When it comes to estate planning, most people automatically think about taking legal steps to ensure the right people inherit their assets when they die. Although that thought is not wrong, it also leaves out a very important piece of planning for life. Planning that’s focused solely on “who gets what” when you die is ignoring the fact that death isn’t the only thing you should prepare for. Consider that at some point before your eventual death, you could be incapacitated by accident or illness.
Each of us is at constant risk of experiencing a devastating accident or disease that renders us incapable of caring for ourselves or our loved ones. But unlike death, which is by definition a final outcome, incapacity comes with an uncertain outcome and time frame.
Incapacity can be a temporary event from which you eventually recover, or it can be the start of a long and costly event that ultimately ends in death. Incapacity can drag out, leaving you and your family in agonizing limbo.
This uncertainty is what makes incapacity planning so important.
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 still 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 about your own welfare. If you regain the cognitive ability to make your own decisions, for instance, the legal power you granted others is revoked. The same goes if you should eventually succumb to your condition — your death renders these powers null and void.
Specifically, 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 will typically appoint a guardian or conservator to make these decisions on your behalf. This person could be a family member you’d never want to manage your affairs, or a professional guardian who charges exorbitant fees. Either way, the choice is out of your hands. In the end, the individual the court appoints may choose treatment options, such as invasive surgeries or prolonged life support, that are the opposite of what you want.
This potential turmoil and expense can be easily avoided through proper estate planning.
Proper tools for the job
There are multiple planning vehicles to choose from when creating an incapacity plan. This shouldn’t be just a single document; instead, 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, it’s likely that your incapacity plan will 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 or inability to speak for yourself.
Living will: An advanced directive that provides specific guidance about how your medical decisions should be made if you are in a terminal or irreversible condition.
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 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.
Don’t let a ‘bad’ become ‘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.
This article is provided by the Law Office of Lasca A. Arnold, PLLC.
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