When it comes to estate planning, most people automatically think about only a will or trust to ensure the right people inherit their stuff when they die. Although that thought is not wrong, it also leaves out a very important piece of planning for life. Consider that at some point before your eventual death, you could be incapacitated by accident or illness.
Like death, each of us is at constant risk of experiencing a devastating accident or illness so we are incapable of caring for ourselves. But unlike death, incapacity comes with an uncertain outcome and timeframe. This uncertainty is what makes incapacity planning so important. And incapacity can be a far greater burden for your loved ones than your death.
Where to start
Planning for incapacity requires a different mindset and different tools than planning for death. If you’re incapacitated by illness or injury, you’ll be alive when these planning strategies take effect. What’s more, the legal authority you grant others to manage your incapacity is only viable while you remain alive and unable to make decisions for yourself.
If you regain the cognitive ability to make your own decisions, the legal power you granted others is revoked – and your death renders these powers null and void.
Therefore, the first thing you should ask yourself is, “If I’m ever incapacitated and unable to care for myself, who would I want to make decisions on my behalf?” You’ll be selecting the person, or persons, you want to make your healthcare, financial, and legal decisions for you until you either recover or pass away.
You must name someone
The most important thing to remember is that you must choose someone. If you don’t legally name someone to make these decisions during your incapacity, the court will choose someone for you.
In the absence of proper estate planning, the court typically will appoint a guardian or conservator to make these decisions on your behalf. This person could be a family member you’d never want, or a professional guardian who charges exorbitant fees. Either way, the choice is out of your hands and involves the court.
An effective plan would give the individuals you’ve chosen immediate authority to make your medical, financial and legal decisions, without the need for court intervention. The plan can provide clear guidance about your wishes, so there’s no mistake or conflict.
The proper tools for the job
There are multiple planning vehicles to choose from when creating an incapacity plan. It should include a comprehensive variety of multiple planning tools, each serving a different purpose.
Though the planning strategies you ultimately put in place will be based on your particular circumstances, your incapacity plan should include some, or all, of the following:
• Healthcare power of attorney: An advanced directive that grants an individual of your choice the immediate legal authority to make decisions about your medical treatment in the event of your incapacity.
• Living will: An advanced directive that provides specific guidance about how your medical decisions should be made during your incapacity.
• Durable financial power of attorney: A planning document that grants an individual of your choice the immediate legal authority to make decisions related to the management of your finances, real estate, and business interests.
Revocable living trust: A planning document that immediately transfers control of all assets held by the trust to a person of your choosing to be used for your benefit in the event of your incapacity. The trust can include legally binding instructions for how your care should be managed and even spell out specific conditions that must be met for you to be deemed incapacitated.
Don’t let a bad situation become much worse
You may be powerless to prevent your potential incapacity, but estate planning can at least give you control over how your life and assets will be managed if it does occur. Moreover, such planning can prevent your family from enduring needless conflict, court intervention and expense during an already trying time.
This article provided by Law Office of Lasca A. Arnold, PLLC. We help ensure you make informed decisions for yourself and the people you love.
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