Estate Planning
Estate Planning is a process whereby individual plans ahead on how to distribute their assets when they pass-on. Also how their assets can be managed in the event they lost mental capacity. Estate planning is not just about how to take care of our beneficiaries but also how to take care of ourselves when we are suffering from dementia or in a coma.
The common estate planning instruments are Will, LPA, AMD, standby trust, testamentary trust and living trust.
LPA (Lasting Power of Attorney)
Singapore’s population is ageing rapidly. As our society ages, we expect a corresponding rise in dementia. At the age of 65 years, one in 20 may have dementia and the incidence could be as high as one in 10 by the age of 75 years as reported by Law Gazette.
You can visit the Alzheimer's Disease Association website to read the statistical appendix report. This statistical appendix presents individual estimates of prevalence and incidence for each of the economies included in the Asia Pacific region, for the period 2005 to 2050. Particularly, the prevalence of dementia in Singapore, those aged 65 years and above in year 2005 was 22,000. By 2020 it is projected the figure will increase to 53,000 and by 2050 the projected figure will further increase to 187,000.
What are the conditions that can cause a lack of mental capacity?
• Dementia
• Stroke
• Brain injury
• Mental health problems
• Intellectual disabilities
Issues that dementia patients and their caregivers may face:
Some basic understandings when considering doing your LPA:
WHAT IS THE MENTAL CAPACITY ACT AND WHY DO WE NEED THIS ACT?
Source: www.publicguardian.gov.sg
The Mental Capacity Act enables people to plan ahead and gives them the
power to make choices for their future before they lose their mental capacity.
It addresses the need to make decisions for persons who are 21 years or older when they lack mental capacity to make those decisions for themselves. The Act
also:
a. Allows people to voluntarily make a Lasting Power of Attorney to appoint one or more persons (donees) to act and make decisions on their behalf if and when they lack mental capacity in the future.
b. Allows the court to appoint a deputy to act and make decisions on behalf of a person who lacks mental capacity where a decision is required but the person does not have a proxy decision-maker.
c. Allows parents of children with intellectual disabilities to apply to the court to appoint a deputy for their child.
d. Gives legal protection for acts done by anyone in connection with the care and treatment of a person who lacks mental capacity if certain conditions are met, including the requirement that the act is done in the best interests of that person.
e. Provides safeguards to protect persons who lack mental capacity.
WHAT IS THE LASTING POWER OF ATTORNEY (LPA)?
A Lasting Power of Attorney (LPA) is a legal document that allows a person who is 21 years of age or older (known as donor), and who has mental capacity, to voluntarily appoint one or more persons (known as donee(s)), to act and make
decisions on his behalf about his personal welfare matters, property & affairs matters or both matters when he lacks mental capacity to make those decisions in the future.
Unlike a Power of Attorney that generally ceases to have effect when the donor loses his mental capacity, an LPA takes effect when the donor loses capacity.
The LPA allows you to plan for such a possible occurrence. The authority granted under the LPA to a donee will not be effective until the time the donor loses mental capacity.
There are 2 prescribed forms of the LPA to cater to different needs:
• OPG Form 1
• OPG Form 2
OPG Form 1 is a low cost Do-It-Yourself way of setting up your LPA. You
can visit Office of the Public Guardian website to download the form.
David Phuah, CFP, AEPP
The common estate planning instruments are Will, LPA, AMD, standby trust, testamentary trust and living trust.
LPA (Lasting Power of Attorney)
Singapore’s population is ageing rapidly. As our society ages, we expect a corresponding rise in dementia. At the age of 65 years, one in 20 may have dementia and the incidence could be as high as one in 10 by the age of 75 years as reported by Law Gazette.
You can visit the Alzheimer's Disease Association website to read the statistical appendix report. This statistical appendix presents individual estimates of prevalence and incidence for each of the economies included in the Asia Pacific region, for the period 2005 to 2050. Particularly, the prevalence of dementia in Singapore, those aged 65 years and above in year 2005 was 22,000. By 2020 it is projected the figure will increase to 53,000 and by 2050 the projected figure will further increase to 187,000.
What are the conditions that can cause a lack of mental capacity?
• Dementia
• Stroke
• Brain injury
• Mental health problems
• Intellectual disabilities
Issues that dementia patients and their caregivers may face:
- Without a LPA, the assets of the dementia patient will be frozen whereas with a LPA, it allows the ‘Property & Affairs donee’ the authority & power to use the patient’s money for his or her maintenance and care.
- Without a LPA, one of your family members has to apply to the court to seek a court order to be appointed as a deputy to make decisions for dementia’s patient, and the process can take 1 to 2 years and cost around $3000 to $10,000. This may cause some financial hardship for the caregiver and the quality of care that can be given to the patient.
- Without a LPA, it may cause frictions between family members as no one is legally appointed as a deputy to make decisions for the patient; and the family members may disagree on how the financial and medical matters should be handled.
Some basic understandings when considering doing your LPA:
- You have the option to do OPG Form 1 or OPG Form 2.
- You have to appoint one or more persons to perform two roles i.e. ‘Personal Welfare donee’ and ‘Property & Affairs donee’.
- You can appoint a Trustee company as your ‘Property & Affairs donee’ but not as ‘Personal Welfare donee.’
- It is better to appoint a replacement donee so that your LPA will not be cancelled in the event your donee dies or becomes a bankrupt; the donee formally refuses the appointment; the donee lacks mental capacity.
WHAT IS THE MENTAL CAPACITY ACT AND WHY DO WE NEED THIS ACT?
Source: www.publicguardian.gov.sg
The Mental Capacity Act enables people to plan ahead and gives them the
power to make choices for their future before they lose their mental capacity.
It addresses the need to make decisions for persons who are 21 years or older when they lack mental capacity to make those decisions for themselves. The Act
also:
a. Allows people to voluntarily make a Lasting Power of Attorney to appoint one or more persons (donees) to act and make decisions on their behalf if and when they lack mental capacity in the future.
b. Allows the court to appoint a deputy to act and make decisions on behalf of a person who lacks mental capacity where a decision is required but the person does not have a proxy decision-maker.
c. Allows parents of children with intellectual disabilities to apply to the court to appoint a deputy for their child.
d. Gives legal protection for acts done by anyone in connection with the care and treatment of a person who lacks mental capacity if certain conditions are met, including the requirement that the act is done in the best interests of that person.
e. Provides safeguards to protect persons who lack mental capacity.
WHAT IS THE LASTING POWER OF ATTORNEY (LPA)?
A Lasting Power of Attorney (LPA) is a legal document that allows a person who is 21 years of age or older (known as donor), and who has mental capacity, to voluntarily appoint one or more persons (known as donee(s)), to act and make
decisions on his behalf about his personal welfare matters, property & affairs matters or both matters when he lacks mental capacity to make those decisions in the future.
Unlike a Power of Attorney that generally ceases to have effect when the donor loses his mental capacity, an LPA takes effect when the donor loses capacity.
The LPA allows you to plan for such a possible occurrence. The authority granted under the LPA to a donee will not be effective until the time the donor loses mental capacity.
There are 2 prescribed forms of the LPA to cater to different needs:
• OPG Form 1
• OPG Form 2
OPG Form 1 is a low cost Do-It-Yourself way of setting up your LPA. You
can visit Office of the Public Guardian website to download the form.
David Phuah, CFP, AEPP
