This article first appeared in Digital Edge, The Edge Malaysia Weekly on June 24, 2024 - June 30, 2024

An estimated 8.5% of older Malaysian adults are living with dementia, affecting their quality of life and making it more difficult to ensure the individuals’ wishes are respected when they are at their most vulnerable.

Capacity is a complex issue for medical and legal practitioners, caregivers and families. Fortunately, in many countries, it is possible to plan ahead for a potential loss of mental capacity. Their laws on enduring power of attorney allow adults that still have full mental capacity to appoint someone they trust to make financial decisions on their behalf when they no longer have the mental capacity to do so.

Malaysia, however, does not currently have a legal framework to enable such planning. Our current set of laws is embodied only in the Mental Health Act 2001. This means the family 

can only take over the monies of a patient with dementia (to fund medical and nursing costs) once that person has lost capacity. This necessitates the long process of obtaining a court order to declare a person unsound. Only then can a committee be appointed by a court to access and take over the funds in the best interest of the person who has been declared mentally incapacitated. Compared to countries where there is a framework of lasting or enduring power of attorney in place, this can be a very lengthy process.

As advisers to families across generations, we are dealing with increasing requests for advice on this issue from UK- and US-based families of these elderly individuals in Malaysia, who thought that Malaysia would have similar laws. In fact, a recent worldwide survey of members of our professional organisation STEP found that 82% of respondents expect to see an increase in capacity-related issues. It demonstrates that an appropriate legal framework is urgently needed.

By way of example, I have a client whose parents (in their late eighties and early nineties) both suffer from dementia. He has moved them to Singapore, where he lives. He has taken them for treatment and therapy with reputable specialists and has had to fund three helpers on rotation. Naturally, he has no access to his parents’ bank accounts in Malaysia without a court order. However, it is the requirement of the law in Malaysia that the treating psychiatrist should be someone from a government hospital with a minimum of two years’ experience. We had to obtain a dispensation of that requirement with compelling arguments, before finally obtaining the order to appoint the committee of persons and estate, allowing my client the power to manage the funds of his parents. Added to this, there are other management and administrative challenges that families have to deal with too.

We also have a client who lives alone in Kuala Lumpur. She was locked out of her online banking when she forgot her passwords and has since developed dementia, slowly losing her mental capacity. She has no access to her monies in Malaysia and London, so her medical expenses are currently being funded by her son-in-law. He has three young children to support and lives in New Zealand. Of course, all these come with other difficulties for the family.

The reality is that without a lasting power of attorney framework, the funds of people who have lost mental capacity can become frozen at a time when these are most needed.

What’s more, cross-border recognition and portability of enduring power of attorney are needed. A lack of consistency from one country to another puts vulnerable people at increased risk too. Meanwhile, it is worth noting that the current lack of standardisation makes access to legal support more costly.

STEP’s recent report, Loss of Mental Capacity: A Global Perspective, revealed that 89% of legal practitioners want to see a power of attorney in some form in all jurisdictions. In an attempt to safeguard vulnerable clients through powers of representation, STEP has developed the Global Representative Power (STEP GRP), a template for an enduring power of attorney that is globally recognised and portable across borders. 

It aims to serve as a “best practice” model when and if new legislation is introduced in line with the spirit of the Hague Convention on the International Protection of Adults.

Many people have families and properties in different countries. With an increasing number of high-net-worth and ultra-high-net-worth individuals, even though we are not a party to the said Convention, we must look into this seriously. If we continue the way we are, this may end up being the government’s burden.

It is critical that we have laws granting adults the freedom to appoint a trusted person to access their monies legally while they still have the mental capacity to do so.

Malaysia can learn from other countries, consider what is working well and what could be improved, and create its own robust legal framework aligned with Malaysian values and culture. Ultimately, this is an issue of balancing between an individual’s rights and protecting the vulnerable from financial abuse.

While awareness of this issue is increasing, thanks to the work of many non-governmental organisations and medico-legal professionals, there is sometimes a misconception that mental capacity is an issue only for the rich. This, of course, is not true and we must address it. It affects every family in society irrespective of economic status.

Stringent processes adopted by financial institutions may also mean that nobody can access funds when in need. While those laws must be respected, asset owners must also have an alternative solution, where someone they trust can be appointed if it becomes a situation of incapacity. The reality is that, while an individual may be wealthy, if his or her assets are frozen and cannot be accessed, he or she may be rendered “poor” and potentially be a burden for those trying to care for them.

Many of my own friends are looking after a parent suffering from some form of mental incapacity, physical disability or other forms of illness, such as cancer, stroke, dementia, Alzheimer’s or Parkinson’s disease. If these elderly parents don’t plan well to equip their children with access to their monies, it becomes an injustice to that generation as they bear the financial burden of caring for their family and ailing parents. It is worth noting that some of my friends themselves have retired and are being cared for by their children. We can see this plight quite clearly among our elder leaders.

As everyone is aware, a non-profit organisation known as the Medico-Legal Society of Malaysia is calling for the promulgation of the Mental Capacity Act with its campaign, “Dignified Decision-Making — It’s Time for Mental Capacity Act”. The Bar Council, too, has set up committees to address this issue. A lot more can be done to create more public awareness of the potential loss of capacity and the dire need for a solution.

We continue to call on all jurisdictions globally to implement robust and consistent legal frameworks to safeguard vulnerable individuals and their families. More needs to be done to educate all stakeholders on issues related to mental capacity and associated planning. To live without an enduring /lasting power of attorney legal framework is especially concerning for Malaysia’s ageing population.

STEP Malaysia chair Farah Deba Mohamed Sofian has over three decades of experience in active legal practice and offers her services to business and wealth owners (Muslims and non-Muslims) across multiple generations. STEP is a global professional association for advisers of families across generations, to help people plan for future incapacity.

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