Incapacity and powers of attorney

Estate planning tends to stop at the will. Yet the period that most often causes a family real difficulty is not the weeks after a death but the years before one — a stroke, a progressive dementia, a serious accident — when the person is alive, owns everything they owned the day before, and can no longer sign. A will is silent on that period, and so, usually, is a foreign estate plan built around trusts and executors. Austrian law addresses it separately, through the adult protection provisions of the Civil Code.

Those provisions were rewritten by the second adult protection act (2. Erwachsenenschutz-Gesetz), in force since 1 July 2018, which abolished the old system of guardianship (Sachwalterschaft) and put four graduated routes in its place. The ladder is deliberate: the more the individual has arranged in advance, the less the state intervenes. Everything on it turns on one register, the Österreichisches Zentrales Vertretungsverzeichnis (ÖZVV), maintained by the Austrian notariat, in which every form of representation must be recorded.

Two features of the system surprise arrivals from common-law countries. The first is that representation does not remove legal capacity: a represented person who can decide a given matter still decides it, and the representative's consent is required only where decision-making capacity for that matter is absent. The second is that the individual keeps a veto. Statutory representation by relatives can be blocked in advance by registering an objection (Widerspruch), and anyone can register an Erwachsenenvertreter-Verfügung — a short deed naming the person who should, or should not, be appointed if it ever comes to that. Both are cheap, and both are ignored far more often than they should be.

The practical case for arranging matters in advance is administrative rather than philosophical. A court-appointed representative works under continuous supervision: a report on the represented person's circumstances within four weeks of taking office and once a year thereafter, an opening account at the end of the first calendar year, running accounts after that and a closing account at the end, with a court fee of at least EUR 119 for confirming the accounts and for other financial approvals. An attorney under a Vorsorgevollmacht owes none of that.

There is a running cost as well, and it is calculated on capital rather than on work done. A court-appointed representative is entitled to an annual payment of five per cent of the represented person's income after tax and duties, and, where the estate exceeds EUR 15,000, to a further two per cent a year of the excess. The court must reduce that figure for good reason — expressly including a particularly large fortune — and may raise it to ten and five per cent for unusually extensive work, but the default arithmetic reads very differently for a family with a Vienna flat and a securities portfolio than for a pensioner. An attorney under an advance power of attorney is paid what the deed provides for, and the deed may provide for nothing.

The residual approvals are worth noting for an internationally mobile family: moving an incapacitated parent permanently to another country needs the court's blessing even where a valid Austrian power of attorney is in place. So does a disagreement between attorney and patient about treatment. Consent to treatment itself, by contrast, rests with the attorney whose scope covers medical matters, who must be guided by the represented person's wishes; in case of doubt the law assumes that a medically indicated treatment is wanted.

Austria is a party to the Hague Convention of 13 January 2000 on the International Protection of Adults, ratified on 9 October 2013 and in force for Austria since 1 February 2014. It has sixteen contracting parties, every one of them European: with Austria, they are Belgium, Cyprus, Czechia, Estonia, Finland, France, Germany, Greece, Ireland, Latvia, Malta, Monaco, Portugal, Switzerland and the United Kingdom. Italy, Luxembourg, the Netherlands, Poland and Romania have signed but not ratified. Two points matter for the families who most often ask. The United States has never signed. And the United Kingdom declared, under Article 55, that the Convention extends to Scotland only, so an English lasting power of attorney is outside it altogether.

Where the Convention does apply, Article 15 provides that the existence, extent, modification and extinction of a power of representation granted by an adult for use after loss of capacity are governed by the law of the state where the adult was habitually resident when it was granted — unless the adult expressly designated in writing the law of a state of nationality, of a former habitual residence, or of the place where property is located, as to that property. A German power granted while resident in Germany therefore does not stop being a valid German power on the day the grantor moves to Vienna. But Article 15 also provides that the manner of exercise is governed by the law of the state where the power is exercised, and it is on that rock that most foreign documents founder.

Two further points follow. First, once habitual residence has moved to Austria, a power granted here is governed by Austrian law unless another law is expressly designated in writing — so the choice-of-law clause that an experienced foreign draftsman inserts is worth having, but it is not a substitute for Austrian form. Second, the safer course is almost always parallel documents: keep the foreign power alive for foreign assets, and put an Austrian Vorsorgevollmacht in place for everything here, drafted so that the two do not contradict each other. The same logic of parallel, coordinated documents applies to wills, as the succession law and wills page explains, and to matrimonial property agreements, covered on the family law page.