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Your partner is in the hospital and you need to pay the mortgage from his or her account, but the bank refuses to talk to you. You need to cancel an important contract or, conversely, sign something urgently. And suddenly you find out that you are not authorized to handle any of it and the only way forward is a court decision restricting legal capacity. Unfortunately, this is not theory but a reality that thousands of families experience every year.
Most of us don’t even want to think about it, but almost all of us have families, commitments and therefore a lot of financial obligations (mortgages, loans, investments, insurance policies). And yet few people realize what happens if we suddenly become unable to make decisions about these things ourselves.
The moment someone is either hospitalized or dies, various legal mechanisms kick in, but in most cases they are neither very fast nor easy to understand, especially when the person close to you is not prepared for it in advance. And the stress caused by the situation itself multiplies all of this. The good news? Preparation can take a great deal of that stress away. Not only from you, but above all from your family.
With Kateřina Obertová, an attorney specializing in family and inheritance law, and Jitka Paterová, founder of the Eterny platform, we discussed what specifically happens when a person cannot make decisions for themselves, how to prepare for it in advance and what to do once the situation has already arisen.
Spouses may represent each other by law in ordinary matters, for example when collecting mail or handling routine matters at government offices. Without a power of attorney, however, this works only for such simple matters.
When a hospital stay is longer and a larger financial transaction needs to be made, you unfortunately often find out that it is not as simple as one might imagine. The key tool for keeping everyday matters running is a precautionary declaration (předběžné prohlášení).
This legal instrument allows you to set out in advance what will happen at the moment when you are unable to handle your own affairs. The law sets no limits; it may cover situations such as:
“A precautionary declaration can, to a certain extent, resolve situations in which a person is unable to act legally. It is a tool that can make life considerably easier for those who remain and have to handle everyday matters on behalf of the hospitalized person,” comments Kateřina.
Although a precautionary declaration can be supplemented by a power of attorney (e.g. for banks), it is crucial to keep its specific nature in mind. There are two basic types of power of attorney.
A special power of attorney applies to a specific purpose (for example, arranging a pension or selling a specific property). It is safer and more precise, and is recommended for ordinary situations. A general power of attorney applies to all matters generally stated in it, carries a higher risk of misuse and is suitable only for very trustworthy persons.
Banks and government offices, however, often require their own power of attorney templates, and for real estate transactions recorded in the Land Registry, everything must be precisely specified. A power of attorney that is too general may not be accepted by institutions.
“When there is no precautionary declaration and no power of attorney, the authorities, and then the bank, will simply say: Unfortunately, you are not authorized to handle this. That is why it is important to update powers of attorney regularly and consult them with a lawyer who knows the requirements of the individual institutions,” adds Kateřina.
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In addition to finances, you can also expressly specify your wishes regarding health care. The patient’s advance directive (dříve vyslovené přání pacienta) allows a person over 18 to describe what treatment and care they envision for the future should they find themselves in any other adverse health condition in which they are no longer able to make decisions for themselves.
This document is typically deposited with a general practitioner and serves mainly in situations where the family situation is complicated or where you have specific wishes regarding care for religious or other reasons.
An advance directive should be written clearly and unambiguously on the basis of your actual health condition. It is useful if it covers specific situations that may arise for the individual as a result of their health condition.
A precautionary declaration concerns assets, finances and legal acts. It is governed by the Civil Code. It determines who may manage your assets, handle financial matters and represent you in legal matters when you are unable to do so yourself.
A patient’s advance directive concerns only health care, not finances or assets. It is governed by the Health Services Act and the Civil Code. It allows anyone over 18 to describe what treatment and care they do or do not wish to receive in the future.
The key difference:
It is typically used in situations such as when you are in a long-term state of unconsciousness or coma, when you suffer from dementia or, for example, advanced Alzheimer’s disease, or when you find yourself in any other adverse health condition in which you are no longer able to make decisions for yourself.
If there is no preparation and an urgent situation arises, the only way forward is often a petition to the court to restrict the patient’s legal capacity and the related petition to appoint a guardian. This is a very lengthy process that can take months or even years because of the need for expert opinions, although it is true that a lawyer can speed up this process considerably, because they may know steps and shortcuts that might not occur to you.
The process runs as follows: First, a petition is filed with the court, specifically with the district court with jurisdiction over the person whose legal capacity is to be decided, and it must meet the requirements laid down by law. The petition must describe precisely the factual and legal grounds on which it is considered justified and why less restrictive measures cannot be used. It is also advisable to attach medical reports or other evidence. The court may ask for the petition or evidence to be supplemented.
The court then appoints an expert. The key element is an expert opinion prepared by a court-appointed expert in psychiatry, who assesses whether, and to what extent, the person examined is capable of managing their assets and making decisions.
The judge should then arrange for the person concerned to be heard. The judge assesses whether the hearing can be conducted without any harm to the person concerned. If the hearing cannot be conducted at all, the judge must at least see the person concerned. A hearing should always take place if the person concerned requests it.
The court then decides, and if it restricts the person’s legal capacity, it must also appoint a guardian for them. The guardian is usually a relative or a close person, someone who has a long-term and serious interest in the person.
We now know the legal instruments and how demanding the process is if the unthinkable happens. Now it is time to talk about how to do it the right way.
The key is to have access to a platform like Eterny, which works as a central place for all important documents: precautionary declarations, powers of attorney, wills, insurance contracts, bank accounts and login credentials, investments, important contacts.
"We try to educate people to get things ready in advance in one place. It is not just about being prepared for a situation that will hopefully never happen. It is about having your assets in order right now,” says Jitka Paterová, founder of Eterny.
Many Eterny users make use of a trusted contact, who would have access to the documents in the event of a sudden situation – whether it is the user’s hospitalization or death. Quite often, this may be a legal representative or a notary who will help with taxes and other matters.
Everything can be resolved. We have had many clients who handled it brilliantly because they shared their wishes in advance. It wasn’t just that a will turned up somewhere later. They communicated, discussed and explained everything in advance.
They presented it as their wish, which everyone heard at the same time. No one read it differently; there was no room for differing interpretations.
“Just as a will is usually deposited with a notary, you can have precautionary declarations and other documents prepared with a lawyer – and at the same time have them available in a well-organized digital folder."
The endors law firm will prepare legal documents tailored precisely to your situation. It updates them in line with changes in your life and in legislation. It keeps the originals safe. It provides legal advice for complicated cases.
Together, Eterny and endors cover both sides – the practical management of what you have where and how to access it, as well as legal protection – who may act, under what conditions and what happens in a specific situation.
The best thing you can do for yourself and your loved ones is to prepare even for what none of us wants to think about. Complicated inheritance of assets, unplanned business succession, lost investments – situations in which emotions mix with law and money tend to be difficult.
We know from practice that we can prevent most complications. Prevention is key, and it is above all about protecting what you have today.
Kateřina Obertová, who leads our family and inheritance law practice and has fifteen years of experience, and our entire team at endors will help you set up a solution tailored precisely to your situation. In partnership with the Eterny platform, we can cover both the legal side – precautionary declarations, powers of attorney, wills – and the practical digitization and management of documents.
Schedule a consultation with Kateřina
The average time is several months. You will have to file a petition, wait for an expert opinion in psychiatry – this is where the biggest delay occurs – and go through court proceedings, including the hearing of the person concerned. That is why it is much better to prepare a precautionary declaration or power of attorney in advance – these take effect immediately.
A precautionary declaration is a document under the Civil Code in which you determine who may act on your behalf in property and legal matters when you are unable to do so yourself – for example, due to hospitalization, a coma or an induced coma.
How to get one: Book an appointment with a lawyer or notary. Say what you want to arrange. You sign the document; your signature can be certified by a notary or at a registry office. Keep a copy yourself and the original with the lawyer or notary.
A special power of attorney applies to a specific purpose – for example, arranging a pension or selling a specific property. It is safer, more precise and recommended for ordinary situations.
A general power of attorney applies to all matters. It carries a higher risk of misuse and is suitable only for very trustworthy persons.
Note: Banks and government offices often require their own power of attorney templates. For real estate transactions recorded in the Land Registry, everything must be precisely specified. A power of attorney that is too general may not be accepted by institutions.
A precautionary declaration concerns assets, finances and legal acts. It is governed by the Civil Code. It determines who may manage your assets, handle financial matters and represent you in legal matters when you are unable to do so yourself.
A patient’s advance directive concerns only health care, not finances or assets. It is governed by the Health Services Act and the Civil Code. It allows a person over 18 to describe what treatment and care they do or do not wish to receive in the future.
The two documents complement each other, and it is a good idea to have both prepared.
Never as a legal requirement – but it is your responsibility to keep the documents up to date.
Why it matters: A power of attorney from 2015 may contain an old account number you no longer have. Or it may authorize a former partner you no longer trust. The composition of your assets changes – today you have a mortgage and one apartment; in five years everything may be different.
By law, a patient’s advance directive has no time limit on its validity. Nevertheless, it is advisable to update it when your health condition or your wishes change. An update may also be appropriate in connection with developments in treatment methods for a specific diagnosis.
You need to consult a lawyer specializing in the relevant area. Each country has different requirements for recognizing these documents.
Yes. Perhaps even more so than for older people. Car accidents and injuries don’t choose by age. Young people often have more complex finances – investments, cryptocurrencies and other assets that a notary may not be able to trace. Many young people own a company or are self-employed – and that is where being unprepared is especially dangerous.
A trustworthy person: a sibling, if you have a good relationship; a close friend – not a formal one, but someone you truly trust; a lawyer – at endors we sometimes act as a trusted contact for our clients; or a notary.
What matters is that you trust that person, that the person knows your situation – where you have your accounts and assets – and that the person knows they have this role.
Often the best thing you can do for yourself and your loved ones is to prepare even for what we hope will never come. Part of such preparation is also education, through which you can find out what your options are. And that is how the partnership between the endors law firm and the Eterny platform came about.
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Only one in ten people over 50 has a will – do you know how to secure your children’s future?
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