Why you need a Lasting Power of Attorney and what happens when you don't have one
Appointing a Lasting Power of Attorney ensures decisions will be made in your best interests by people you trust, should you lose mental capacity. In the second installment of our women’s legal series, CNA Women looks at how this works.
The famous Czech novelist Franz Kafka is widely attributed with the saying: “Better to have, and not need, than to need, and not have.”
While this statement could apply to any number of things, it seems particularly apt if you’re considering whether or not to make a Lasting Power of Attorney (LPA).
As defined on the Ministry of Social and Family Development’s (MSF) website, the LPA is a legal document which allows a person who is at least 21 years of age (referred to as the ‘donor’) to voluntarily appoint one or more persons (the ‘donee’ or ‘donees’) to make decisions and act on his or her behalf if he or she loses mental capacity one day.
It says you can choose to grant a donee decision-making powers over personal welfare or property and affairs matters, or both. And if you have more than one donee, you’ll need to decide if they are to make decisions jointly, or if they can do so jointly as well as separately.
The government-created digital service, My Legacy, says personal welfare decisions would include living arrangements, medical care and daily care; while property and affairs matters cover actions like accessing the donor’s bank accounts to pay for his or her care, handling property and making investments.
WHEN DOES LPA COME INTO PLAY
My Legacy states that an LPA takes effect when you lose the mental capacity to make your own decisions. This needs to be verified by a registered medical practitioner.
Some common causes of mental incapacitation it lists include advanced dementia, mental illness, a stroke, a coma or head injuries sustained in an accident.
Tan Shen Kiat, CEO, founder and director of Kith & Kin Law, said: “A will kicks in upon a person's death, whereas an LPA comes into effect when a person is alive but has lost mental capacity. In fact, it only applies to those who are mentally incapacitated.”
Although there are other kinds of Power of Attorney, Tan said these are effective only when the donor still retains mental capacity or when they have not expired. Also, these only delegate powers over property and affairs matters but not personal welfare, unlike the LPA which grants powers in both areas.
Often, Power of Attorney is used in cases where a person is moving overseas and requires someone to manage his or her financial affairs in Singapore, such as rental income and investments.
WHY YOU SHOULD MAKE AN LPA
“With death, it’s relatively straightforward – after you die, your estate will be distributed, with or without a will. But when you lose mental capacity, it tends to be for a long period and your direct welfare is involved,” said Tan.
“An LPA allows your donees or caregivers to use the resources under your name to look after you if you become mentally incapacitated,” he explained.
A will kicks in upon a person's death, whereas an LPA comes into effect when a person is alive but has lost mental capacity.
In addition, making an LPA while you are of healthy and sound mind means you can make a considered decision as to who is a reliable and competent person you trust to act in your best interests.
And should you have instructions regarding how to fund your care or which assets to utilise, these can also be included in the LPA.
WHAT HAPPENS IF YOU DON’T MAKE AN LPA
Without an LPA, said Tan, your family or loved ones will have to apply to the court to be your deputy or deputies in order to administer your affairs. This can be long and costly, not to mention stressful for the people making the application.
As explained on the MSF website, a deputy is someone appointed by the court to make certain decisions on behalf of a person who lacks mental capacity if there is no LPA made and hence no donee who can decide.
“The court sees itself as a guardian of the person who has lost mental capacity and cannot exercise his or her right to choose who to entrust decision-making powers to,” Tan said. “It has to step in and decide on the person’s behalf, hence it is very careful about who it gives deputyship to – there are a lot of background checks to be conducted.”
He added: “Whereas with an LPA, you can make your own decisions – wise or unwise – regarding the people you appoint to be donees. The court will not investigate whether they are trustworthy and competent.”
Those who apply to be a deputy must have an established relationship with the care recipient, cannot be a bankrupt, and show that they have a plan in place for the person’s current and future care.
Medical reports will be required to certify that the care recipient has already lost mental capacity and cannot make decisions in the areas that the prospective deputy wants powers over.
Tan also raised the issue of asset tracing.
“People who did not make an LPA or a will are unlikely to have left behind easily-referenced documents that show what is in their estate. This means their prospective deputies may have little or no idea about what assets need to be managed and have to feel their way in the dark,” he said.
Ultimately, though, what happens when people lose mental capacity without having an LPA in place depends on their personal circumstances at the time.
“Were they in the midst of a property transaction or were caregivers to others? Some may have no need for deputyship at all because their family already takes very good care of them without drawing on their estate.
“In other situations, if a person’s resources need to be tapped on, the next-of-kin may apply for a limited deputyship to manage financial affairs only,” Tan explained.
LPA DONEE VERSUS AN EXECUTOR OF THE WILL
Tan explained that your LPA donee makes decisions on your behalf while you are mentally incapacitated. Upon your death, your LPA is cancelled and the executor of your will steps in to administer your estate and carry out the instructions in your will.
“It is legally permissible for your LPA donee to also be the executor of your will. A donee should be both trustworthy and competent. The same person with these qualities can also assume the role of an executor,” he said.
“If, however, there are exceptional circumstances due to the size of the estate or age and longevity issues, different people can be appointed.
“For example, we have had elderly widowers who appoint their next-of-kin to be the donees, but the partners of the law firm to be executors,” he said.
HOW TO MAKE AN LPA
Once you have chosen your donee or donees, obtained their express agreement to serve in the role, and decided whether to grant them decision powers over your personal welfare or your property and finances, there are three key steps to applying for an LPA:
1. Fill up the relevant form, available on the MSF website. You can opt for Form 1, a standard version that grants general powers like where you should live, your medical treatments and how to manage your money and property; or Form 2 if you want to customise the powers.
2. Get the form certified by an LPA certificate issuer. This can be a practising lawyer, a psychiatrist, or an accredited doctor who is registered with the Office of the Public Guardian (find the list here).
3. Submit your application by post or by hand to the Office of the Public Guardian at the following address:
Office of the Public Guardian
Ministry of Social and Family Development
20 Lengkok Bahru
#04-02, Family@Enabling Village
Submissions cannot be made online for now.
While Form 1 can be filled in and signed by you and your donees, Form 2 is more fit for purpose and needs to be drafted by a lawyer, said Tan
“My general advice is that if there are any particular areas which are very important to you or specific instructions you wish to tailor, they should be dealt with using Form 2 because the powers set out in Form 1 are so broad that it can be unclear what they cover or do not cover,” he said.
Examples where Form 2 may be more appropriate include situations where there is a family business, or where the donor’s resources need to be used for the benefit of dependents or someone else who is not the donor, such as paying for a child’s school fees or upkeep.
THINGS YOU MAY NOT KNOW ABOUT AN LPA
Tan listed a few points that many people are unaware of when it comes to an LPA.
- There is a 116-page document called The Code of Practice which outlines the roles of a donee and how they are supposed to act in various situations. It is advisable for donees to go through it carefully.
- Despite the broad powers of a donee, certain limits and restrictions apply. For example, a donee cannot make a will on behalf of the donor, make or revoke insurance nominations, or change CPF nominations.
- If you make an LPA while single, your donee remains the same even after you get married unless you decide to appoint someone else.
- But if your only donee is your spouse, the act of divorce will disqualify him or her from continuing in that role, and your LPA is considered cancelled.
- If you have made an Advanced Medical Directive – a legal document informing the doctor treating you that you don’t want the use of any extraordinary life-sustaining treatment to prolong your life should you become terminally ill and unconscious – the decisions in it are excluded from the powers of your donee. In other words, the AMD overrides the donee’s decisions.
Tan added: “At the end of the day, the LPA is there for your own benefit. Yes, it makes it easier for your loved ones to look after you and handle your affairs, but it’s really about looking out for your own welfare.
“There’s no point in having a lot of assets or health insurance if they cannot be activated for your own care.”
CNA Women is a section on CNA Lifestyle that seeks to inform, empower and inspire the modern woman. If you have women-related news, issues and ideas to share with us, email CNAWomen [at] mediacorp.com.sg.