Planning what happens to your assets after your death, or if you lose capacity before your death, is not something that most people like to consider. But if you want to ensure that important decisions are taken care of in accordance with your wishes, proper planning is vital.
The different steps that can be taken prior to and after incapacity, as well as the relevant legislation as it is applied in the Cayman Islands, are considered below.
Prior to incapacity
Powers of attorney ("POA")
One option which can be taken to protect an individual prior to incapacity is to confer a POA on a trusted family member, personal adviser or acquaintance pursuant to the Powers of Attorney Act (1996 Revision). Such ordinary POAs can be either general or specific and are usually for a particular event or temporary period of time until the donor returns to full capacity. They do not last once the donor becomes mentally incapable but, in principle, the Cayman Islands Grand Court (the "Court") may recognise lasting POAs that are valid under a foreign law.
In order to implement more lasting directions, even beyond a loss of capacity, creating a professionally drafted will is arguably the most fundamental part of estate planning. It ensures that the testator's wishes, whether simple or complex, will be properly dealt with and that their estate is distributed to whomever they would want it to benefit.
Advance directive and healthcare proxies
Pursuant to the recently enacted Health Care Decisions Act, 2019, an advance directive and healthcare proxy is a written legal instruction regarding preferences for medical care which takes effect upon one or more registered medical practitioners being of the opinion that the directive-maker is mentally incompetent, terminally ill or seriously injured.
By planning ahead, a directive-maker is able to ensure they:
- get the medical care they would have wanted;
- avoid unnecessary suffering;
- appoint their chosen healthcare proxy;
- relieve caregivers of decision-making burdens during moments of crisis or grief; and
- help reduce confusion or disagreement about the choices they would have wanted people to make on their behalf.
Cayman has a judiciary well-versed in assessing mental capacity and we have legislation which provides the Court with broad powers to significantly assist in circumstances where the loss of capacity has triggered serious administration issues. Pursuant to the Grand Court Act (2015 Revision) and the Mental Health Act (2021 Revision), when a person is of unsound mind and has lost capacity the Court can appoint a person/persons as guardians (and receivers) over that person and their estate whilst retaining broad powers over their property and affairs.
Typically, these applications concern situations where a person is suffering from a loss of capacity and their spouse or close relative applies so as to be in a position to provide necessary consent for ongoing medical treatment and/or to make decisions in respect of the management, investment and administration of their assets, liabilities and affairs.
An application for the appointment of a guardian is made to the Court by way of an originating summons and an affidavit which provides full details of the circumstances surrounding the application and exhibits a medical practitioner's report certifying the mental capacity of the individual. If the report concludes that the individual in question lacks capacity and requires the assistance of a guardian, the Court will usually grant the application without further investigation.
Prior to incapacity, it is advisable to take one or more of the steps outlined above. However, in the event that capacity is lost, the Cayman Islands benefits from a wealth of well-drafted legislation which not only provides comfort to trustees and close relatives but also enables the Court to provide clear and consistent decisions when it comes to the administration of such individuals' affairs.
If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.
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Location: Cayman Islands