Living will finally possible in Italy

The new law regarding the Italian Living Will – testamento biologico (law 219/2017) – enters into force on 31 January 2018.

Nick Metta highlights the implications in Italy of a foreign Lasting (Durable) Power of Attorney in light of this new legislation.

Power of Attorney, Lasting (Durable) Power of Attorney and Living Will Under Italian Law

Many of my clients with properties in Italy or doing business there have asked me to explain the difference between a Power of Attorney, Lasting Power of Attorney and Living Will.

Although Power of Attorney and Lasting Power are similar, there are some fundamental differences which are important to bear in mind. Let’s start by describing how a Power of Attorney works and then highlight the main differences with a Lasting Power of Attorney.

Power of Attorney: Definition

A Power of Attorney (or PoA) is a document used to appoint another subject to act in your name and on your behalf. The name for Power of Attorney in Italian is procura.

Parties

The person acting on your behalf under a Power of Attorney is called the “representative”, or “attorney-in-fact”, or just “attorney”, whereas in Italian it is rappresentante or procurator.

The person granting the Power of Attorney is called the “principal”, in Italian mandante.

Powers

The principal is represented by the representative with respect to aspects and powers listed in the Power of Attorney. The principal can establish in the Power of Attorney specific conditions and restrictions, including, for example, an expiration date which terminates the powers by a specific date.

A Power of Attorney can be drafted for one affair only, for example, to buy a house, or for more than one matter, for example to sell a house and close a bank account. The Power of Attorney can also establish generic wide powers of representation, e.g., to carry out all activities related to real estate, or to buy, sell and rent properties.

A Power of Attorney can also set out very broad powers to represent the principal in all personal and business affairs. This type of Power of Attorney with a broad scope is called “General Power of Attorney”, in Italian procura generale.

Taxation

While a single affair Power of Attorney is free of taxes, if the Power of Attorney gives power to conduct more than one affair, it is subject to a “registration tax” (approximate cost from €200 to €500, depending on the circumstances).

Formalization

In most cases, the principal’s signature on the Power of Attorney is required to be certified by a notary, who can be an Italian notary or a notary (or solicitor) from another country.

A Power of Attorney done abroad is valid in Italy if complies with Italian substantive and formal requirements. A PoA notarized overseas might need legalization or an apostille certificate to be used in Italy. International validation requirements depend on the country where it is notarized.

Legal Effects

One of the main aspects of a Power of Attorney is that the actions carried out by the representative under and in compliance with a Power of Attorney have legal effects only in favor of and against the principal.

However, if the representative carries out activities that are not included within the scope of the Power of Attorney, or outside of the granted powers, the legal effects apply in favor of and against the representative only, unless the principal ratifies said activities.

Duration

A Power of Attorney lasts the life of the principal, with some exceptions.

For example, one exception is that the principal can establish an expiration term. The principal can establish a fixed date after which the Power of Attorney is no longer valid. Or the principal can establish in the Power of Attorney document that, when or should a certain event occur, the Power of Attorney will no longer be valid. However, should the principal die before the established deadline or event, the Power of Attorney will expire upon death anyway.

it is important to know that a Power of Attorney will not become invalid if the principal gets incapacitated, i.e., loses mental capacity. Therefore, the appointed representative can still legally carry out activities in the name and on behalf of an incapacitated principal.

In any event, a Power of Attorney can be revoked at any time, unless it is granted also in the interest of the representative.

Lasting Power of Attorney Limits

In some foreign countries, especially common law counties like the UK, USA, Canada, Australia and Ireland, it is possible to establish a Power of Attorney that grants powers to act on behalf of the principal on a very large range of areas even if the latter gets incapacitated. Said Power of Attorney might be called Lasting Power of Attorney, or similar names like Enduring Power of Attorney, Durable Power of Attorney, or Continuing Power of Attorney, depending on the jurisdiction and the powers’ extent. Hereinafter generically “Lasting Power of Attorney”.

A Lasting Power of Attorney valid abroad might be temporarily valid in Italy, during the time that the principal is mentally sound.

The provisions of a Lasting Power of Attorney regarding powers of representation after the principal becomes incapacitated are compatible with Italian law and therefore have effect in Italy too. Once the principal loses mental capacity, the Lasting Power of Attorney can still be used in Italy.

However, the lasting power of attorney powers regarding medical decisions would not be valid in Italy whether the principal is mentally lucid or not.
Therefore, a Lasting Power of Attorney signed abroad can be used in Italy if it complies with Italian substantive and formal requirements and if it refers to activities for which it would be legal to make an Italian power of attorney in Italy, among which making medical decisions is not included.

Alternative to Lasting Power of Attorney

As an alternative to a Lasting Power of Attorney, in Italy it is possible to designate a subject as the principal’s “guardian” giving the broadest authority with respect to financial, personal and some health care matters. Traditionally, a guardianship process would be started after incapacitation by the person who would like to be appointed as a guardian, through a Court process. This usually creates a gap in time between incapacitation and when the Court completes the guardianship process, which can take a few months.

However, it is also possible for a person to designate a guardian (in Italian amministratore di sostegno) in his/her own interest, while being lucid (not incapacitated), under the condition that the guardianship would be effective as soon as the principal becomes incapacitated. This form of “preemptive guardianship designation” would avoid the gap in coverage issue above.

The law requires that the guardian designation is done in writing and that the principal’s signature is authenticated by a notary public. The principal shall set out in the preemptive guardianship designation document several parameters, such as guardianship authority scope based on incapacitation grade, etc.

Also, Italy just passed a new law that gives the possibility to a person to set out wishes to receive the preferred kind of healthcare in the event of incapacitation (law 219, 22 December 2017). In some foreign countries for this purpose it is possible to draft a “living will” or “advance directive”. The name in Italian is testamento biologico or biotestamento.

More specifically, one of the main provisions of this new law is that a person, in view of a future incapacitation, can now grant somebody else the power to discuss and instruct doctors regarding medical decisions and health treatments, including refusal of life support measures (for example, respirator). These new rules will be in force from the 31^st of January 2018.

Therefore, if a person establishes a General Power of Attorney, a preemptive guardianship designation and a living will (biotestamento under the law 219/2017) in compliance with Italian law requirements, the end result would be very similar to, if not the same as, a Lasting (Durable) Power of Attorney, in that the designated person(s) would be able to take care of the principal’s personal and business interests regardless of the principal’s mental condition.

When you know your rights under current Italian law you can find a solution to address your particular needs.

Nick M. Metta, Italian lawyer, partner of Studio Legale Metta, focuses his practice on international estate planning.