Exercising Continuing Power of Attorney — Professional Legal Guidance | Attorney Rozil Amir

What is Exercising a Continuing Power of Attorney and How Does It Work in Israel

Exercising a continuing power of attorney is a legal process that enables a person (the principal) to appoint another person (attorney-in-fact) to act on their behalf when they are unable to do so themselves — due to loss of legal capacity or medical incapacity. Unlike an ordinary power of attorney that is revoked upon incapacity, a continuing power of attorney remains in force even after the principal loses their judgment or decision-making ability, provided it is executed in the manner required by law.

In Israel, exercising a continuing power of attorney is regulated by the Continuing Power of Attorney Law, 5756–1996. The law establishes the conditions, procedures, rights, and obligations of the attorney-in-fact, and protects the rights of the elderly, persons with cognitive disabilities, and others who fear future loss of capacity.

The process of exercising a continuing power of attorney begins with the preparation of a standard legal document (before witnesses or before an authority), continues with notification to the authority and capacity assessment, and ends with oversight and periodic reporting. The attorney-in-fact receives broad powers — financial, medical, personal, or any combination — and must act with full protection of the principal's interests.

Steps for Implementing a Durable Power of Attorney — From Preparation to Execution

1. Selection of an Appropriate Attorney-in-Fact

Choosing an attorney-in-fact is a critical decision. The attorney-in-fact should be a person you trust absolutely — a family member, close friend, or professional (attorney, accountant, licensed asset manager). It is important to consider their competence, ethical standing, availability, and ability to handle significant legal and financial responsibilities. In some cases, two attorneys-in-fact or a committee (multiple individuals) can serve as an additional control mechanism.

2. Preparation of the Legal Document

A durable power of attorney must be in writing, signed by witnesses (at least two witnesses) or before an authority (attorney, notary public, or representative of the Public Trustee). The document must clearly state:

• Names and identification numbers of the principal and the attorney-in-fact
• Accurate description of the powers — financial (management of bank accounts, sale of property), medical (decisions regarding medical treatment), personal (determination of residence)
• Date of signature and signatures of witnesses or authority
• An explicit statement that the power of attorney remains in effect even after loss of capacity

3. Notification to the Authorities

After the document is signed, the implementation of a durable power of attorney must be reported to the competent authorities — typically to the Public Trustee or the Ministry of Health (if there is a medical component). This notification documents the existence of the power of attorney and establishes the reporting obligations of the attorney-in-fact.

4. Capacity Assessment

At this stage, a medical or psychological evaluation is usually performed (if required) to confirm that the principal still has capacity or has already lost capacity. The assessment may be conducted by a physician, psychologist, or by court decision if there is a dispute.

5. Exercise of Powers

After the durable power of attorney becomes effective (typically upon loss of capacity), the attorney-in-fact begins to act on behalf of the principal. This includes managing accounts, making medical decisions, changing residence, or exercising any other specified power.

6. Ongoing Reporting and Supervision

The attorney-in-fact must report regularly to the Public Trustee or the relevant supervisory authority — typically in annual or semi-annual updates, in accordance with authority guidelines. The report must include details of financial transactions, medical decisions, and the status of the principal's property.

Rights and Obligations of the Attorney-in-Fact in Exercising Enduring Power of Attorney

Rights of the Attorney-in-Fact

The attorney-in-fact is entitled to act on behalf of the principal in the areas assigned to them, in accordance with the terms of the power of attorney. They may sign legal documents, manage accounts, make medical decisions, and represent the principal before public bodies. These rights enable the attorney-in-fact to act independently, so long as they act within the boundaries defined in the power of attorney.

Obligations of the Attorney-in-Fact

The attorney-in-fact must:

• Act in the best interests of the principal — every decision must be for the benefit of the principal, not for the benefit of the attorney-in-fact themselves
• Report regularly to the public guardian or relevant supervisory body on all significant transactions
• Preserve the principal's assets — not to invest in overly high risk, not to lend money to the principal, not to commingle assets
• Maintain confidentiality and discretion — all information about the principal must be kept secure
• Not use powers for personal benefit — prohibition on conflict of interest
• Report significant changes — for example, if the principal has regained capacity or if they have passed away

Legal Liability

If the attorney-in-fact fails to fulfill their obligations, they may be sued for financial damages, required to return assets, or even face criminal prosecution in cases of breach of trust or fraud. The family court can also remove the attorney-in-fact from their position and appoint a new one.

Common Mistakes in Exercising Durable Power of Attorney — and How to Avoid Them

1. Improper Signature or Missing Witnesses

A durable power of attorney that is not executed in the required manner (with witnesses or before an authority) may be considered invalid. This could result in the attorney-in-fact being unable to act, or their actions being subject to challenge. It is important to ensure that the signature was executed in the presence of two unrelated witnesses or before an authorized authority.

2. Failure to Notify the Authority

If you do not notify the Public Guardian or the relevant body of the existence of the power of attorney, the authority will not be able to supervise it. This could lead to legal problems later on. You must always notify the authority when the power of attorney begins to be actively used.

3. Ambiguous Definition of Powers

If the power of attorney states "financial powers" but does not specify exactly what, there may be doubt as to whether the attorney-in-fact is authorized to sell assets, sign mortgage agreements, or make charitable donations. It is important to be specific and precise in defining the powers.

4. Commingling of Personal Assets and Principal's Assets

If the attorney-in-fact uses a joint bank account or mixes assets, it may be difficult to prove what belongs to the principal and what belongs to the attorney-in-fact. This could lead to family disputes and allegations of fraud. Every transaction must be clearly documented.

5. Failure to Report or Partial Reporting

If the attorney-in-fact does not report significant transactions to the authority, the authority will not be able to supervise and protect the principal's rights. This could lead to legal investigation and claims of non-compliance with the law.

6. Failure to Update After a Change in the Principal's Status

If the principal regains capacity or passes away, you must notify the authority promptly. If the attorney-in-fact continues to act after the power of attorney has ended, this could be considered fraud or misconduct.

Comparison Between Continuing Power of Attorney, Guardianship, and Other Legal Tools

Conclusion: A continuing power of attorney is the most flexible and relatively affordable tool, provided it is prepared while the individual still has capacity. Guardianship requires a longer court process but provides full legal protection when no existing power of attorney is in place.

Why It's Important to Plan Implementing a Durable Power of Attorney Today

Many of us believe that loss of capacity or serious illness befalls others — not us. However, statistics show that a significant percentage of the population suffers from dementia, stroke, or other neurological diseases in old age. If you have not planned ahead, your family may be forced to petition the court to obtain guardianship — a long, expensive, and public process.

Implementing a durable power of attorney enables you to:

• Preserve your independence and choice — you choose who will care for you, not the court
• Protect your assets — an attorney-in-fact you trust will ensure your money is used for your benefit
• Save on costs — a durable power of attorney is less expensive than guardianship
• Avoid public court proceedings — the entire matter remains private and discreet
• Ensure continuity — your family will know exactly what you want regarding medical care, residence, and asset distribution

If you are 50 or older, or if there are health issues in your family history, now is the time to act. Preparing a durable power of attorney as part of estate planning (together with a will, financial power of attorney, and healthcare power of attorney) is a wise and cost-effective step.