Introduction

In our November 2021 Family Legacy Planning newsletter, we published an article discussing the importance of a Lasting Power of Attorney (LPA). As a brief recap, the LPA is basically a legal document allowing a person (“donor”) at least 21 years of age to appoint their trusted person as a donee. In the LPA, the donee can be appointed to, in the event the donor loses his mental capacity, act in the donor’s (a) personal welfare matters and/or (b) property and affairs matters.

It is never too early for one to start doing up their LPA, as any person can lose their mental capacity at any time. However, it is also vital to choose donees wisely, as this helps avoid lengthy legal disputes. In this month’s article, we hereby provide a brief overview and case study discussing how to determine the donees in an LPA, and elaborate on how our Family Legacy Planning Team at Sim Mong Teck and Partners (SMTP) can assist you in choosing the right donees in your LPA.

Persons eligible to be donees in an LPA

A donor may in their LPA appoint one or more donees. Where there are multiple donees, the donor can decide if the donees are to act (a) jointly, or (b) jointly and severally. Donees acting jointly must make decisions together and are prohibited from acting separately. Donees acting jointly and severally can make decisions together or separately, and both types of decision are valid.

A donee eligible to manage personal welfare matters must be an individual who is at least 21 years of age.

A donee eligible to manage property and affairs matters may be a (a) non-bankrupt individual who is at least 21 years of age, or a (b) licensed trust company as defined in the Trust Companies Act (Cap. 336) read with the Mental Capacity Regulations.

In addition to the above, a donee should ideally be trustworthy, reliable, and competent to make decisions for their donor, as they have various duties to observe in their position as a donee. Such duties include but are not limited to being fully aware of the types of actions and decisions they can make for their donor, acting in their donor’s best interests, adhering to the relevant laws and practices, acting in good faith, and exercising reasonable care and skill.

Case study

As mentioned, it is important for one to start doing up an LPA early, but it is also equally important that one chooses donees wisely.

A recent case in point involves an elderly, childless widow who is 71 years of age and suffers from dementia. In light of her condition, the widow’s friends and relatives had engaged in a court dispute, with each side fighting to be appointed as deputies to make decisions on the widow’s behalf.

On one hand, the widow’s friends claimed to be her long-term friends whom she personally entrusted her affairs to. They also claimed that the widow’s relatives have been neglecting her welfare for years and are only concerned about her assets.

On the other hand, the widow’s relatives claimed that her friends have been exploiting their friendship to become beneficiaries under her will and insurance policies. The widow’s relatives had also raised questions on a S$250,000 withdrawal made from her Singapore bank account, as well as a S$1.48 million mortgage loan taken on her Hong Kong properties.

Initially, a district judge ruled that neither side was a particularly ideal choice to be appointed as the widow’s deputies. Hence, a deputy was appointed from each side, and they were urged to put aside their differences to work together for the widow’s welfare.

However, on appeal to the High Court, the district judge’s decision was overturned in favor of appointing two deputies from the widow’s relatives. This was mainly due to the fact that the aforementioned transactions took place after the widow was diagnosed with dementia, which formed a sufficient cause for concern as to whether her friends could be trusted to act for her welfare over their own benefit. Furthermore, the widow’s friends had their own jobs and families as well as a difficult relationship with her relatives, all of which would negatively impact her care arrangement.

How SMTP can assist

The above case study serves as a cautionary tale highlighting the importance of both doing up an LPA early and choosing the donees wisely. In the widow’s case, her friends and family had to engage in a lengthy and rather acrimonious court dispute to determine the deputies making decisions on her behalf. Not only was the saga counterproductive to the widow’s care arrangement, it had also incurred significant time, monetary, and relational costs for all involved. Such unpleasant situations could have been avoided should there be an LPA done up early to clearly determine the donees as well as the boundaries of their accompanying powers and duties.

The case study has also showed that it is a heavily fact-centric process to determine the right decision-makers for a person who has lost their mental capacity, a process which requires close attention and astute judgment. In the widow’s case, the court had to closely analyze the background facts and weigh the various benefits and disadvantages of appointing deputies from her friends and/or relatives, before making the decision to appoint two deputies from her relatives.

At SMTP, we provide a suite of services related to Family Legacy Planning, which includes advising on and doing up your LPA. Not only do we have a wealth of experience in such matters, 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.  This goes a long way in helping you determine the right donees in your LPA.

Conclusion

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 in their family legacy planning matters, be it through advising on and doing up LPAs, wills, and Advance Medical Directives.

We understand that determining suitable donees in your LPA may prove to be a complicated process. Be that as it may, our up-to-date knowledge and expertise on these matters can help to simplify and expedite the relevant processes for you.

Should you or your clients require any assistance in family legacy planning matters, please feel free to contact our Business Development Team to schedule a consultation with our Family Legacy Planning Team. We look forward to working with you.