Many of us understand the importance of Will planning to ensure there is a proper distribution of our estate when we pass on. However, one of the common overlooked aspect in proper financial/asset planning is doing a Lasting Power of Attorney (LPA).
1. What is an LPA?
An LPA is a legal document that allows you (the donor) to plan ahead and appoint one or more persons (Donee) to act on your behalf in the event that you lose your mental capacity to make decision.
To be eligible to make an LPA, the person (Donor) must be:
- 21 years old & above
- Possess Mental Capacity
2. When does an LPA come into effect?
The LPA comes into effect when the donor loses mental capacity. Some examples of loss of mental capacity can be a result of Dementia, Coma, Stroke, brain tumour, Severe brain Injury.
3. What can donee(s) do?
With an LPA in place, the appointed done will be able to make decision on the donor behalf for personal welfare and/or property matters. As such, it is important to appoint someone you trust to act for your best interest should you lose the mental capacity.
4. What happens if there is no LPA?
In the unfortunate event if an individual loses mental capacity with no LPA in place, the Next of Kin will have to seek a court order and apply for deputyship to be able to make legal decision on the person behalf.
An application of deputyship typically requires 3-4 months to process as there are plenty of documents involved such as the doctor’s medical report and the doctor’s affidavit of consent. In addition to the long processing time, the cost of deputyship may cost upwards of $3500.
During this period, assets such as bank account, CPF withdrawals, insurance claims (such as critical illness or Disability payout) may not be assessable by the family members until the deputy has been appointed.
5. How to make an LPA?
The donor will have to decide on the done, and seek an LPA certificate issuer. The issuer can be either an accredited medical doctor or a lawyer. The donor can submit the completed LPA application to the Office of the Public Guardian.