What happens when an ageing parent loses the ability to make important financial decisions? Across Kenya, the assumption is that a spouse or an adult child can step in, operate the bank accounts, manage property or run the business.

Under Kenyan law, that is not only unlawful, but it can leave families in a legal bind.

Relatives do not automatically acquire the authority to manage the affairs of an adult who has lost mental capacity, lawyers say. Instead, they should petition the High Court for the appointment of a manager under the Mental Health Act.

“The family cannot appoint itself manager of that person’s affairs. Nobody, not a spouse and not even the eldest child, can lawfully sign for that person simply because they are family,” says Njuguna Muri, a partner at MMTK Law, working with senior associate Mary Audi and associate Fridah Muriithi.

The problem can arise after a stroke, serious illness, injury or cognitive decline, leaving a person alive but unable to make some legal or financial decisions.

“Your bank can freeze your account, the Lands Registry will not accept your signature and your business can stall, all while you are still alive. It can be very frustrating,” the lawyers say.

The implications can be serious in wealthy families, blended households, polygamous marriages and businesses where much of the wealth or decision-making authority is concentrated in one person.

When capacity is lost

One of the biggest misconceptions, according to the lawyers, is that a power of attorney will automatically allow a trusted relative to continue managing a person’s affairs after incapacity.

An ordinary power of attorney does not provide that protection once the person who granted it loses mental capacity.

“A power of attorney is only as good as the mind that gave it. The very event most people believe it is designed to solve, losing mental capacity, is the event that switches it off,” the lawyers say.

This, they observe, creates a gap in a country that does not have a statutory lasting or enduring power of attorney similar to those available in jurisdictions such as England and Wales.

Where a person has already lost capacity, relatives may therefore have to seek court-appointed management of the person’s affairs. The process can become particularly difficult where family members disagree over who should manage the assets or whether the person had actually lost capacity.

Consequences beyond personal finances

For business owners and company founders, incapacity can affect bank mandates, contracts, shareholding decisions and the day-to-day running of a company. A business built around one person’s authority can be exposed if there is no alternative decision-making or governance arrangement.

Shareholder agreements, alternative signatories and other succession structures can help reduce that risk, lawyers say.

The ability to make important financial decisions is therefore not confined to inheritance. It concerns the management and preservation of wealth while the owner is still alive.

That distinction is becoming more important as families deal with longer lifespans and the financial consequences of cognitive decline, illness and serious injury.

Does dementia invalidate a will?

Losing mental capacity during a person’s lifetime does not automatically mean that a will they have already made is invalid.

Nor does a diagnosis of dementia, by itself, determine whether someone has the capacity to make a will.

The lawyers say capacity is assessed at the time the document is executed. A person diagnosed with early-stage dementia may still be capable of making a valid will if they understand what they are doing and the consequences of their decisions.

For a will to be valid, the lawyers point out, the person must understand that they are making a will, have a reasonable understanding of the assets they own, appreciate the people who might reasonably expect to benefit from their estate and understand the effect of the decisions they are making.

This makes the timing of estate planning critical.

A will prepared years before cognitive decline is likely to present a different evidentiary question from one signed shortly before death or after serious deterioration in a person’s mental state.

When a will is challenged, courts can consider medical evidence, witness testimony and the circumstances surrounding its execution in determining whether the document represents the person’s wishes.

Disputes can become particularly contentious where relatives allege that a caregiver, spouse or child exerted undue influence over an ageing parent. The possibility of such disputes means families should not wait until an individual is visibly declining before beginning discussions about succession.

Proof of lost capacity

But psychologists caution against treating every change in behaviour or every unpopular financial decision as proof that a person has lost capacity.

Consultant psychologist Serah Wanjiru, founder of Unique Divine Touch Counselling Consultants, says mental capacity is decision-specific. An older adult may be capable of making everyday choices but struggle with more complicated financial or legal decisions.

“People have the right to make decisions that others disagree with, provided they understand the risks involved,” she says.

Dementia is one possible cause of impaired cognition, she observes, but capacity can also be affected by stroke, illness, injury, medication or temporary confusion.

This distinction matters in families where relatives may be tempted to take control of an older person’s affairs simply because they believe the person’s decisions have become irrational or financially unwise.

The question, Serah says, is whether the person understands the decision and its consequences, rather than whether other family members agree with it.

How to plan before a crisis

The legal gap becomes more difficult to navigate when families have avoided conversations about money, property and future care.

Psychologist Salima Njoki Macharia of Peace Brigades International says discussions about ageing, wealth and inheritance often carry considerable emotional weight and are postponed until a crisis forces the issue.

“In many cultures, talking openly about bank accounts, property or debts remains taboo, while some parents fear that discussing inheritance too early could spark conflict among children. Others worry that revealing the extent of their wealth could make them vulnerable to exploitation or loss of autonomy,” she says.

By the time families begin discussing these issues, cognitive decline may already have made meaningful participation more difficult.

Salima says repeated financial mistakes, personality changes, withdrawal from social activities, difficulty performing familiar tasks and increased vulnerability to scams can be warning signs that should prompt a conversation.

But the purpose of such conversations is not necessarily to remove control from an older person. Rather, she says, families should discuss finances, property, healthcare and succession while the person can still express their wishes and participate in decisions.

“Preparation matters because the law does not automatically give relatives authority to step in once capacity becomes uncertain. The safest approach is to discuss finances, property, healthcare, succession and other important matters while the older person is still able to make and communicate their decisions.”

For lawyers, that preparation should extend beyond simply writing a will.

Families can keep an up-to-date record of assets and important legal documents, establish appropriate trusts and succession structures, and ensure that businesses have governance arrangements that do not depend entirely on one individual’s ability to act.

They also need to understand the limits of informal arrangements.

Sharing an ATM card, bank PIN or M-Pesa account with a relative may appear convenient, but it does not give that person the legal authority to make decisions on behalf of someone who has lost capacity.

The lawyers argue that Kenya’s legal framework also needs to evolve as the population ages. They are calling for the introduction of a statutory enduring or lasting power of attorney that would allow a person with capacity to nominate someone to manage their affairs if they later become incapacitated.

“Kenya should enact a statutory enduring or lasting power of attorney so that a person of sound mind can lawfully appoint someone to manage their affairs if mental incapacity later occurs,” they say.

Such a framework, they argue, could reduce the need for families to seek court intervention after incapacity has already occurred while providing greater certainty over who can manage a person’s affairs.

→ jngari@ke.nationmedia.com