The new frontier

Following our Back to Basics feature on European cross-border estates in the last edition of PS, we now present an article on European cross-border mental incapacity. The number of cross-border mental incapacity matters is growing steadily. We are receiving a considerable number of enquiries, not just from practitioners in England and Wales, but also from foreign practitioners acting for clients with interests in England and Wales. Since this article is aimed at practitioners in England and Wales, we will be focusing on the typical scenarios that they may face.

As before, we take a practical approach, and provide a series of questions and case studies, drawing on the knowledge and expertise of our colleagues in France, Spain, Italy and Portugal. We have chosen these jurisdictions as the European destinations where British nationals are most likely to have assets.

Case study 1

You are approached by an English solicitor acting for the attorneys of Maria, a British citizen who lacks capacity. Maria owns a property and bank accounts in your jurisdiction. Maria’s nephew, Anthony, is her attorney. Anthony is concerned that Maria’s property is empty, and has spoken to a reliable estate agent, who has mentioned that the property could be sold quickly. Anthony has contacted Maria’s solicitor to see how this can be achieved.

Maria has an English lasting power of attorney (LPA) for financial decisions, appointing Anthony as her attorney.The English solicitor contacts you with questions.

1. Is the LPA valid in your jurisdiction? If so, what formalities will be required to use the LPA in the property sale?

France

Generally, English LPAs are accepted by French notaires, although a sworn translation and an apostille of the certifier of the certified copy are usually required. The notaire may require a legal opinion confirming the validity of the LPA under English law and may require the apostille on it. As the solicitor providing the legal opinion, you would want to carry out a search of the Office of the Public Guardian’s (OPG) registers using form OPG100. A sworn translation into French will be required. Each individual notaire will decide what they require.

Spain

In principle, an English LPA will be valid in Spain, although the notario and land registrar will require the LPA to be legalised with the Apostille of the Hague. It is common practice for both notario and land registrar to also request an affidavit of English law confirming the validity of the document under English law. It will also be necessary to carry out an OPG100 search to confirm that Anthony is still Maria’s attorney. Some notarios and land registrars may not accept an LPA certified by a solicitor, and it may be necessary to request that the LPA is certified by a notary in England.

Italy

The LPA will not be valid in Italy.

Portugal

Portugal does not have the concept of an LPA. As such, the admissibility of a power of attorney in Portugal will depend on the position assumed by the notary who is dealing with the sale.

In some situations, since a person’s capacity is determined by the law of their nationality, the notary will consider the matter to be an issue of capacity, and therefore apply the law of nationality. They may accept a certified copy of the LPA: duly translated, certified and apostilled; and accompanied by an affidavit of English law issued by an English solicitor, attesting to the formal validity of the document and confirming that, under English law, it entitles the attorney to dispose of immoveable assets.

Others argue that the issue relates to voluntary representation and that, under the Portuguese conflict of law rules, the law that is applicable to the disposition and administration of immoveable assets will be the law of the country where those assets are located. As a result, the notary may require the LPA to meet the formal requirements set out under Portuguese law, and therefore may not accept the LPA.

In our practice, we have experienced both situations and, unfortunately, it’s difficult to answer the question definitively.

2. Will the banks accept the English LPA, so Anthony can operate the bank accounts?

France

Generally, banks will accept English LPAs under similar terms as French notaires (sworn translation and an apostille). However, they will be more receptive if they know that a notaire has accepted the LPA. It may be easier to use the notaire.

Spain

It will depend on the bank; some compliance departments have been known to be helpful and have accepted a certified copy of the LPA (apostilled), together with a translation into Spanish and an affidavit of English law confirming the validity of the LPA. However, other banks have asked for unobtainable documents, such as a court order from the Court of Protection (CoP) confirming that the LPA is registered.

Italy

The LPA will not be accepted by an Italian bank to give authority to deal with bank accounts in Italy.

Portugal

This will depend on how a bank’s legal department interprets the LPA, although in general, and from our experience, banks do not accept LPAs to operate bank accounts.

3. Could there be additional delays?

France

Any delays will be linked to complying with the formalities of using the LPA in France, and these should be addressed as early as possible.

Spain

In principle, there should not be delays, but it will depend on where in Spain Anthony is using the LPA. There are areas of Spain where notarios and land registrars are familiar with LPAs, but in other regions, LPAs are used infrequently, and the notario and land registrar may require additional time to consider them. The compliance departments of Spanish banks can be notoriously slow, so be patient.

Italy

In practice, the estate agent may be prepared to accept a mandate from Anthony to market the property, but he would not be able to enter into a legally binding contract with any purchaser.

Anthony would need to apply for an order from the Italian court, declaring that Maria does not have capacity to deal with her affairs. This would be either: an order for interdizione from the civil court (tribunale civile), which would be appropriate if Maria were unlikely ever to regain capacity; or an order for amministrazione di sostegno from the guardianship judge (ufficio del giudice tutelare), where Maria still has some limited decision-making capacity. In this latter case, there would need to be a specific power in the LPA for the sale of property. Anthony could apply for either, as he is a close family member.

Unfortunately, there will be delays – the reality is that these proceedings can be very slow. It is possible for an urgent provisional order to be made if circumstances warrant it, but even this may take at least two or three months.

Portugal

Given that the position is not consensual, we would always advise clients to have a separate power of attorney in Portugal to deal with their general day-to-day financial affairs in Portugal (complying with the formal requirements for a Portuguese power of attorney), including powers to operate a bank account, in addition to their LPA.

In this way, they can mitigate any possibility of the authorities considering this to be a matter of voluntary representation and, as such, applying the law of Portugal to the formal validity of the power of attorney.

Case study 2

Maria has lost capacity before she could make an LPA, so Anthony has made a deputyship order in England and Wales to deal with her finances.

1. Is this deputyship order valid in your jurisdiction? Can Anthony deal with the sale of the property and the bank accounts?

France

In my experience, the response depends on the notaire dealing with the matter. Some notaires will accept an English deputyship order (with a sworn translation and with the apostille), while others require exequatur proceedings to be brought in France to recognise and enforce the order.

Spain

The notario, land registrar and the bank may accept the deputyship order, if legalised and translated into Spanish, together with an affidavit of English law. But it’s possible  that Anthony will have to file for exequatur proceedings in Spain to have the order recognised in Spain. These can be long and costly.

Italy

The deputyship order will not be valid in Italy. Anthony cannot deal with the property or bank accounts without a court order.

Portugal

As the matter of capacity is excluded from EU regulations such as the Brussels IV Regulation, Anthony would have to commence proceedings at the Portuguese High Court (Tribunal da Relação) to have the foreign court order recognised in Portugal, in accordance with the general rules contained in the Portuguese Civil Procedure Code. Anthony can only act legally as deputy once the decision is recognised.

2. Is there any advice that you can give to the English private client solicitor?

France

Consider the position in France before applying for a deputyship order, and ask the French notaire and estate agent what they need to see in the deputyship order.

Spain

When applying for the deputyship order, seek the input of your Spanish counterparts in relation to the wording referring to the Spanish assets.

Italy

You’ll need to apply for a court order in Italy (as described above) in order to appoint Anthony as her guardian in that country. The deputyship order, including any attached medical reports, should be translated into Italian, as it will be relevant background information for the Italian court. The court may require an up-to-date medical report confirming Maria’s incapacity.

Portugal

When the deputyship order is obtained, it should describe in detail the extent and nature of the powers of the deputy. Be aware that, despite the deputyship order, certain acts may still require a case-by-case judicial authorisation, such as the sale of a property.

Case study 3

Maria has been living in your jurisdiction for over 20 years. On one of Anthony’s visits, he notices that Maria is losing capacity. Anthony asks Maria to call her solicitor in England to check if she has an English LPA in place. It turns out that Maria does not have one, but her solicitor will prepare one. However, the solicitor suggests that Anthony makes enquiries with a local lawyer to check if there is anything that Maria can do in your jurisdiction.

1. Does your jurisdiction have a similar instrument to an English LPA? How does it work, and how do you obtain one?

France

Since 1 January 2009, France has a mandat de protection future (power for future protection). These are similar to LPAs, allowing an individual, while they still have capacity, to appoint one or more attorneys to act on their behalf once they are not able to do so. However, for the power to apply to real estate, it must be made in notarial form, and the disposal of the donor’s residence (main or secondary) will always require authorisation by a judge.

Spain

There is no LPA equivalent in Spain. Maria should grant a power of attorney in Spanish form in favour of Anthony. That document should include a clause confirming that the power of attorney will remain valid even if Maria loses capacity – otherwise it will not be valid. Anthony or any other attorneys will only be able to deal with financial transactions, and not welfare decisions.

The power of attorney will be valid until Maria’s death, or until she revokes it by executing a deed of revocation before a notario.

Italy

There is no LPA equivalent in Italy. Maria could make a power of attorney (procura generale), which in Italy needs to be witnessed by a notary and is a public deed. However, the notary will need to assess Maria’s capacity.

The power of attorney does not last for the lifetime of the person granting it. An attorney’s appointment loses validity as soon as Maria loses capacity, so this power may not have effect for very long. However, if Maria still has capacity, then Anthony would be able to sell the property now, using the power of attorney.

Portugal

There is no LPA equivalent in Portugal. It is, however, possible and advisable to grant a general power of attorney to govern the day-to-day necessities, and to access bank accounts, should it be required.

It is also possible, since 10 February 2019, for someone to enter into a contract, known as a “mandate”, conferring on a third party the necessary powers to represent them if they lose capacity. This mandate is freely revocable. Although it does not substitute any future similar application to the courts, in the event that the person loses capacity, it is held in consideration by the judge when determining the kind of support to be provided to the person, and also who should be their deputy.

2. Is there a body such as the OPG to which suspected abuse by attorneys can be reported? Do you have specific courts that deal with mental capacity issues, like the CoP in England and Wales?

France

The donor can appoint individuals to have oversight of the attorney. The attorney must draw up an inventory of the donor’s assets, and provide accounts and report on an annual basis. When the power of attorney ends, the attorney must provide an updated inventory to either the donor or their legal heirs, as well as accounts for the last five years. Any person can bring an action in front of the local juge des contentieux de la protection (judge for protection proceedings). For all other capacity issues, the relevant judge is the local juge des tutelles (see below).

Spain

There are no specific courts for mental capacity issues. Such issues will be dealt by the local civil courts in the area where Maria lives in Spain.

Italy

Orders which provide for guardians in case of loss of capacity can be made by either the ordinary civil court or by the guardianship judge (as explained above), depending on the severity of the incapacity and the circumstances of the case.

There is no specific court equivalent to OPG.

The named guardians are answerable to the civil court by which the order was granted. They may be removed from office or substituted, or other guardians may be appointed to support them.

Alternatively, they may be prosecuted in the criminal courts for abuse of power.

Portugal

The Public Prosecutor (Ministério Público) is responsible for looking after the interests of those who are incapable. Someone appointed under a power of attorney must provide accounts and information in relation to the actions taken under the power of attorney, when requested to do so.

In general, the family courts have jurisdiction to hear capacity matters.

Case study 4

Maria has been living in your jurisdiction for over 20 years. Maria’s carer contacts Anthony to say that Maria had been taken ill to hospital and the doctors have confirmed that she has lost capacity. Maria’s solicitor in England confirms that Maria has no LPA in place.

1. What are the mechanisms available for Maria’s relatives to deal with her affairs in your jurisdiction?

France

France has a graded approach to incapacity and representation and, in addition, has two simplified regimes for when the proposed deputy is the spouse (habilitation judiciaire pour représentation du conjoint) or another close family member (descendant, ascendant or sibling) (habilitation familiale). As Anthony is a nephew – and assuming that Maria is neither married nor has a surviving spouse – neither regime applies. The graded regimes are:

• sauvegarde de justice – the protected person carries out all their own decisions, except those that are allocated to a ‘special attorney’
• curatelle – the protected person can manage their own assets but must be assisted by their curateur (deputy) to make acts of disposal
• tutelle – the tuteur (deputy) carries out all acts on behalf of the protected person.

From the facts, it is likely that Anthony will need to make an application for a tutelle; the judge may also appoint a subrogé tuteur to oversee the tuteur’s actions.

Spain

Since Maria lacks capacity, she cannot grant a power of attorney. Anthony will need to instruct a lawyer in Spain to issue incapacity proceedings in that country. Presumably, Anthony will apply to be Maria’s legal tutor (the Spanish equivalent of a deputy). However, as Anthony does not live in Spain, he may not be an ideal choice. The application process can be long, and the Spanish lawyer will also need to liaise with the English solicitor, as it is likely that they will have to provide affidavits of English law regarding mental capacity. This is because under Spanish private international law, capacity is governed by the individual’s national law.

Italy

Anthony would need to apply for an order from the Italian court. This could be one of the following.

• An order for interdizione from the civil court nominating a tutore
  An order for interdizione from the civil court nominating a tutore would be appropriate only if Maria is unlikely ever to regain capacity or make decisions for herself. Once appointed, the guardian would take Maria’s place in relation to all her rights and obligations, including the signing of deeds / contracts; and can make decisions about her financial affairs, health and welfare. This is seen to be a very invasive and all-encompassing order, and is only used by the courts in cases of total and permanent incapacity.
• An order for amministrazione di sostegno from the guardianship judge appointing an administrator
  This would be the preferred type of court order where Maria still has  some limited capacity, as it allows the person with incapacity (usually elderly people with progressing dementia) to retain some degree of autonomy. An order is tailored to the specific needs and circumstances of the person. The administrator is seen as a collaborator and may need to ask the court for specific powers which are not granted by default, for example for the sale of property. The administrator has regular reporting duties and needs to submit annual accounts to the court.

Anthony could apply for either of these orders as he is a close family member, but he would most likely need to instruct a lawyer in Italy and grant a valid and specific power of attorney (procura speciale) for that lawyer to represent him in proceedings on behalf of Maria.

Portugal

The legal system relating to deputyship orders has been recently overhauled, and a new legal regime, known as the ‘accompanied adult’ regime, was introduced from 10 February 2019.

This regime is applicable to anyone who, for reasons of health or disability or as a result of their behaviour, cannot manage their daily life without support.

Accompanying measures can only be ordered by the court and are intended to protect the person, in order to prevent them or others from making any potentially harmful decisions.

The extent of the measures is determined case by case; after analysing each specific case, the court will decide the acts that can and cannot be undertaken by the person.

The request is made to the court and can be made by the person affected, if they are still capable, or otherwise by the Public Prosecutor’s Office, the spouse, common law spouse, or any relative. The judge’s decision will appoint a ‘companion’ (deputy) and list the acts that the person who is being accompanied may, or may not, freely perform.

Conclusion

There will be circumstances where there is not much you can do other than rely on the mechanisms available to the client once they have lost capacity. However, when clients come to you to review their LPAs or to plan ahead, make sure that, if they have assets overseas, they seek advice in that jurisdiction, so that their LPAs are reflected as far as possible. Sometimes, having an LPA to deal with the overseas assets is not enough.

We are very grateful to Charlotte Oliver TEP from Oliver & Partners (Italy), and Teresa Patricio and Vicky Rodrigues from Teresa Patricio & Associados (Portugal) for their assistance in writing this article.