Most of us have heard the often used term “Power of Attorney”, commonly referred to as a PA or POA. While many people in Singapore use it, there are several who either do not understand it at all or do not know its implications. What is the purpose of executing a power of attorney and why do people need it? While you may not have the need to know about or to execute a POA right now, there may be circumstances that will require you to acquire such knowledge.
Power of Attorney has been defined by the Supreme Court of Singapore as “an instrument created by a person who entrusts someone to act on his behalf.”
The “Donor” is the creator of the instrument while the person who is the recipient of the authority to act is the “Donee”. The donor is also called the principal, or the granter of the power of attorney whereas the donee is variously termed as the attorney-in-fact or the agent. Mere use of term ‘attorney-in-fact’ does not imply that the authority has to be entrusted to only a lawyer by profession.
A power of attorney is a legally enforceable document through which you authorize someone else (who may be a friend, relative, employee or any other person) to decide or to act on your behalf. This document is accepted under civil law as well as common law. The authority given by the donor to the donee may be in respect of business or legal matters.
The creation of a power of attorney under the Conveyancing and Law of Property Act (CLPA) (section 48) may be deposited with the Supreme Court as per the Rules of Court (Order 60).
Powers of Attorney deposited with the Supreme Court are public documents and may be inspected by any person desiring to do so, on the payment of the requisite fee.
Different types of POAs are in use in Singapore but the most commonly used one is the POA for HDB flat and property.
It is important to understand the concepts behind the execution and operation of a Power of Attorney. First of all the fact that you have authorised someone to act on your behalf, does not take away your power to make decisions. The POA only permits another person to perform certain acts or to decide for you. For example, if you are suddenly hospitalised or are away from your regular place of residence or business, preventing you from performing important duties like carrying out certain important banking transactions which require your presence, the POA will ensure that someone else can do these acts for you.
The agent, who is in a position of trust, should only follow your directions, particularly when you are able to take your own decisions. It is like a sharing of power and authority with another person and both, the principal and the agent, are able to make the decisions or to do certain acts, on their own. However, the agent draws power from the principal.
In a situation where the principal is not satisfied with or is suspicious about the acts and decisions taken by the agent using the power of attorney, the principal can revoke the power of attorney at any time he deems fits.
Sometimes, the power of attorney may serve other purposes.
A Lasting Power of Attorney (LPA) permits any person who is of legal age (21years) to appoint a person to make decisions and act on their behalf, should the donor lose his mental capacity. The LPA is designed differently from the usual POA and is specially suited to the needs of the elderly.
Lasting, in simple words, means that the agent can act on behalf of the principal only in the event that the principal loses his mental capacity. The law protects the interests of the principal by mandating that the agent act only in a manner that is in the best interests of the principal.
Whenever you intend to execute a Lasting Power of Attorney, keep in mind that the agent authorised to act on your behalf and make decisions for you, will have the authority to draw money from your bank accounts and spend it, dispose of your properties through sale as well as to follow up on insurance claims and legal actions, as and when the LPA comes into effect.
If you do not like the idea of creating a lasting power of attorney or even the normal power of attorney in favour of another person, you may not do so. However should you become mentally incapable of handling your affairs, it is within the powers of the court to appoint a guardian or conservator to manage your affairs. The person so appointed to deal with your affairs, may not be someone you are comfortable dealing with or trust.
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