This is a guest post by BH. BH is a healthcare professional who takes a keen interest in palliative care. He applies to his personal financial affairs the same level of meticulousness he displays at work. He has kindly agreed to contribute an article on something that is very close to his heart. BH is also a BigFatPurse reader and a long time childhood friend.
Speak of financial planning and the image of sitting down with a financial advisor going through numbers and portfolios will come to mind. We work hard to earn our money, and make sure that our money work harder for us by diligently saving and investing the money in financial instruments.
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We try to make sure we have enough for our nest egg when we retire and not be financially dependent on family members. We buy insurance policies in case something untoward happen to us, so that our families will not be left high and dry.
A typical investor like me will probably have shares in the CDP account, savings in the bank and probably a joint savings account for household expenses. These arrangements work fine when one is well and is earning.
What if something untoward happens to me?
If I die, the estate is frozen until the will is executed. If there is no will, the intestate laws in Singapore will distribute my estate to my wife and children in a rather fair way. Except that the process is a tedious and frustrating process, with multiple trips to the lawyer. For the Letter of Administration to be granted to executor of the estate, the process can take up to 2 years for a simple case.
Dying, in this sense is straightforward.
What if I meet with an accident or suffer a stroke and become comatose, and become unable to make decisions about my finances? Or what if I suffer from dementia as I advance in age and my decision-making abilities becomes impaired?
Any assets in my name are technically frozen, because my family cannot access them without my consent. Caring for me is tough and cash runs dry. I become expensive to keep alive.
My family is left distressed, both emotionally and financially. Until the day I die and my assets become part of my estate, they are inaccessible, even if the money is desperately needed to pay for my maintenance and medical expenses……
Holistic Financial Planning – The Lasting Power of Attorney
To me, financial planning includes making decisions about what happens to my money. It should be made when I am of sound mind and is well and ideally should be discussed with my loved ones.
This planning includes writing a will to specify how I want my estate to be distributed when I die, and more importantly, making a Lasting Power of Attorney (LPA), also known as the living will, to appoint a proxy to make decisions on my behalf should I lose my mental capacity.
Under the Mental Capacity Act (2010), the LPA is a statutory document that allows me (the donor) to appoint a proxy (the donee) to make decisions in areas of personal welfare, property and finances.
The LPA allows me to appoint one or more donees that are competent and trustworthy to manage my affairs. It can be a family member or a friend. I can also decide whether to grant general powers to my donee or give specific powers only. My donee needs to give consent to be appointed.
Being joined in matrimony does not allow my spouse to step up to this role, unless the appointment is formalised via a LPA.
Upon being certified to lose my mental capacity, my donee steps up and liaises with third parties to act on my behalf in my care and finances.
Making an LPA
Making LPA is straightforward. Choose an appropriate form (Form 1 or 2) and complete your LPA. Find a certificate issuer which can be either a doctor, lawyer or psychiatrist. (Form 2 needs to be drafted at the laywer’s).
This ensures that one understands the implications of making a LPA. Mail the completed LPA to the Office of the Public Guardian (OPG) and the LPA will be registered with the OPG 6 weeks later. Making a LPA is free for Singapore Citizens. Doctor’s or lawyers fees apply.
The LPA can be revoked anytime as long as I still have the mental capacity to. Like a will, decisions like these can be amended to suit my life’s stages. More importantly, they are in place when “what if” comes.
There are safeguards in place to protect me. Moreover, the LPA does not give the donee any power in areas of treatment decisions, the Advanced Medical Directive, matters regarding my will, CPF and insurance nominations. Ill-treatment and wilful neglect of the donor under the Mental Capacity Act are criminal offences.
A case in point of a LPA that went awry was the case of Yang Yin. It underscores the importance of choosing someone trustworthy.
What happens without an LPA?
Without a LPA, an alternative to act on my behalf in the event I lose my mental capacity is to apply to the courts to be appointed as a deputy to manage my affairs. It is an even more tedious and draining process.
A friend shared his horror stories of the hassle of applying to the courts to be appointed a deputy to manage his mum’s affairs because his mum has dementia. Having learnt the hard way, he advocates the importance of making of a LPA to each and every one of us.
However, a LPA does not cover all aspects of care. In fact, Advance Care Planning (ACPs) is the new national conversation that healthcare providers want to start to reach out to help people initiate difficult conversations about healthcare decisions about what we want and don’t want at end of life with family members, and this is increasingly important as our population ages.
However morbid, starting conversations like these can never be too early!