Making a living will or registering a power of attorney

You need to have capacity in order to manage your affairs independently. Having capacity means you’re aware of the consequences of your actions. You ‘lack capacity’ if you lack awareness of those consequences. A person in a coma lacks capacity, quite obviously, but a person with dementia tends to lose their capacity gradually. That’s why it’s sometimes difficult to tell exactly how incapacitated someone is.

If you lack capacity, another person must act and make decisions on your behalf. This power must be granted on a legitimate basis. For instance, a child doesn’t automatically obtain the power to act on behalf of a parent. Married couples also aren’t automatically entitled to make decisions for each other, regardless of whether they’re married in a community of property or not.

There are various arrangements that let you appoint someone to act on your behalf if you lack capacity. Some of these arrangements are specifically designed for this situation. Others are not, but they can be useful nonetheless.

The main arrangements are administration and guardianship. If you already lack capacity, the court will appoint a person to act on your behalf. More often than not, an incapacitated person’s close family will initiate this process. The judge will then appoint a family member as your administrator or guardian. The administrator or guardian must request consent from the judge to make major financial decisions on your behalf, and the judge will perform an annual check of these decisions. 

Married couples usually try to avoid taking things to court; the same goes for children and their parents. Most want to reach an agreement between themselves. The good news is: you can. Married couples may give each other powers of attorney to manage ‘all affairs’ on each other’s behalf. This is called a general power of attorney and is often registered with a notary.

The authorising party determines who can act on their behalf. Next, you’ll need to decide what powers this person has. Married couples may know exactly what powers each one should have, but children may be unsure how they can act on a parent’s behalf. In any case, it can be helpful to include instructions in the power of attorney.

Will the power of attorney take effect immediately or only after a doctor has diagnosed the authorising party as incapacitated? May gifts be made on behalf of the authorising party? What happens to investments? Where do you want live if you’re unable to live on your own? These are just some of the questions it can helpful to answer in the power of attorney. A document that both determines who can act on your behalf and sets out instructions for them is often called a ‘living will’ in the Netherlands.

An example of a tool that is not intended for long-term loss of capacity but is used when one person wishes for another person to manage their bank account is called an ‘account mandate’.

Married couples or registered partners, as well as parents with children, are often clear about who will act on their behalf: the partner or a child.

However, family dynamics, busy jobs or physical distance may influence this decision. If so, an independent representative can provide a solution.

An independent representative can also be a good idea if nobody in your family or circle of friends would be a suitable representative. You may also choose to appoint two representatives, so that they can share responsibilities.

Sadly, abuse of power of attorney does happen, including in situations in which a child has power of attorney over their parent. People with power of attorney ‘forget’ that they may only act in the authorising party’s best interests and instead use that person’s money for their own gain. As these offences break a bond of trust and constitute abuse of power over a person in a position of vulnerability, they often lead to prison sentences.

You can reduce the risk of abuse of power by incorporating the ‘four-eyes principle’ into your living will. This avoids a situation in which someone acts on your behalf for an extended period of time without any supervision. There are various ways to set this out in writing. You can appoint two people to act on your behalf, appoint a supervisor alongside the person acting on your behalf, or instruct the person acting on your behalf to provide an account and justification of their actions. The best option for you depends on your personal situation.

Some people are reluctant to do this, believing it makes it appear as if they don’t trust the person they are appointing. However, this protection mechanism may also benefit the person in question themselves: they won’t need to manage everything alone, and they can consult with someone else. 

In the case of guardianship and administration, the court decides on the appointment. This may be a reason to choose these options. Your living will may contain a petition (request) to the court to appoint a person who has your best interests at heart to be your administrator or guardian, if such a situation arises.

You have the option of registering your living will with a notary. Although you’re not obliged to use a notary, an officially registered living will covers more bases than a private living will and it provides greater assurance. Registering your living will with a notary demonstrates to us that you were of sound mind and capacity when the living will was drafted, that you drafted the living will yourself and that you weren’t coerced or influenced into doing so. If this evidence is lacking, you may find it difficult to have your will accepted by official bodies or other organisations, such as banks.

• How to register a living will or power of attorney with your bank
• How can you organise your digital legacy?