Introduction

Singapore, being an international hub, draws a huge number of expatriates and immigrants all year round – Many of whom have amassed substantial assets, both immoveable and moveable, not only in their countries of origin but in multiple other jurisdictions. Those who are slightly more informed in estate planning have even gone on to execute a Lasting Powers of Attorney (“LPA”) or such similar instrument abroad (“Equivalent Instrument”) to provide for the situation where they have lost mental capacity and require an official representative to make decisions for them on their assets and their welfare. Indeed, having executed an Equivalent Instrument, this then bags the question: Is it necessary for such individuals to execute another LPA in Singapore to cover their Singapore assets and other matters concerning their well-being (in Singapore) in the event they lose their mentally capacity?

In this month’s FLP newsletter, we will first begin with a comprehensive exploration of the uses and significance of the LPA and such Equivalent Instruments in estate planning. We will then consider how such Equivalent Instruments are treated under Singapore law with a focus on First and Second Schedules of the Mental Capacity Act 2008 (“MCA”) and finally, be able to ascertain whether executing a fresh LPA in Singapore is necessary if an individual already has executed an Equivalent Instrument previously.

What are Lasting Powers of Attorney and their foreign Counterparts?

At its core, a Lasting Power of Attorney (and the Equivalent Instrument) is a legal document that enables an individual (known as the “Donor”), to appoint one or more individuals (referred to as “Donee”), to make certain decisions on their behalf. The lasting nature of these powers distinguishes LPAs from ordinary powers of attorney, ensuring their effectiveness even in the event of the Donor’s mental incapacity. The primary goal is to provide a structured mechanism for managing personal, financial, and health-related affairs when the Donor does not possess the mental capacity to do so.

Personal Welfare

Personal Welfare LPA or LPAs that covers personal welfare, empower Donees to make decisions concerning the Donor’s daily care, accommodation, communication and medical treatment. The applicability of this form of LPA becomes evident especially when individuals seek to navigate healthcare systems and make decisions across borders. For example, an expatriate living in a foreign country may utilize the Personal Welfare aspect of the LPA (executed in such foreign country) to designate representatives who can make decisions aligned with his/her cultural and personal preferences regarding healthcare and living arrangements in such foreign country.

Financial / Property & Legal Affairs

Financial LPAs or LPAs that cover properties and legal affairs, grant Donees the authority to manage the Donor’s financial affairs, including property, bank accounts, investments, and other assets. This type of LPA proves invaluable when a foreign individual has financial interests in the local jurisdiction. With the LPA, the Donees (regardless of nationality) can navigate complex financial landscapes, execute transactions, and ensure the prudent management of the Donor’s assets in the respective jurisdiction (where the valid LPA or Equivalent Instrument was executed).

The Mental Capacity Act 2008 and the Treatment of Equivalent Instruments in Singapore

The First Schedule of the Mental Capacity Act 2008 on the formalities for the LPAs, sets out very clearly that only the Singapore LPA, with the relevant forms and prescribed manner of execution, will be recognised and enforceable by the relevant authorities in Singapore.

However, even though the Equivalent Instruments are not directly enforceable in Singapore, such Equivalent Instruments will be taken into account by the Singapore court in deciding if the Singapore assets is to be vested in the relevant Donee. Paragraph 7 (2) of the MCA states that the “the court may direct (a) any property situated in Singapore standing in the name of (the Donor); or (b) any stocks standing in the name of (the Donor) or the right to receive dividends from such stocks, to be transferred into (the Donee’s) name or otherwise dealt with as required by (the Donee), and may give such directions as the court thinks fit for dealing with accrued dividends from the stocks.”, provided if the Court is satisfied, as per Paragraph 7(1) of the MCA , “(a) that under the law prevailing in a place outside Singapore, (the Donee) has been appointed to exercise powers in respect of the property or affairs of (the Donor) on the ground (however formulated) that (the Donor) lacks capacity to make decisions with respect to the management and administration of (the Donor)’s property and affairs; and (b)that, having regard to the nature of the appointment and to the circumstances of the case, it is expedient that the court should exercise its powers under this paragraph”.

Thus, the Donee must first be able to produce the relevant Equivalent Instrument stating that he/she is indeed the Donee for the individual. Then, in his/her application to the Singapore court for the powers to deal with such assets to be vested in him/her, the Donee would need to explain and convince the Singapore court that it would be expedient to grant such an application. 

Our Concluding Thoughts

Whilst Lasting Powers of Attorney and such Equivalent Instruments are established to be used in the jurisdiction that they were created in, it seems that such Equivalent Instruments do have certain uses, albeit limited, in the Singapore jurisdiction.

For Donees seeking to assist their Donors to manage their assets in Singapore without a Singapore-executed LPA, Paragraph 7(2) of the MCA provides that such Equivalent Instrument may be helpful towards an application by such Donees to the Court to have the powers to deal with such assets of the Donor vested in the Donee. It should be noted, however, that the Court will nevertheless have the ultimate discretion towards deciding if such powers should vest in the Donee applying.

Indeed, the above will be helpful when no such Singapore LPA had been executed by the Donor. However, the Donee will still have to go through the comparatively costly process of making a court application for the vesting of the power to deal with the Donor’s assets which will inevitably lead to unnecessary delays in the transition of powers. Furthermore, as the Court still has the discretion (and hence, no obligation) in granting such powers, despite the existence of an Equivalent Instrument, this opens a gap for uncertainty as to whether the Donee can indeed have such powers vested in him/her eventually.

On this note, it seems that it will be in the Donor’s best interest to execute a Singapore LPA such that the Donee can swiftly take over control of the Donor’s Singapore assets and make decisions for the Donor in Singapore without suffering the delays, costs and potential uncertainty of outcome from the arduous court application process.

How can SMTP Help You

Having an experienced hand guiding you through the legalities of legacy planning is always helpful. Tapping on our wealth of experience and resources in Family Legacy Planning, we can guide you through the process of achieving your legacy planning objectives, with the quickest, most cost-effective methods with the greatest certainty of outcome.

We also believe in close engagement with our clients, paying close attention to their individual facts and circumstances, and tailoring our advice and courses of action to cater to their specific needs and requirements. SMTP’s core philosophy is to provide bespoke legal advice based on our private clients’ specific needs and requirements, as cases always differ on their fine details. Our team of dedicated staff are ever eager and prepared to assist interested parties. Should you or your clients require any assistance in trust or real estate matters, please feel free to contact our Business Development Team to schedule a consultation. We look forward to working with you.