How a Lasting Power of Attorney can guard against financial abuse

Source: Straits Times
Article Date: 18 May 2025
Author: Chor Khieng Yuit

Donees can be appointed to act in the two broad areas of personal welfare and/or property and other matters.

None of us wants to think we might be rendered mentally incapable one day, yet sadly the risk is there, so drawing up a Lasting Power of Attorney (LPA) is essential.

This simple document can protect people from being exploited financially, and go a long way towards reducing the anguish and stress for loved ones dealing with the stricken person.

An LPA allows a donor who is at least 21 years old to voluntarily appoint up to two donees to make decisions and act on his or her behalf.

Donees can be appointed to act in the two broad areas of personal welfare and property and other matters.

Personal welfare includes the donor’s daily care and living arrangements, while property and other matters include managing the donor’s bank accounts, investments and tax matters.

Mr Chong Yue-En, global chair of the mental capacity special interest group at the Society of Trust and Estate Practitioners (Step), said the LPA includes penalties if a donee abuses – including financially – the person being cared for.

Singapore, Britain, Australia, New Zealand and Hong Kong have LPA frameworks in place, said lawyer Lim Fung Peen.

Mr Lim, who heads the private wealth and family practice group at Yuen Law, wrote a book in 2019 on the importance of having an LPA and how to set one up.

The Ministry of Social and Family Development (MSF) said 233,000 Singapore citizens aged 50 and over had registered LPAs as at Sept 30, 2024, a 32 per cent jump from the 177,000 at the end of June 2023.

LPAs for this age cohort are on track to exceed the 240,000 target by the end of 2025.

An LPA allows for checks and balances against financial abuse, but only if it is set up early, before a crisis hits, noted Ms Chandrima Das, chief executive and co-founder of Teleskop, which provides digital vault services for information on an individual’s assets like property, wine and art.

Ms Das added that it is easier for an individual to think clearly about who he or she can trust and what boundaries or safeguards to set in the LPA during periods of calm.

“That is the essence of a personal readiness infrastructure – putting the right people, roles and documentation in place before there is a crisis,” she said.

An LPA can be made using Form 1 or Form 2. LPA Form 1 grants donees wide-ranging powers to make decisions on the individual’s behalf, while Form 2 is for those who want to appoint more than two donees, or grant specific powers to them. You will need a lawyer to draft up Form 2.

Mr Alfred Chia, CEO of financial advisory firm SingCapital, said Form 1 is the cheapest and most cost-effective way to set up an LPA.

The registration fees for Singapore citizens have been waived until March 31, 2026, after which, they will have to pay $70. Permanent residents already pay $90 while foreigners fork out $230.

Mr Chia said people should use Form 1 if they are able to appoint donees they trust. He has appointed his wife to take care of his personal affairs and financial matters if he loses mental capacity, and his wife named him as her donee.

Mr Lim, the lawyer, said an individual can appoint two donees who can alternate between the two broad areas of personal welfare and property matters.

Alternatively, these two donees can play different roles – one to handle personal and medical decisions and the other financial matters. It is also possible for the two donees to make all decisions jointly, Mr Lim added, so the checks and balances are even tighter – what is called a two-key-to-one-lock scenario.

Some people will want even more specific instructions to be built in to guard against financial abuse.

Mr Chong said this group could consider LPA Form 2.

For instance, the person can specify that any expenditure over a certain amount will require the donee to first seek a judge’s approval.

Form 2 registration fees are $185 for Singapore citizens, $230 for permanent residents and $275 for foreigners.

Forms 1 and 2 must be witnessed and certified by an LPA certificate issuer, who can be an accredited medical practitioner, a lawyer practising Singapore law or a registered psychiatrist.

Fees for certifying Form 1 range from $24 to $500 for accredited doctors, $50 to $300 for lawyers and $55 to $1,526 for psychiatrists.

Mr Chia said some people may want to appoint a neutral, third-party professional donee, especially if they have no family or friends they can entrust their care needs to. And sometimes, a parent may want to appoint a professional donee so they do not have to burden their children with the task.

Mr Lim said professional donees can be expensive. There is typically a one-time set-up fee plus an annual fee. Once a person becomes mentally incapacitated, the charges for professional donees are tallied at an hourly rate that is agreed upon at the point of engagement.

An LPA must be registered online via the Office of the Public Guardian Online portal. It is stored electronically and donors and donees can view it with their Singpass credentials.

It can be revoked as long as the individual still has the mental capacity to do so. A new LPA with the necessary updates can then be created.

The LPA is usually updated as a result of events such as death, divorce or bankruptcy.

Mr Lim said an LPA registered in Singapore is not valid for an individual’s assets overseas.

Individuals will have to draft separate LPAs – or an enduring power of attorney as it is called in Australia – for property, bank accounts or other investments in the other country.

He noted that many Singaporeans have assets in Malaysia, a country that does not have an LPA framework.

They will need to get a lawyer in Malaysia to draw up an irrevocable power of attorney, he said, adding that “it is not cheap”.

Similarly, the United States does not have an LPA framework so people have to spend “a pretty penny” to get one done for assets there, Mr Lim said, adding that he has seen “a quote of more than US$1,000 (S$1,300) to do a springing power of attorney in the US”.