Lasting Power of Attorney is now more simplified
The Office Public of Guardian announced that the simplified version of the Lasting Power of Attorney, also known as “Form 1”, is now further simplified because the previous simplified version was just too complicated.
I have a lot of grievousness against the previous Form 1 of the Lasting Power of Attorney. I made numerous feedback to the Office Public of Guardian but it was largely ignored. Thank goodness they realised their mistakes after a whopping 4 years in office. Talk about productivity. The following is a summary of the old and new Form 1 Lasting Power of Attorney:
Too Many Pages
The previous Form 1 of Lasting Power of Attorney was too long and difficult to fill. There were 18 pages for the Form 1 and 7 pages for the old application form. This means a total of at least 25 pages to fill. The number of pages could increase further if there are multiple donees or replacement donees.
The Red Seals
The previous Lasting Power of Attorney Form 1 requires red seals. Why is there a need for red seals to affix beside the signatures of donor and donees (and replacement donees)? These affix seals may be used by law firms but ordinary persons will not have such seal. They have to buy these seals themselves.
Unfortunately, these red seals are still required on the new form. The red seal can be purchase from stationary stores. The specifications of the seals and the images of the red seal package are as follows:
Brand: ZEPSTICK Size: 15mm No: S0015
Confusing Application Form
The old application form itself can be quite confusing. Apparently either Donor or Donee can be the applicant. There is no reason why the Donee can be the applicant. In fact, I found it strange that there is a distinction made between applicant and the donor. Moreover, the replacement donees are not listed in the application form although the donees are. This is in contrast to the Lasting Power of Attorney itself in which all donees and replacement donees are listed. The 7 page application form is an unnecessary document as the information can be found in Form 1.
In the new Application Form, we still have the same in which the donee can be the applicant. What has improved is that the replacement donee’s particulars are now listed in the application form. Still, in my opinion that application form itself is redundant.
By the way, with effect from 1 September 2014, SingPost will offer free postage service for submission for 2 years. Previously, submission by post was not allowed.
Persons to be notified
In the previous Lasting Power of Attorney Form 1, the onus is on the donor to notify the ‘persons to be notified’. This is not logical because would a donor who is under duress notify others of his intention to do a Lasting Power of Attorney? Also, there is a mandatory six weeks waiting period after the application to wait for any valid objections which may be raised by the donees or the person(s) named to be notified of the application.
In the new Lasting Power of Attorney, the section on notifying others have been taken away. Great! But is the six weeks waiting period still there?
Self-collection or registered mail
There was a separate document which specifies whether the Donor wants the Lasting Power of Attorney to be sent to them by registered mail or by hand. This document is now incorporated into the new application form.
Fees for Lasting Power of Attorney (Form 1)
Previously, it cost $50 to apply for Lasting Power of Attorney if using Form 1. Now, the fee is waived for 2 years for Singaporeans. Does that mean Permanent Residents still need to pay?
The fee for Certificate Issuer still applies and there is no standard fee imposed.
Powers Relating to Physical Properties
Since this is a financial blog, I will zoom in into whether the Form 1 Lasting Power of Attorney is sufficient for financial planning.
In the old Lasting Power of Attorney Form 1, if the Donor wants restriction in handling physical properties, the restriction is with regard to two physical properties only.
In the new Lasting Power of Attorney, it is down to just one property. Bad! Bad! Bad!
Powers Relating to Making Cash Gifts
In the old Lasting Power of Attorney, if the Donor wants to give the Donee the authority to make cash gifts, this authority is unlimited in monetary value and to anyone. This is very bad.
In the new Lasting Power of Attorney, if the Donor wants to give the Donee the authority to make cash gifts, cash gifts can be unlimited in monetary value or restricted in monetary value (capped at $X within 1 calendar year). However, the Donee still can give the cash gift to any tom tick harry. Bad!
Can you use Lasting Power of Attorney for financial planning?
From financial planning standpoint, Form 1 is not useful for financial planning in many circumstances due to the severe limitations in properties and cash gifts. It is more suited for young married couple (assuming the couple 100% love each other).
Consider a young married couple who 100% love each other and they have children who are still minors. Such a loving couple would totally entrust the other person to manage the family’s finance if one party lacks mentally capacity. Hence, it is not an issue for the Donor to give total power to the Donee (spouse) including the ability to make cash gifts to any tom-dick-harry. Also the restriction of just 1 property is not an issue since most young couples only got 1 HDB flat. Even if the Donor has 100 properties, the Donor just do not need to impose any restriction on the Donee with regard to property & affairs and there is no longer any issue.
However, Form 1 of the Lasting Power of Attorney may not be suitable if the Donor is
- A single or
- A person with adult children or simply only love the spouse 99% or
- Wants to leave instructions on how to handle investments.
A Donor who is single is likely not to have any soul mates who can be the trusted donee especially in relation to financial matters. Such a Donor can appoint siblings. But if these siblings are busy with family on their own, there is really nobody who can be the Donee.
The Lasting Power of Attorney Form 1 is not suited for those with adult children. I shall give an example for illustration. Consider an individual who has three properties, one wife and two children. The individual has written in his will that he would bequeath one property to each of them. As a Donor, he appoints his wife to be the Donee with the authority to do anything she likes (because he 100% trusts her). When the Donor suffers from lack of mental capacity, his wife sells one of the property to raise cash to support his medical and maintenance needs. Subsequently the Donor dies. As a result, one of the beneficiaries gets NOTHING because the property concerned is no longer in existence. This simple example illustrates that the Lasting Power of Attorney actually could alter the intention of the Donor’s will. Of course, if the family 100% love each other, they can ‘rearrange’ the distribution on their own such as by putting everybody as equal joint owners under tenancy-in-common of the remaining properties. But this would incur hefty stamp duty since the distribution is no longer in accordance to the will.
Lastly, the Lasting Power of Attorney Form 1 does not provide any guidance for the Donee on how to handle investments. In fact, there is no appointment of an Investment Adviser. What if the Donee gets prospected by the most feared insurance agent to buy some nonsense product using the Donor’s money?
Did 68% of applicants for Lasting Power of Attorney did it right?
97% of application for Lasting Power of Attorney uses Form 1. 68% of the applicants for Lasting Power of Attorney were made by people from 56 and older (who may have adult children). Putting these two figures together, it means a HUGE majority of those who applied for the Lasting Power of Attorney likely did not thought through enough whether the Form 1 is indeed the most suitable form to use.
Of course, for every problem there is always a solution. That is why yours truly can always earn a decent living from such problems... (hint hint).
For those who want to learn more about the Lasting Power of Attorney, I have a Full Report on Lasting Power of Attorney which can be downloaded. The Full Report on Lasting Power of Attorney will answer questions such as:
- What are the functions of the Public Guardian?
- Who can be the Donee?
- What types of decision can a Donee make?
- Is the Donee allowed to revoke an existing Advanced Medical Directive?
- Can the Donee change the religion of the Donee?
- Is the Lasting Power of Attorney revocable?
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 Media Release - "MOVES TO ENCOURAGE SINGAPOREANS" by OPG 12 July 2014