Introduction
It can be readily accepted that we ought to plan for future unpleasant events, which may include our loss of mental ability, or mental capacity, to manage our own affairs. In Singapore, such forward planning would take the form of a lasting power of attorney (“LPA”), which would be executed through two different prescribed forms by the Office of Public Guardian (“OPG”). In this month’s newsletter, we take a closer look at the key concepts behind the LPA before we turn to look at the key differences between the two prescribed forms, LPA form 1 and LPA form 2.

Key Concepts
There are two parties to the LPA – (i) the donor, the person appointing one or more persons (“Donee(s)”) to make decisions on their behalf and (ii) the Donee(s). You may select to give your Donee(s) powers to make decisions regarding (i) your personal welfare (ii) your property and affairs (iii) both your personal welfare and your property and affairs, in the event that you lose your mental capacity.

Personal welfare matters would include giving or refusing consent to treatment by a healthcare provider and decisions about whom the donor should live with, although this would exclude decisions such as life sustaining decisions or organ donations. Property and affair matters would include decisions about the acquisition and disposal of property as well as banking transactions, but exclude decisions such as the revocation of insurance policies or CPF nominations.

Given the scope of powers bestowed on the Donee(s), you should choose someone trustworthy and competent for this purpose.

Also, your Donee(s) must be at least 21 years old and, if your Donee(s) are granted powers to manage your property and affairs, you Donee(s) must not be bankrupt. The Donee(s) must also agree to perform the role of a donee.

Having established the key concepts behind the LPA, we now closely examine the prescribed forms for the LPA.

LPA Form 1 And LPA Form 2
LPAs can be created through the use of LPA form 1 (a simplified form) or LPA form 2 (a customizable form which would allow for greater flexibility in spelling out the powers for the Donee(s)) and having the relevant form executed before a certified LPA issuer.

Some key differences between both forms include:

LPA Form 1:
– Maximum 2 donees
– General powers with certain basic restrictions that the donor may opt to impose on the Donee(s), such as restricting decision-making power for Personal Welfare matters only to healthcare decisions.

LPA Form 2:
– Unlimited donee
– All powers and restrictions are customizable in line with the donor’s requirements, such as requiring some decisions to be made jointly by both Donees, whilst allowing for other decisions to be made solely by the one Donee.

Indeed, there may be situations where the use of the customized LPA form 2 may have allowed family members to clearly understand the intentions of the donor, as we will see in the case study below.

Facts Of VHI v VHJ [2020] SGFC 37
An elderly father had appointed both his daughters as donees in respect oh his personal welfare and property and affairs by way of LPA form 1. In the LPA form, the father had allowed for his daughters to act jointly and severally as his donee. In other words, each daughter could exercise her powers under the LPA without the knowledge of the other.

The father lost his mental capacity after suffering a stroke. Initially, the sisters split their responsibilities on the mutually agreed basis that the younger sister would take care of her father’s day-to-day needs whilst the older sister would take care of his finances. Subsequently, a dispute arose between the sisters as the younger sister had felt that the older sister had breached their common understanding when the older sister exercised her powers to transfer the father’s business to herself. The matter was tried by the Family Court and subsequently put on appeal to the High Court, where the High Court revoked the older sister’s powers to manage the father’s financial matters.

Conclusion
This above case study illustrates the importance of clearly defining the scope of powers conferred on the Donee(s) under the LPA. Although the elderly father
entrusted both his daughters with decision making power in the event of his mental incapacity, the unhappy dispute might have been avoided if he had made a clear distinction about the scope of powers conferred on each daughter.

If the father had used LPA form 2 and the respective donee powers were clearly spelt out, perhaps there would be no doubt as that the father had intended for the older sister to make all decisions regarding his business, even though it may seem unfair that the older sister to transfer the business to her own name.
At least, it would have been crystal clear that this was what the father intended.