Incapacity Planning: Why Your Estate Needs a Plan that Works

Don’t get caught unprepared when an accident or illness leaves you incapacitated. Incapacity planning should be a part of your overall estate planning effort.If you have trouble imagining your own death, then chances are you also struggle to imagine a time when you won’t be able to manage your own affairs. That’s understandable, since no one wants to think about such things – especially when we are young and incapacity seems like something that only happens to other people. But, failing to plan for incapacity could leave your loved ones unable to help you when they must. It could also threaten your estate planning. Your estate plan needs an incapacity strategy that will work when you need it most.

Why it Matters

Without a proper incapacity plan, important decisions like your medical treatment, finance management, and other concerns will be left to the courts. Yes, that’s right; if you have an accident or illness that eliminates your ability to make your own informed decisions about medical treatment or financial issues, a judge will appoint someone else to act for you – a guardian. Throughout your period of incapacity, the court will then supervise that guardian while the guardian makes important financial and medical decisions you probably would have preferred be made by you or your loved ones. Your failure to create a plan that anticipates your possible incapacity will prevent those you love and trust from helping you manage your affairs when you become incapacitated.

Most people would prefer to avoid that situation at all costs. After all, you don’t want a complete stranger making critical medical decisions for you or deciding how your money will be managed. You don’t want to see personal and financial control of your life in the hands of a government-supervised guardian rather than a trusted family member. The good news is that you can avoid that situation by planning for incapacity before it happens.

Proper Planning with Essential Financial Documents

Two documents essential to maintaining control of your assets and the financial decision-making process in the event of incapacitation is the financial durable power of attorney and a revocable living trust – each will allow the person you choose to stay in control for you.

  • The Financial Power of Attorney provides your designated agent with the authority needed to make financial decisions, pay your bills, manage tax obligations, and even buy or sell property in your name.
  • A Revocable Living Trust permits you to hold title to your assets in your name as trustee of your assets, naming a successor trustee for when you no longer are able to manage your affairs yourself. In that way, you can be assured that if you no longer have capacity, someone you trust and have appointed can manage your assets for your benefit.

Proper Planning with Essential Medical Documents

To avoid a court making decisions about your health and well-being, you should also have certain medical documents in place. These have to be created prior to any incapacity:

  • The Health Care Power of Attorney will give authority to the person you trust to make health care decisions for you; since October, 2105, you can now choose to make that document immediately effective, meaning your agent need not wait for a determination of your incapacity in order to help you in your time of need.
  • Proper HIPAA authorization is essential to ensure that your agent receives access to critical health care documents and information related to your medical needs. Without that authorization, federal and state law may prevent your designated decision-maker from accessing the information needed to make informed decisions.
  • You also need a living will to give your agent authority to decline life-supporting medical treatment under certain conditions.

Choosing the Right Person to Represent You

Since you will be giving control over much of your life to another individual during your incapacitation, choosing an agent can be one of the most important decisions you make. While it might be tempting to name just one person to fulfill both roles, that may not always be the most effective solution. There are several key things you should consider:

  • Is the person trustworthy?
  • Does the person have experience dealing with financial matters? Do they handle their own financial affairs as you would want yours handled?
  • Is there someone close to you with medical experience?
  • How busy is the person you are considering too busy to help you?
  • Will they agree to help?

Putting it all Together

Incapacity planning is a very important part of your estate planning; it is recommended that you consult with an attorney to ensure that your incapacity plan is sound and able to withstand potential challenges. The last thing you need is for a medical emergency to arise and have your loved ones discover that your plan was improperly designed and executed. That would be as bad as never creating a plan in the first place.

A competent attorney can help you avoid any incapacity planning complications and ensure that the plan you create properly meets your needs. We can help you create a comprehensive plan to meet your needs. Contact us today to learn more about how we can provide you with the estate planning you need to help you stay in control for the rest of your continued living.

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We specialize in estate planning, incapacity planning, business planning, trust administration, and probate.

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