The Family Court on Monday ruled that wealthy widow Madam Chung Khin Chun's application to cancel former China tour guide Yang Yin's Lasting Power of Attorney (LPA) over her assets is valid.

The 87-year-old Madam Chung granted Yang the LPA in 2012, but the ruling deems her mentally capable of changing her mind over who should look after her welfare and assets worth $40 million.

A spokesman for the Office of the Public Guardian said on Monday: "Now that the court has determined Mdm Chung's capacity to revoke her LPA, the Public Guardian will process the cancellation of her LPA from the register."

Madam Chung, who was diagnosed with dementia this year, met 40-year-old Yang in Beijing in 2008.

Her niece Hedy Mok, 60, has accused him of manipulating the widow to seize control of her $40 million worth of assets, which included a $30 million bungalow.

She has also sued him in the High Court for abusing his powers as Madam Chung's guardian under the LPA scheme and is seeking damages.

Yang is on police remand after being charged with faking 331 of his firm's receipts.

He is also being probed by the Ministry of Manpower and Immigration and Checkpoints Authority on how he obtained his Employment Pass in 2009 and permanent residency in 2011.

In this video by The Straits Times, Madam Chung was asked how she feels about the Family Court's ruling on Monday.