This post came out from The Straits Times (30 October 2016)
What is an LPA? This allows people to voluntarily
appoint one or more persons (donees) to take decisions and act on their behalf
as a proxy decision-maker if they lose mental capacity one day.
The
LPA allows donees to act in two broad areas - personal welfare and property.
Naturally, it is unwise to wait until one is showing signs of physical or
mental vulnerability before executing an LPA. Knowing that provision has been
made for the future provides peace of mind, as no one can predict when illness
or deterioration will take place.
Mr Alex Goh, an associate with JLC Advisors, says we are in a
better position to know who can be trusted to be our donees. "Without an
LPA, there will be uncertainty as to who can act as your proxy decision-maker.
An application would have to be made to court to decide who should be appointed
as your deputy to decide and act on your behalf. In some cases, there may be
friction between family members as to who should be appointed as deputy,"
he said.
Ms Ang Kim Lan, director at Goodwins Law Corporation, points out
the differences between a will and an LPA. "The provisions of a will kick
in only when one passes on. However, if a person suffers a lack of mental
capacity (for example, lapsing into a coma or suffering a stroke, brain injury,
dementia and mental health issues), the will does not apply. "Most of my
clients thought that the will kicks in when such circumstances occur and were
surprised when told otherwise," she said.
Mr Vincent Lim, a partner at JLC Advisors, notes that one
advantage of the LPA is that the donee would get quick access to funds. "If
an LPA is in place, this will allow your donee to get quick access to funds
necessary for your care and maintenance. Banks will allow your donee to take
charge of your bank accounts upon presentation of documents such as the
original LPA and a doctor's report certifying that you have lost the capacity
to manage your own affairs," he said.
If you lose your mental capacity without an LPA, funds in your
bank account cannot be touched until a court order is obtained appointing a
person as deputy. It could create stress and inconvenience for loved ones who
would, in the interim, have to pay for your care and maintenance as well as
expenses relating to applying for the court order, Mr Lim added. Ms Ang advised
that an LPA should be taken out as part of a person's estate planning. She
points out that it is not true that an LPA is a legacy planning tool for the
very old or the very rich. "In fact, it should go hand in hand with making
a will. It is prudent to align both legacy planning tools so that there is
continuity in the person's wishes, regardless of his or her mental capacity,
and at death," she added.
Mr Brandon Lam, head of financial planning group at DBS Bank
Singapore, said that as the population ages, the number of people with mental
illness is expected to go up. "Having an LPA in place will help to protect
the interest of the individuals in case they lose their mental capacity,"
he said.
According to studies, after age 65, the risk of Alzheimer's
doubles every five years. After the age of 85, the risk reaches nearly 50 per
cent. "That, to me, means that I'm very likely to get mentally
incapacitated when I get older," said Mr Keon Chee, director of Legasy
Planners.
What
are the top considerations?
CHOICE
OF DONEE
It is critical to choose the right person to be your donee because
of the significant powers wielded by him or her. After all, the donee is
someone conferred with the authority under the LPA to make decisions about your
personal welfare and/or property and affairs when you no longer have the
capacity to do so. He or she should be someone who is trusted and competent and
has good financial standing. You can appoint more than one donee. If joint
donees are appointed, they should be able and willing to work together to make
decisions in your best interests, said Mr Goh.
SCOPE
OF POWERS
In the LPA, you may decide to give the donee general powers for
all your personal welfare and/or property and affairs, or only specific powers.
There are two LPA versions available. LPA Form 1 - which can be self-completed
- allows you to grant general powers subject to basic conditions or
restrictions. Mr Chee said LPA Form 1 is like a "check the box" form
for standard cases where the donee has almost full power over the donor's
personal welfare and property affairs.
"This works for the majority of people. When a person becomes
mentally incapacitated, the donee then steps into the donor's shoes and goes
about acting for the benefit of the donor. However, Form 1 doesn't say 'please
look after my mum and dad or even my cat'. Form 2 allows such care to be specified
and/or performed through the trust," said Mr Chee. LPA Form 2 needs to be
drafted by a lawyer and allows you to tailor specific powers that are to be
granted to the donee. In both forms, you will find the terms "personal
welfare" and "property and affairs". A personal welfare donee is
authorised to decide on matters such as where you are to live, whom you may
have contact with, what social activities you take part in and what you wear
and eat. A property and affairs donee will have control and management of your
property. Among other things, he or she can deal with your property, handle
your tax matters and invest your savings. Those who have assets of a larger and
more complicated value may prefer to tailor the powers to be granted to their
donees in respect of their property and affairs.
APPOINTING
PROFESSIONAL DONEES
Earlier this year, changes to the Mental Capacity Act enabled
professionals such as lawyers or social workers to step in and be appointed as
professional donees. This is significant as people who are single, divorced or
elderly and have no next-of-kin or close friends - and thus no one to rely on
to be their proxy decision-makers - can consider appointing professional
donees. Even those with family members now have the option of paying professionals
to be donees. They may prefer this if they have complex instructions about
their care and assets, or if they want to prevent heated disagreements among
their loved ones.
AN
LPA DOES NOT OVERRIDE AN ADVANCE MEDICAL DIRECTIVE (AMD)
You should be aware that your LPA does not override an AMD if you
have registered one. An AMD is a legal document in which you register in
advance your wishes not to have any extraordinary life-sustaining treatment to
prolong life when you are suffering from a terminal illness, requiring
extraordinary life-sustaining treatment, and are unconscious or incapable of
exercising rational judgment over your own treatment. The Ministry of Health
has stated that making an AMD is a voluntary decision, and cannot be made on
behalf of another person. And regardless of objections from family members,
doctors will have to respect a person's AMD.
FEE
FOR LPA APPLICATIONS
From Sept 1 this year, the application fee for LPA Form 1 for
Singaporeans was revised to $75. The good news is that this fee is waived for
another two years, until the end of August 2018. The fee waiver for LPA Form 1
applications was introduced in 2014. This means we will be able to file LPA
Form 1 applications for free until this date, although people will still have
to pay fees charged by professionals engaged to witness and certify the
application, such as medical practitioners and lawyers. The fee of $200 for LPA
Form 2 for Singaporeans remains unchanged.
To download the LPA forms and get more information, visit www.publicguardian.gov.sg
Thoughts anyone?
Yours,
Something Small Thinking Big
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