s banks account is frozen by the bank until thefamily can present to the bank a Succession Order or Probate Order, and thefamily cannot even finance normal ongoing expenses such as mortgage,electricity, arnona, medical help, etc.
- You can designate that youragent must report every move he makes, or every transaction over a given value,to a named third party [your lawyer, your spouse, your financial adviser] whichgives you control over the agents discretion, via your trust in that thirdparty's judgment and/or professional ability.
Despitethe wide discretion the a DPOA can grant to the agent, nevertheless Israeli Lawstill limits the power and scope of the DPOA, and these limitations are goodand were erected to prevent exploitation of the principals by unscrupulous agents.
Here's a few of the salient limitations on all new Israeli DPOAs:
- The DPOA is limited in itsscope to any transaction up to a value of 300,000 NIS. This means, for example,that your agent can manage a real estate property extensively, but won't be ableto actually sell it.
- The DPOA allows you toempower the agent to make loans, gifts, or charity donations to given parties,but only up to limited sums defined by law.
- While not limited to 10years like a regular POA, the DPOA nevertheless may be reviewed periodically bythe Justice Ministry.
Here are few scenarios in which you can leverage the new Israeli POA to you and your family's benefit:
- A DPOA is the most directmeans to give your family and hospitals instructions as to how you want to betreated in cases of serious illness, surgery, etc. However, it cannot helpterminally ill patients, and that issue is governed by another law which willbe discussed elsewhere.
- If you don't like theprospect or expenses of asking for guardianship over an elderly person in thefuture, and the subsequent intervention of government lawyers and judges inmanaging your family's assets or even personal decisions, a DPOA can handlealmost all the scenarios that court-appointed guardianship would have handledin the past. You will save time, heartache, and money by circumventing the needfor guardianship buy using a DPOA.
- If you have an elderlyparent who is healthy and mentally capacitated, but they or you expect thatthat status is likely to deteriorate in the near or distant future, todaythey can empower you or someone else to act in the future as their agentto manage a particular asset [a bank account, real estate property, a mutualfund] or all of their assets. This agency can kick into force at anycircumstance which you can define objectively and you can also define who willdecide whether that circumstance has indeed occurred.
- If you feel that you wantto totally entrust a child or other trusted person with managing your assetsonce you are no longer capacitated, then giving them a DPOA provides a solutionfor management of almost all scenarios up until the time of death [regardingdisposition of all issues after death, you will need to write a Will].
- If you have one piece ofproperty in Israel, and wish to have it administered on a permanent basis untilyour death by an agent, you can write a designated DPOA which will give thatagent authority to make all decisions and administration. Since almost all realproperty in Israel is valued at more than half a million NIS, the agent cannotuse to DPOA to actually sell the property itself. This solution could beparticularly appropriate for people in advanced years, who don't want to selloff a particular asset in their lifetime, yet fear that in the near future thatthey themselves will no longer be able to manage that asset. Their agent willmanage the asset, direct the income as per the instructions in the DPOA, andafter the principle's death, the asset will be distributed among his heirsaccording to a will which he will write.
Asof today, the Israeli DPOA can only be filed in Hebrew, so it will beineffective for any property outside of Israel. For those situations, consultour office regarding drafting a DPOA which will comply with the laws of thecountry or state abroad.
Inother articles in our website, you can read about the different possibilitiesof Medical POAs according to Israeli Law.
Ifyou think that you, a parent or other an elderly relative, or any person who isabout to undergo a medical procedure which may incapacitate him permanently orfor a significant amount of time, could benefit from creating a DPOA, youshould contact our office, or the office of any other Israeli lawyer who hasreceived accreditation, for a consultation.
This article is notlegal advice, but rather a general introduction to the principles involved inthe issues discussed. It is not a replacement for personal legal advice and isoffered as a public service to prospective clients.
Sincerely,
Greiff & Koven, Attorneys-at-Law