Incapacity Laws in Cyprus & the Management of Property of Incapable Persons

Various situations may lead to an individual being deemed incapable of managing their property or handling their personal affairs. This article offers a comprehensive overview of the legal prerequisites and procedures in Cyprus that pertain to incapacity and safeguarding the financial interests of such individuals. We will explore the critical elements of the legislation, focusing on the Management of Property of Incapable Persons Law of 1996 (N. 23(Ι)/1996).

The Law on the Management of Property of Incapable Persons, enacted in 1996, serves as a crucial legal framework that regulates the management and administration of property belonging to persons deemed incapable of handling their own affairs. This legislation was specifically formulated to safeguard the rights and interests of these individuals, taking into account their unique needs and vulnerabilities.

The primary purpose of the law is to ensure that the property and assets of incapable persons are managed in a responsible, ethical, and transparent manner, while minimising the potential for financial exploitation or mismanagement. To achieve this, the law outlines a set of procedures and criteria to determine the incapacity of an individual and establish the necessary legal framework for managing their property and affairs.

Definition of Incapable Persons

According to the Management of Property of Incapable Persons Law, an incapable person is defined as someone who, due to mental or physical impairment, is unable to manage their own property and affairs. This can include individuals suffering from dementia, severe mental illnesses, addiction, alcoholism, brain injury or another physical illness or condition that render them unable to make informed decisions about their property and financial affairs.

Generally, incapacity is assessed based on the person’s ability to understand, comprehend, and make decisions regarding their financial, legal, and personal affairs.

Some common factors considered in determining incapacity may include:

Cognitive impairment: A decline in cognitive abilities, such as memory, reasoning, and judgment, can indicate that a person is incapable of managing their affairs. This may result from conditions like dementia, Alzheimer’s disease, or a traumatic brain injury.
Mental health issues: Mental illnesses, such as schizophrenia, bipolar disorder, or severe depression, can also affect a person’s ability to make informed decisions about their life and property.
Communication difficulties: A person may be deemed incapable if they are unable to communicate their decisions and choices effectively. This can occur due to conditions like aphasia or other communication disorders.
Physical disabilities: In some cases, severe physical disabilities or illnesses that prevent a person from performing daily tasks can also lead to a determination of incapacity.

Protecting the Financial Interests of Incapable Persons

Appointment of an Administrator

To ensure the proper management of an incapable person’s property, the law allows for the appointment of an administrator, who will be responsible for managing and administering the property on behalf of the incapable person. The administrator can be appointed by the court, through a guardianship order, or by the incapable person themselves, through a power of attorney or other legal document.

Duties and Responsibilities of an Administrator

The administrator is responsible for managing and administering the property of the incapable person in their best interest. This includes:

Collecting and preserving the property and its income.
Investing the property in a prudent manner, considering both risk and return.
Paying the incapable person’s debts and expenses.
Keeping detailed records of all transactions related to the property.
Providing periodic reports to the court or other relevant authorities.

Since the enactment of the Law on the Management of Property of Incapable Persons, there have been several cases that have shaped the interpretation and application of its provisions. Some notable cases include:

Case A v. A: In this case, the court determined that an administrator’s decision to sell an incapable person’s property was in their best interest, despite objections from family members. The court found that the sale was necessary to meet the individual’s financial needs and that the administrator had acted in good faith.
Case B v. B: The court removed an administrator who had been found to be misappropriating funds and appointed a new administrator to ensure the proper management of the incapable person’s assets.

The administrator must also act in accordance with any specific instructions provided by the court or the incapable person and must act in good faith and with due diligence.

Court-appointed Administrator

The court has the authority to protect the financial interests of persons declared incapable of managing their own affairs. In such cases, a court-appointed administrator is assigned to oversee the person’s property, with specific powers detailed in the relevant law concerning the care, management, and maintenance of the incapable person’s assets and affairs.

The appointment of an administrator for an incapable person terminates only upon the issuance of a court decree, which either determines that the individual has regained the capacity to manage their property, upon the death of the incapable person, or in cases of mismanagement when the administrator has acted with malice or negligence.

As highlighted in the case of T v. L, the purpose of this law is to protect the incapable person’s property and, by extension, their well-being. Consequently, any decrees issued in relation to the property and affairs of an incapable person, as well as any actions taken by the administrator, must always be guided by the best interests of the incapable person.

Supervision and Accountability

To ensure that the administrator is always acting in the best interests of the incapable person, the law establishes certain safeguards and a process for reviewing the actions of an administrator for an incapable person. Initially, the appointed individual must provide a guarantee, of a type and amount determined by the court, for the faithful and proper execution of their duties. Furthermore, the administrator is required to submit a detailed inventory of the incapable person’s property to the court within 30 days of their appointment. They must also register accounts, examined by the Registrar of the competent court, detailing their actions related to the property and affairs of the incapable person within 12 months of their appointment and every 12 months thereafter, or within any other specified time frame.

An administrator’s liability is reflected in legislative provisions that make it a punishable offence, with a monetary penalty, for them to fail to comply with the law’s requirements. Additionally, as established by case law, malicious actions or conduct inconsistent with the best interests of the incapable person, such as unlawful appropriation of their property by the administrator, constitute mismanagement and necessitate the immediate removal of the administrator.

Application Process

An application to declare a person incapable can be submitted to the court within the jurisdiction where the person resides. The application may be submitted by any interested party as defined by the law, which includes the spouse, father, mother, and descendants of the incapable person, as well as the Director of Mental Health Services and/or Social Welfare Services. Additionally, any person who can satisfy the court of their interest in the property of the incapable person can also submit an application.

Court Proceedings

If the court is satisfied, based on medical testimony or other evidence, that the person in question is incapable according to the law’s definition, a decree will be issued. This decree prohibits the incapable person from performing any acts with legal consequences. Furthermore, the court holds general and specific powers to issue any orders related to the overall management of the property and affairs of the incapable person or for their maintenance, the maintenance of their family members, or the care of any persons or purposes for which the incapable person would be expected to act. These orders may include, among other things, control, sale, acquisition, and management of any movable or immovable property, execution of any payments, execution of any contracts, and/or taking any legal measures on behalf of and for the account of the incapable person.

The Law on the Management of Property of Incapable Persons is an essential legal framework for protecting the rights and interests of individuals who are unable to manage their own property and affairs. By establishing a clear process for the appointment of administrators and outlining their duties and responsibilities, the law ensures that the property of incapable persons is managed in their best interest, while also providing a system of supervision and accountability.

Our Services

At Chambers & Co, we offer a comprehensive range of services to address the legal needs and challenges associated with cases involving incapable persons. Our team of experienced lawyers is dedicated to providing the highest quality of representation and guidance to ensure the best possible outcome for our clients. Our services in such cases include, but are not limited to:

Assessment and determination of incapacity: We work closely with medical professionals, psychologists, and other relevant experts to assess and determine the incapacity of individuals in accordance with the legal criteria and guidelines.
Representation in court proceedings: Our lawyers are skilled in representing clients in court proceedings related to the declaration of incapacity, the appointment of guardians or administrators, and the management of property and affairs of incapable persons.
Appointment of guardians or administrators: We assist in the process of appointing suitable guardians or administrators to manage the property and affairs of incapable persons, ensuring that the appointed individuals act in the best interests of the client.
Legal advice and support: We provide comprehensive legal advice and support on all aspects of incapacity, property management, and guardianship, helping our clients navigate the complex legal landscape and make informed decisions.
Dispute resolution: Our lawyers are experienced in handling disputes and conflicts related to the management of property and affairs of incapable persons, working diligently to resolve issues and protect the best interests of our clients.
Regular monitoring and reporting: We oversee the management of our client’s property and affairs, ensuring that the appointed guardian or administrator complies with the legal requirements, guidelines, and reporting obligations.
Estate planning and asset protection: We provide tailored estate planning and asset protection solutions for incapable persons and their families, ensuring that their property and financial interests are secure and well-managed.

Our law firm is committed to delivering exceptional legal services in cases involving incapable persons, prioritising the protection of their rights and interests while ensuring their property and affairs are managed responsibly and effectively.