Introduction 

We all know that a Will is important. However, too few of us realize that having a Lasting Power of Attorney (LPA) is equally important.

Singapore is facing the challenges of a rapidly ageing population being one of the fastest ageing populations in Asia. 13.1% of our population is above 65 years of age. Recent studies have shown that 1 in 10 Singaporeans over 60 years of age has dementia. A study in 2012 showed that 28,000 people in Singapore aged 60 and above had dementia and that number is expected to soar to 80,000 by 2030.

 Lasting Power of Attorney

An LPA is a legal instrument that allows you to voluntarily appoint a representative called a ‘donee’ to make decisions relating to your personal welfare and financial affairs on your behalf in the event you lose mental capacity. It is not just for the elderly since mental incapacity can strike anyone due to accidents, stroke or illness.

In the unfortunate event a person becomes mentally incapacitated, for example he has a massive stroke that damages his mental capacity, his family would have to go through the hassle of applying for a court order to enable them to manage his affairs. This process is not only time-consuming, it is also costly.

An LPA is a relatively inexpensive document that allows you to plan for yourself so as to avoid being a potential burden to your loved ones. It also ensures that you take the pro-active step to ensure that in the event you should be unable to care for yourself, you would be protected from abuse. Who better to choose who should be best suited to take on the role to manage your affairs in your best interest when you can no longer do so other than yourself? Wouldn’t that give you a peace of mind?

An LPA can allow your Donee to make important decisions on your behalf and these decisions extend to selling your property, investing your money and withdrawing monies from your bank accounts. These are important decisions and if made incorrectly can have serious implications in that it can cause the vulnerable to be exploited. In light of the high profile Yang Yin saga that has made news all over Singapore, it clearly shows that an LPA is a very important and powerful document, one that has potential for abuse and exploitation. Having said that, it does not mean we should neglect having one in place. More importantly, we need to recognize the importance of this tool and ensure that we have full understanding of how we can use it to ensure that we are protected and not unnecessarily exposed should we become vulnerable one day.

There are 2 formats of an LPA – Form 1 is a general form which is fairly straightforward and has minimal restrictions.  Form 2 on the other hand is a ‘bespoke’ document that allows you to determine the extent of your donees’ powers and to even include restrictions that can safeguard some of your assets. Not only do we need to be comfortable with our choice of donee, we also need to be comfortable with the scope and extent of the powers conferred upon our donee in the event our mental capacity is compromised.

Planning is important and we should make use of the resources and tools we have available to help us plan ahead. Having a Lasting Power of Attorney as an important document alongside our Will is definitely a right thing to do as part of our initiative to plan ahead. We should however have a full understanding of the scope and limitations of a Lasting Power of Attorney so that we can effectively use this instrument to help us to the best of our ability should the need arise.