In recent months I have been attending courses and upgrading my knowledge in the area of estate and legacy planning. In the area of preparing for the worst, most people assume that having some insurance is enough planning. However we should ask ourselves if the insurance payout would be easily accessible should we lose our mental capacity. We may lose our mental capacity regardless of age, through accidents, neurological diseases or other causes. This month we look at the how a Lasting Power of Attorney may complement our financial planning.
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Mr Unlucky meets with an accident and goes into a coma. He has an accident policy that would cover his medical costs. However, as this is not a Death claim, he faces two potential problems.
Potential Problem 1: He is unable to sign the claim the document in order to receive the insurance payout.
Potential Problem 2: The insurance cheque will likely be made out to him to be deposited to his bank account. His family will not have any access to the money for his medical bills since they cannot withdraw from his account.
A person who becomes mentally incapacitated will likely face the same problems.
Solution: Make a Lasting Power of Attorney (LPA)
What is an LPA: It is a legal document that a person who is at least 21 years old (donor) can make to voluntarily appoint one or more persons (donee[s]) to make decisions on his behalf should he lose the capacity to make his own decisions. Donee(s) may be appointed to act in two broad areas – personal welfare and/or property & affairs matters.
How the LPA works:
How to make an LPA:
If Mr Unlucky had appointed a Donee using the LPA, his Donee would then be able to make the claim and receive the payout on his behalf, to be used for his medical bills. Making an LPA, allows Mr Unlucky to choose a trusted person to make decisions for him, giving him certainty and peace of mind for himself and his loved ones.
For more info start a conversation with your Financial Services Consultant or visit www.publicguardian.gov.sg
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