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2010: Legal capacity and proxy decision making

Issues surrounding the loss of legal capacity

Under §18 of the Guardianship Services Act (HE 146/98) of 2 October 1998, the Court can restrict a person's competence if s/he is found to be incapable of managing his/her financial affairs, situation or income and for this reason his/her interests are threatened. The court has three options:

  1. To allow the person to carry out particular legal acts or manage particular assets only with a guardian.
  2. To restrict the person's competence with the result that s/he does not have the competence to carry out particular legal acts or the right to manage particular assets.
  3. To declare the person legally incompetent.

No one can be declared legally incompetent if appointment of a guardian would be sufficient to protect his/her interests. If it is decided to restrict a person's competence to act, the degree of restriction must not exceed that which is necessary to protect the person's interests. If the court does restrict a person's competence to act, it must at the same time appoint a guardian for the person in question.  

Once declared legally incompetent, the person no longer has the right to manage his/her own assets, enter into contract or other legal acts, or decide on personal issues for which s/he does not understand the meaning. S/he can carry out legal acts which are considered normal in view of the circumstances and insignificant in terms of importance.

The legally incompetent person can manage any money s/he has earned during the period of legal incompetence, as well as any money which the trustee has allowed him/her to handle. If, however, the guardian considers that the way the money is being handled is not in the interests of the person, s/he can take over responsibility for handling it. Taking over responsibility for handling the earnings of the person who has been declared legally incompetent requires the consent of the guardianship authority.

Proxy decision making


The Guardianship Services Act (HE146/98) of 2 October 1998, which came into force on 1 December 1999, replaced the existing law which dated back to 1898. The aim of the law is to protect the interests and rights of those people who due to legal incompetence, sickness, absence or some other reason, are themselves unable to take care of their financial affairs. The law also covers protection in the non-financial domain.

Conditions for the appointment of a guardian

Guardianship law applies to both minors and people over 18 years of age. Paragraph 8 specifies that the court can appoint a guardian to a person (hereafter referred to as “the client”) who is of age and who, due to illness, mental disturbance, deterioration in health or other equivalent reasons, is unable to protect his or her interests or manage matters concerning his or her financial affairs, and the affairs cannot be managed any other (less restrictive) way.

If a guardian is appointed under the paragraph 8, the client retains legal competence; a person with a guardian obtains support from the guardian, who manages the client’s affairs and looks after the client’s interests either together with him/her or on his/her behalf. However, if a client’s competency to undertake obligations endangers his/her financial interests, the competency of the client is restricted (according to paragraph 18; please see above under “loss of legal capacity”).

How guardianship is arranged

A petition for the appointment of a guardian or the restriction of someone’s legal competency may be filed by a guardianship authority (i.e. the local Registry Office), the person whose interests are to be looked after, as well as the guardian, parent, spouse, child or other person close to him/her. (§72)

The appointment of a guardian is usually made by the District Court.  In addition, the local Registry Office may appoint a guardian if a person her/himself seeks a guardianship order when s/he is already starting to lose capacity. A person who seeks guardianship and whose interests are to be protected must be able to understand the meaning of the issue and request that a particular person be appointed as a guardian.

The appointment of a guardian always requires a statement by a physician.

If a person lives with a spouse who manages the financial affairs of the family, a guardian is not necessarily needed as long as these affairs can be managed with simpler measures, such as through financial powers of attorney or joint bank accounts.

Who can be a guardian

Guardians must fulfil certain criteria. They must be legally competent, suitable for the post and have consented to appointment. In assessing suitability, the court or guardianship authority bases its opinion on the ability and experience of the prospective guardian, as well as the nature and scope of the task. If necessary, several trustees can be appointed and the duties divided between them.

The guardian of a person with dementia is usually someone who is close to him/her, e.g. his/her spouse or next-of-kin, or another relative. It is also possible for an official guardian to be appointed. This is common when there are conflicts within the family or if a person with dementia does not have anyone to take care of his/her affairs. In Finland, the state is obliged to organize guardianship services.

The duties and responsibilities of guardians

Chapter 5 of the Guardianship Services Act describes the guardian’s position and duties in considerable detail. His/her duties and responsibilities can be divided into three categories: representation, management of assets and care (unofficial translations of the relevant extracts can be found below).


§ 29: The guardian has a duty to represent his/her client in legal acts concerning the client’s assets and financial affairs unless the court in appointing the guardian has ruled otherwise or unless otherwise regulated. Similarly, unless the court has ruled otherwise, the guardian can represent the client in personal matters which the client may be incapable of understanding. S/he cannot agree to marriage or adoption, admit paternity, accept admission of paternity, make or cancel a will or represent the client in other such affairs of an equally personal nature.

§30: If the client has several guardians, they must jointly take care of the duties of the guardian unless the court has decided to divide these duties between them. If one of the guardians is unable, due to travel, illness or other reasons, to take part in making a decision and delaying the decision would be inconvenient, his or her consent to the decision is not required. Issues of considerable importance to the client, however, may only be decided by the guardians jointly, unless the interests of the client clearly indicate otherwise. If the trustees cannot come to a unanimous decision and delaying the decision would be disadvantageous to the client, they can request that the guardianship authority responsible for supervision decides which opinion should be followed.

§31: A claim which is part of the assets to be managed by the guardian may be paid only to the guardian or to the client’s account as instructed by the guardian. A payment made to the client would, however, be considered valid, if the debtor did not know or, in view of the circumstances, could not have been expected to know, that the payment should have been made to the guardian.
If the client has an account with a credit institution, the guardian must inform the institution of the person or people able to withdraw funds from the account.

§32: A guardian may not give away the assets of his or her client. A guardian may not represent his or her client if the opposing party is the guardian him or herself, the guardian’s spouse or another close friend or relative of the guardian or someone represented by the guardian. However, if siblings share a guardian, the guardian does have the power to represent the siblings in the distribution of an inheritance unless there is a conflict of interests linked to the distribution of the estate or other factors associated with the distribution.

§34: Unless otherwise provided by law, a guardian does not have the right to do any of the following on the client’s behalf without the permission of the guardianship authority:

  1. relinquish or for a consideration  acquire fixed property or such land rental or other rights of use with buildings which may, without consulting the owner of the land, be transferred to a third party;
  2. put up assets as collateral or otherwise mortgage them;
  3. relinquish fixed or other property as set out in number 1 for the use of another party for a period exceeding five years or longer than a year from the commencement of the client’s majority;
  4. take out a loan other than a state-guaranteed student loan or guarantee bills of exchange or guarantee the debts of a third party;
  5. start a business on behalf of his or her client;
  6. enter into a contract to found a partnership or a registered partnership or join such a business;
  7. give up an inheritance or relinquish the client’s share of an inheritance;
  8. enter into an agreement regarding the joint administration of an estate;
  9. enter into an agreement on dividing assets or dividing an inheritance dealt with without an executor as set out in Chapter 23 of the Inheritance Code;
  10. relinquish or for a consideration acquire stocks or shares which give him or her the right to manage apartments or right of residence as set out in the Act (650/1990) on Rights of Residence to Apartments
  11. relinquish property managed in accordance with the rights set out in number 10 for the use of a third party by a fixed period contract for a period longer than five years or for a longer time than one year from the commencement of majority;
  12. sell forest or fell timber for sale or acquire for sale stone, gravel, sand, clay, peat or soil from the client’s land or relinquish the right to acquire it unless this is done in accordance with the asset management plan approved by the guardianship authority; or
  13. for a consideration acquire investments or shares in bodies set out in the Act on Investment Companies (579/1996) second paragraph other than:a) bonds issued by the state, municipalities or local government regional authorities;b) securities publicly traded as set out in the Securities Marketing Act; c) shares in such investment funds in which at least three quarters of the capital is invested in bonds and securities set out in a) and b) above; d) parallel investments as set out in a) – c) as regulated by decree, plus e) such stocks and shares which produce a right whose main content is the right to acquire a service or consumable used in the home if this does not incur a personal responsibility for the body’s debt.

Permission must be obtained from the guardianship authority responsible for supervising the work of the guardian. The decision whether or not to grant permission will be based on the interests of the client.

Management of assets

§37: The guardian may manage the property of his or her client such that the assets and their proceeds can be used for the benefit of the client and to meet his or her personal needs. In this task the guardian must conscientiously protect the client’s rights and further his or her best interests.
The guardian must assume the administration of the property (e.g. take the property under his/her administration) to the extent necessary in order to protect the client’s interests. Where required in this respect the guardian is entitled to receive police assistance as set out in §40 of the Police Act (493/1995). If the issue concerns assets over which the client may freely determine, the guardian may not take care of the property against the wishes of the client.  

§38: The client must have access to sufficient assets for his or her personal needs. The client must also have set aside a reasonable amount of available funds, taking into account his or her needs and other circumstances. The guardian may leave other assets in the client’s ownership, if this is in the interests of the client. The guardian must assist the client, should s/he wish to make a moderate gift, which is appropriate in view of the circumstances.

§39: The guardian must preserve assets which the client, during the duration of the guardianship or later, requires for living or for earning a living or which are otherwise of particular value to the client.
Other property which is not required to support the client or to meet other needs of the client must be invested in such a way that there is sufficient certainty that it will be preserved and that a reasonable profit can be attained. If the client so requests, the guardian must explain to him/her the financial situation and the steps which have been taken to manage any assets.


According to §42, the guardian must take the necessary measures to ensure that the client receives the treatment, care and rehabilitation that is appropriate to his/her needs. The circumstances and the wishes of the client should be taken into account when making decisions.  

Furthermore, before making a decision which is of importance to the client, the guardian must ask the client’s opinion on that matter, provided that this can be done without considerable inconvenience and that the client is incapable of understanding the meaning of the issue (§43).  

The court can also authorize the guardian to represent his or her client on matters related to the client’s person e.g. for treatment decisions, if the client lacks the capacity to understand such issues (§29.2).

Measures to protect the ward from misuse of power

The guardianship authority may decide that the guardian must draw up a plan for the management and use of the assets and present it to the guardianship authority for approval. Whether this is demanded, depends on the nature and size of the assets and other factors. When drawing up a management plan, the conditions for the managing of assets (as expressed in the Guardianship Services Act) must be taken into account. If the guardian in the course of his/her duties causes any injury or damage to the client (either intentionally or as a result of negligence), s/he is liable to pay compensation. Chapter 6 of the Guardianship Services Act specifically deals with the supervision of the work of the guardian.

It is the duty of the guardianship authority in the guardian’s home municipality to supervise the work of the guardian. If for some reason, there is no guardianship authority in the area to provide supervision, the obligation to supervise will rest with the Helsinki Administrative Court.

Within three months of taking up duties, guardians must submit to the guardianship authorities a list of the client's funds and debts which are to be managed by the guardian. The list should include details of any assets which have been set aside for personal use by the client. If the client receives assets or becomes a co-heir to property after the list has been submitted, details must be provided within one month. The guardian may be required to include a statement that the information provided is to the best of his/her knowledge accurate and that nothing has been deliberately omitted. S/he may also be asked to swear an oath.

A guardian who is responsible for handling the client's assets must keep a record of all assets, debts and transactions during the accounting period. A guardian who has responsibilities other than handling the client's assets must also keep records in order to be able to substantiate the actions that s/he has carried out (§50).

Accounts must be submitted annually to the guardianship authorities, within three months from the end of the accounting period. This period can be extended if the guardian was unable to submit the accounts within that time due to illness, the extent of the task or another valid reason. The necessary receipts must be included with the accounts and are returned to the guardian at a later date. If the list reveals that the client has little if any assets, the guardianship authorities may release the guardian from the obligation to submit accounts or extend the accounting period beyond one year. This is not possible if the client has considerable debts which the guardian is in change of handling. Exemption from the obligation to provide accounts concerning assets or parts of the assets handled may be granted if the guardian is the parent, spouse, child, close friend or relative of the client.

If the guardian does not fulfill his/her obligations or submit a requested management plan, the guardianship authorities can order the guardian to carry out the neglected action and enforce its decision by imposing the threat of a fine or by threatening that the neglected action be carried out at the expense of the negligent party. Alternatively, the courts may decide that it is in the interests of the client that another guardian be appointed to carry out the neglected action (§57-58).

Compensation and liability of guardians

Under Section 44, which deals with compensation, the guardian of an adult is entitled to compensation for his/her necessary expenses from the assets of the client, as well as a fee which is reasonable in view of the nature and extent of his/her task and the assets of the client. Detailed guidelines on the determination of guardians’ fees are available from the Ministry of Justice.

In section 45 of the Guardianship Services Act, it is stated that the guardian is liable in damages for any loss that s/he has deliberately or negligently caused to the client in the performance of his/her duties. The client cannot be held liable for any loss caused by the guardian acting on his/her behalf. Liability may be divided in the case of two or more liable people. Public guardians are also liable under the Damages Act.

Duration of guardianship

Guardians can be appointed for a fixed period of time or for an indefinite period. During this time, they must perform any tasks which have been assigned to them. They must complete such tasks but their duties can be amended if required.

There are a few reasons for releasing guardians from their duties e.g.

  • if the guardian asks to be released from his/her duties;
  • if it is revealed that the guardian is incompetent or unsuitable for his/her duties (i.e. the guardian is unable/not capable of doing the job for whatever reason, including the fact that s/he has become incompetent.)
  • if the death of the person for whom the measure was arranged dies;
  • if the tasks have been completed or the term of duty has come to an end.

The right to appeal

(§80) Everyone who has the right to bring the matter before a court under section 72  (a guardianship authority , the person whose interests are to be looked after, as well as the guardian, parent, spouse, child or other person close to him/her) shall have standing to appeal against a court order on the appointment of a guardian or the restriction of someone’s competency.

Continuing powers of attorney

A power of attorney is a deed in which one person (known as the donor) grants authorisation to another person (known as the attorney) to manage his/her property and financial affairs. Powers of attorney can be general or limited to specific tasks specified in the document.  They are usually considered as being durable powers of attorney which means that they continue to be valid even after the donor has become mentally incapable.

Conditions for setting up a Continuing Power of Attorney

In November 2007, the Act on Continuing Powers of Attorney (648/2007) came into force. This act provides a legal framework and system whereby donors can ensure that the attorney they appoint can continue or begin to manage their property and financial affairs once they have become mentally incapable.

How continuing powers of attorney are set up

A continuing power of attorney must be made in writing in the same way as a will. The donor appoints a person who is willing to be his/her attorney and defines the scope of the power of attorney. This can be limited to matters related to the donor’s property and other financial affairs but can also be for personal and healthcare matters.

Two witnesses must be present when the donor signs the continuing power of attorney or acknowledges his or her signature. They cannot be close relatives of the donor. The witnesses must certify the power of attorney by signing. The document is then given to the attorney or s/he is simply informed about it. It is advisable for the donor to seek advice before making such a document even though it can, of course, be revoked or amended.

The following information (at least) should be stated in the continuing power of attorney:

  1. that it constitutes an authorization
  2. the matters in which the attorney is entitled to represent the donor
  3. the donor and the attorney
  4. that the power of attorney will come into force in case illness, deteriorating health or similar circumstances renders the donor incapable of managing his or her own affairs.

When does a continuing power of attorney come into force?

When the donor becomes incapable of managing his/her affairs e.g. due to illness, the Register Office has to officially confirm that the power of attorney has come into force. For this to be possible, the attorney must provide the Register Office with the original power of attorney and a medical certificate or equivalent stating that the donor has become incapable of managing the affairs covered by the power of attorney.

Who can be an attorney

Any person can be appointed attorney provided that s/he is willing.  However, the Register Office cannot confirm the CPA if the attorney is incompetent (if s/he for example has a guardian) or if s/he is unsuitable for the task.

Measures to protect the donor against misuse of power

When the attorney commences his/her duties, s/he must draw up a list of the assets and debts of the donor which are covered by the power of attorney and submit this to the Register Office and at the request of the Register Office, submit a report on how the financial affairs have been managed. The donor can indicate in the power of attorney that certain requirements in the Guardianship Services Act be applied to the monitoring of the attorney, namely the obligation to submit a periodical statement of accounts to the Register Office.

Compensation and liability of attorneys

Unless otherwise stated in the CPA, the attorney is entitled to compensation for his/her necessary expenses from the assets of the donor, as well as a fee which is reasonable in view of the nature and extent of his/her tasks and the assets of the donor. The attorney is liable to pay damages for any loss that s/he has deliberately or negligently caused to the donor in the performance of his/her duties. The donor cannot be held liable for any loss caused by the attorney acting on his/her behalf.

Duration of the continuing power of attorney

A CPA becomes invalid if the guardian’s duty is to manage the same assets/take care of the same matters as the appointed CPA.  If the guardian and attorney have different duties, the CPA remains valid.

The right to appeal

A donor can annul a continuing power of attorney provided that s/he understands the meaning of the annulment. Annulment comes into force after the Registry Office has confirmed it. However, as the CPA comes into force only if the donor becomes incompetent to manage his/her affairs, this usually means that s/he cannot understand the meaning of the annulment. However, s/he can of course contact the Registry Office and demand that they investigate how the attorney is managing the person’s affairs.

Capacity in specific domains

Marriage and divorce

A person retains the right to marry even if s/he has been diagnosed as having dementia and/or has been declared legally incapacitated. However, a person who wants to get married has to understand the meaning and consequences of the act. The priest/officiator is the person who decides whether a person has the capacity to get married.

According to the Marriage Act (§18):

“A marriage ceremony shall not be performed if the officiator is aware of a fact that forms an impediment to the marriage or if the officiator deems that an engaged person is evidently unable to understand the significance of marriage due to his or her disturbed state of mind.”

Once married, the marriage cannot be declared invalid. However, if it is clear that the relationship is over and that the spouse is merely using the marriage in order to financially abuse the incapacitated spouse, the guardian of the latter is entitled to file for a divorce on behalf of his/her client.  

Voting capacity

It is stated in the Election Act (714/1998) that every Finnish citizen is entitled to vote in parliamentary elections, the Presidential election and European Parliamentary elections provided that s/he has reached the age of 18 not later than on the day of the election.

A person retains the right to vote even if s/he has been diagnosed as having dementia and/or has been declared legally incapacitated.

Contractual capacity

Contractual capacity of people subject to guardianship (whose capacity has been restricted)

The Act on Guardianship (HE 146/98) of 2 October 1998 addresses the issue of the validity of contracts made by people who have been declared incompetent to act or whose capacity has otherwise been restricted and also guardians who have acted outside their domain of competence. (§23-28)

Responsibility on the part of the incompetent person and the contracting party:

If a person carries out a legal act, which s/he was not entitled to carry out due to a restriction of his/her competence to act, the act is not binding unless the guardian consented to it.

If a legally incompetent person carries out an act without the consent of the guardian, the person with whom the contract was made has the right to withdraw, provided that the contract has not already been approved or properly fulfilled. If the other contracting party was aware that the person was legally incompetent, s/he cannot withdraw from the contract until a sufficient period of time has passed during which consent can be obtained. On the other hand, the contracting party can withdraw if s/he genuinely believed that the person was legally incompetent but was still entitled to carry out the act. In the case of withdrawal from a contract, the legal incompetent person and his/her guardian must be notified.

If the legal act, which the legally incompetent person carried out, is not later authorised, each party must return what they received as a result of the agreement or, if this is impossible, pay compensation. A legally incompetent person cannot be obliged to pay compensation over and above that which has been used for his or her reasonable living expenses or which s/he might have benefited from.

If both parties contracting an agreement are legally incompetent and either party is unable to return that which was received as a result of the agreement, compensation must be paid which is considered reasonable from the point of view of both parties. In considering what would be reasonable, consideration must be paid to the position of both parties when making the legal act, subsequent circumstances and any other relevant factors.

Responsibility on the part of the guardian:

A legal act which the guardian was not competent to carry out, is not binding upon the client (the person for whom s/he is guardian). A legal act which the guardian has carried out without the required permission is not binding upon the client unless the guardianship authority (from which permission should have been requested) subsequently approves the legal act on the application of the guardian.
If a legal act carried out by the guardian is not binding, the guardian’s obligation to compensate the contracting party for injury or damage caused is applicable as set out in §25 of the Act on Legal Acts under the Law of Property (228/1929).

Contractual capacity of people not under guardianship (whose capacity has not been restricted)

A person suffering from dementia, whose capacity has not been restricted under the Guardianship law, may make a contract which seems unwise or not in his/her best interests. The contract may be declared invalid if there is sufficient evidence that at the time the contract was made, the person lacked the necessary capacity to make a valid contract e.g. the person could not understand the meaning and consequences of the act (actual legal incompetence). This regulation is not part of written law in Finland but it is acknowledged as a legal principle.

However, if there is evidence that a person was being financially abused due to the fact that s/he was suffering from dementia, sections 31 or 33 of the Contracts Act (228/1929) would be applicable:

Section 31: If anyone, taking advantage of another’s distress, lack of understanding, imprudence or position of dependence on him/her, has acquired or exacted a benefit which is obviously disproportionate to what s/he was given or promised or for which there is to be no consideration, the transaction thus effected shall not bind the party so abused.

Section 33: A transaction that would otherwise be binding shall not be enforceable if it was entered into under circumstances that would make it incompatible with honour and good faith for anyone knowing of those circumstances (to invoke the transaction) and if the person to whom the transaction was directed could be presumed to have known of the circumstances.

Testamentary capacity

The rights of a legally incompetent person to make a will are regulated by the Finnish Code of Inheritance (40/1965).

If a person is under guardianship this does not affect the person's right to make a will. The capacity to make a will can be ascertained only after the death of the testator, if the testator's heir wishes to contest it. Invalidity of the will is regulated in Chapter 13 of the Law of Wills 1965. Under Section 1, the whole will may be contested and declared invalid if the testator lacked testamentary capacity, that is, if a mental illness, debility or other mental aberration of the testator had influenced the making of the will.

The will may also be declared invalid, if the testator was forced into making the will or induced to do so through abuse of the testator's lack of understanding, weakness of will, dependency, or if she or he was deceived and thereby misled into making the will.

It is often the case that testators' relatives contest the will because they claim that the testator lacked testamentary capacity due to dementia and old age infirmity. On the other hand, relatives seldom win the case as it is very difficult to obtain evidence of lack of testamentary capacity (Mäki-Petäjä-Leinonen 2003).

Civil responsibility

If a legally incompetent adult causes damage or injury by committing an illegal act, this will be dealt with in accordance with the Damage Compensation Act (412/1972) regardless of the person's responsibility.

Criminal responsibility

Criminal responsibility is addressed in Chapter 3 of the Penal Code of Finland (39/1889). Section 3 states that the act of an insane person, or a person who is mentally deficient due to senility or another similar reason, is not punishable. Similarly an act committed by a person who was at the time temporarily not in possession of his/her mental faculties is also not punishable. Separate provisions govern decisions regarding conditional discharge and imprisonment and to sanctions which might be imposed in addition to conditional discharge (515/2003; entered into force on 1 January 2004).

However, under section 4 (of Chapter 3 of the Penal Code), a person who was not considered as having been in full possession of his/her mental faculties when the offence was committed, but cannot be regarded as totally irresponsible in accordance with section 3, may be punished. In such cases, the punishment would be the same as that given to people of at least 15 years of age and not older than 18 who commit an offence i.e. 2-12 years imprisonment instead of life imprisonment (if that is the sentence that would normally have been applicable) and in case of imprisonment or a fine, at most three quarters of the most severe penalty and at least the minimum penalty. A reduction of penalty does not apply in cases of voluntary intoxication or other “self-induced mental aberration” (Section 4, §2).



Last Updated: Tuesday 27 March 2012


  • Acknowledgements

    The above information was published in the 2011 Dementia in Europe Yearbook as part of Alzheimer Europe's 2010 Work Plan which received funding from the European Union in the framework of the Health Programme. AE also gratefully acknowledges the support it received from Fondation Médéric Alzheimer for its project on legal capacity and proxy decision making in dementia
  • European Union
  • Fondation Médéric Alzheimer